<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 3, 1997
FILE NO. 333-33229-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<S> <C> <C>
STAR BANC CORPORATION OHIO 31-0838189
STAR CAPITAL I DELAWARE APPLIED FOR
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
425 WALNUT STREET
CINCINNATI, OHIO 45202
(513) 632-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
JENNIE P. CARLSON
SENIOR VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
STAR BANC CORPORATION
425 WALNUT STREET
CINCINNATI, OHIO 45202
(513) 632-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
LEE MEYERSON
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instructions G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____.
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
PROPOSED MAXIMUM
AGGREGATE OFFERING PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED SECURITY(1) PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Securities of Star Capital I............ $150,000,000 100% $150,000,000 $45,455
- --------------------------------------------------------------------------------------------------------------------------
Junior Subordinated Debentures of Star Banc
Corporation(2)................................ -- --
- --------------------------------------------------------------------------------------------------------------------------
Guarantee of Star Banc Corporation(3)........... -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total(4)........................................ $150,000,000 100% $150,000,000 $45,455
==========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) The Junior Subordinated Debentures will be exchanged for outstanding
unregistered Junior Subordinated Debentures which were purchased by Star
Capital I with the proceeds of the sale of the unregistered Capital
Securities. No separate consideration will be received for the issuance of
Junior Subordinated Debentures. Pursuant in Rule 457(a), no separate fee is
payable with respect to the Junior Subordinated Debentures.
(3) No separate consideration will be received for the issuance of the
Guarantee. Pursuant to Rule 457(a), no separate fee is payable with respect
to the Guarantee.
(4) This Registration Statement is deemed to cover the rights of holders of
Capital Securities of Star Capital I under the Declaration of Trust, and the
rights of holders of Junior Subordinated Debentures under the Junior
Subordinated Indenture and the rights of holders of Capital Securities under
the Guarantee. Star Banc Corporation's obligations under the Declaration of
Trust, the Junior Subordinated Debentures, the Junior Subordinated Indenture
and the Guarantee provide a full and unconditional guarantee of the Capital
Securities.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 3, 1997
PROSPECTUS
STAR CAPITAL I
OFFER TO EXCHANGE ITS FLOATING RATE CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ITS OUTSTANDING FLOATING RATE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
TO THE EXTENT DESCRIBED HEREIN, BY
STAR BANC CORPORATION
------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
Star Capital I, a Delaware statutory business trust (the "Trust"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus (as the same may be amended or supplemented from time to time, the
"Prospectus") and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange up to $150,000,000 aggregate
liquidation amount of its Floating Rate Capital Securities (the "New Capital
Securities") which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement (as defined
herein) of which this Prospectus constitutes a part, for a like liquidation
amount of its outstanding Floating Rate Capital Securities (the "Old Capital
Securities"), of which $150,000,000 aggregate liquidation amount is outstanding.
As soon as practicable after the Exchange Offer, Star Banc Corporation, an Ohio
corporation (the "Company"), will exchange its guarantee of the payment of
distributions and payments on liquidation or redemption of the Old Capital
Securities (the "Old Guarantee") for a like guarantee of the New Capital
Securities (the "New Guarantee") and all of its Floating Rate Junior
Subordinated Debentures (the "Old Junior Subordinated Debentures"), of which
$154,640,000 aggregate principal amount is outstanding, for a like aggregate
principal amount of its Floating Rate Junior Subordinated Debentures (the "New
Junior Subordinated Debentures"), which New Guarantee and New Junior
Subordinated Debentures also have been registered under the Securities Act (the
exchange of the Old Capital Securities for the New Capital Securities, the
exchange of the Old Guarantee for the New Guarantee and the exchange of the Old
Junior Subordinated Debentures for the New Junior Subordinated Debentures is
referred to collectively herein as the "Exchange"). The Old Capital Securities,
the Old Guarantee and the Old Junior Subordinated Debentures are collectively
referred to herein as the "Old Securities" and the New Capital Securities, the
New Guarantee and the New Junior Subordinated Debentures are collectively
referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that the New Securities have
been registered under the Securities Act and therefore will not be subject to
certain restrictions on transfer applicable to the Old Securities and will not
be entitled to any increase in the distribution rate thereon or any further
registration rights under the Securities Act, except in certain limited
circumstances. See "Description of the Old Securities."
The New Capital Securities and the Old Capital Securities (together, the
"Capital Securities") represent undivided beneficial ownership interests in the
assets of the Trust. The Company is the owner of all of the beneficial ownership
interests represented by common securities of the Trust (the "Common
Securities"; together with the Capital Securities, the "Trust Securities"). The
Trust exists for the sole purpose of issuing the Trust Securities and investing
the proceeds thereof in the Old Junior Subordinated Debentures, which will be
exchanged for New Junior Subordinated Debentures (together, the "Junior
Subordinated Debentures"). The Junior Subordinated Debentures will mature on
June 15, 2027. The terms of the Capital Securities provide that they will have a
preference under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of Capital Securities -- Subordination of Common
Securities."
SEE "RISK FACTORS" COMMENCING ON PAGE 15 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS WHO TENDER OLD CAPITAL SECURITIES IN THE
EXCHANGE OFFER.
THESE SECURITIES WILL NOT BE DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND WILL
NOT BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 3
Holders of the Capital Securities are entitled to receive cumulative cash
distributions accruing from the date of original issuance and payable quarterly
in arrears on the fifteenth day of March, June, September and December of each
year (each, an "Interest Payment Date"), commencing September 15, 1997, at a
variable annual rate equal to LIBOR (as defined herein) plus 0.765% of the
liquidation amount of $1,000 per Capital Security ("Distributions"). The
distribution rate and the distribution payment dates and other payment dates for
the Capital Securities correspond to the payments and payment dates on the
Junior Subordinated Debentures, which will be the sole assets of the Trust. The
Company will guarantee the payment of Distributions and payments on liquidation
of the Trust or redemption of the Capital Securities, but only in each case to
the extent of funds held by the Trust, as described herein (the "Guarantee").
See "Description of Guarantee" herein. If the Company does not make interest
payments on the Junior Subordinated Debentures held by the Trust, the Trust will
have insufficient funds to pay Distributions on the Capital Securities. The
Company's obligations under the Guarantee, taken together with its obligations
under the Junior Subordinated Debentures and the Indenture (as defined herein),
including its obligation to pay all costs, expenses and liabilities of the Trust
(other than with respect to the Capital Securities), constitute a full and
unconditional guarantee of all of the Trust's obligations under the Capital
Securities. The obligations of the Company under the Guarantee and the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Indebtedness (as defined in "Description of Junior Subordinated
Debentures -- Subordination" herein) of the Company and structurally
subordinated to all liabilities and obligations of the Company's subsidiaries.
As of June 30, 1997, approximately $152 million aggregate principal amount of
Indebtedness was outstanding, and the Company's consolidated subsidiaries had
approximately $9.9 billion of indebtedness and other liabilities. The terms of
the Junior Subordinated Debentures place no limitation on the amount of
Indebtedness that may be incurred by the Company or on the amount of liabilities
and obligations of the Company's subsidiaries. See "Description of Junior
Subordinated Debentures -- Subordination."
The Company has the right to defer payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each deferral period
(each, an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity (as defined herein) of the Junior Subordinated
Debentures. Upon the termination of any such Extension Period and the payment of
all amounts then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period subject to the requirements set forth herein.
Accordingly, there could be multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debentures. If interest payments
on the Junior Subordinated Debentures are so deferred, distributions on the
Capital Securities will also be deferred and the Company may not, and may not
permit any subsidiary of the Company to, subject to certain exceptions described
herein, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank pari passu with or junior to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
with or junior to the Junior Subordinated Debentures (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants or in connection with a dividend reinvestment
or stockholder stock purchase plan, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company'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 the adoption of 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). During
an Extension Period, interest on the Junior Subordinated Debentures will
continue to accrue (and the
2
<PAGE> 4
amount of Distributions to which holders of the Capital Securities are entitled
will accumulate) at the variable rate of LIBOR plus 0.765% per annum, compounded
quarterly, and holders of the Capital Securities will be required to include
such interest income in gross income (as original issue discount ("OID")) for
United States federal income tax purposes prior to receipt of the cash related
to such interest income. See "Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment Period" and "Certain United
States Federal Income Tax Consequences -- Interest Income and Original Issue
Discount."
The Junior Subordinated Debentures are not redeemable prior to June 15,
2007 unless a Special Event (as defined herein) has occurred. The Junior
Subordinated Debentures are redeemable prior to maturity at the option of the
Company, subject to the receipt of any necessary prior approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve") (i) on or after
June 15, 2007, in whole or in part, at a redemption price equal to 100% of the
principal amount thereof, plus the accrued and unpaid interest thereon, or (ii)
at any time, in whole (but not in part), upon the occurrence and continuation of
a Special Event, at a redemption price equal to 100% of the principal amount
thereof plus the accrued and unpaid interest thereon, in each case subject to
the further conditions described under "Description of Junior Subordinated
Debentures -- Redemption." The Capital Securities are subject to mandatory
redemption, in whole or in part, upon repayment of the Junior Subordinated
Debentures at maturity or their earlier redemption, in an amount equal to the
amount of related Junior Subordinated Debentures maturing or being redeemed and
at a redemption price equal to the redemption price of such Junior Subordinated
Debentures, in each case plus accumulated and unpaid Distributions thereon to
the date of redemption.
Upon the occurrence and continuation of a Special Event, the Company will
have the right, subject to the receipt of any necessary prior approval of the
Federal Reserve, to dissolve the Trust and cause the Junior Subordinated
Debentures to be distributed to the holders of the Capital Securities and the
Common Securities in liquidation of the Trust. See "Description of Capital
Securities -- Redemption -- Special Event Redemption or Distribution of Junior
Subordinated Debentures."
In the event of the liquidation of the Trust, after satisfaction of the
claims of creditors of the Trust, if any, as provided by applicable law, the
holders of the Capital Securities will be entitled to receive a liquidation
amount of $1,000 per Capital Security plus accumulated and unpaid Distributions
thereon to the date of payment, which may be in the form of a distribution of
such amount in Junior Subordinated Debentures as described above. If such
Liquidation Distribution (as defined herein) can be paid only in part because
the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Capital Securities shall be paid on a pro rata basis. The holder(s) of the
Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that if
an Indenture Event of Default (as defined herein) has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities. See "Description of Capital Securities -- Liquidation Distribution
Upon Dissolution."
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither the Company nor the Trust has sought its own interpretive
letter and there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance, and subject to the two immediately following sentences, the
Company and the Trust believe that New Capital Securities issued pursuant to
this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Company or the
Trust (within the meaning of Rule 405 under the Securities Act) or who intends
to participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any
3
<PAGE> 5
broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) such holder is not
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities. In addition, the Company
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Company and
the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds the Capital Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives New Capital Securities for its own account pursuant
to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Company and
the Trust believe that broker-dealers who acquired Old Capital Securities for
their own accounts, as a result of market-making activities or other trading
activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with this Prospectus, as it may be amended or supplemented from time
to time. Subject to certain exceptions, the Company and the Trust have agreed
that this Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with resales of such
New Capital Securities for a period ending 180 days after the Registration
Statement of which this Prospectus constitutes a part is declared effective. See
"Plan of Distribution." Any Participating Broker-Dealer who is an "affiliate" of
the Trust (within the meaning of Rule 405 under the Securities Act) may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. See "The Exchange Offer -- Resales of New Capital
Securities."
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Declaration (except
for those rights which terminate upon consummation of the Exchange Offer).
Following consummation of the Exchange Offer, the holders of Old Capital
Securities will not be entitled to any increase in the distribution rate thereon
and will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Company nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old Capital Securities
held by them. To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old
Capital Securities could be adversely affected. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities."
4
<PAGE> 6
The New Capital Securities will be a new issue of securities for which
there currently is no established trading market. Accordingly, there can be no
assurance as to the development or liquidity of any market for the New Capital
Securities. The Company currently does not intend to apply for listing of the
New Capital Securities on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System. The New
Capital Securities will be issued and may be transferred only in blocks having a
Liquidation Amount of not less than $100,000. Any transfer, sale or other
disposition of New Capital Securities in a block having a Liquidation Amount of
less than $100,000 shall be deemed to be void and of no legal effect whatsoever.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company and the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. Old Capital Securities may be tendered in whole or in part
having a Liquidation Amount of not less than $100,000 (100 Capital Securities)
and or any integral multiple of $1,000 Liquidation Amount (one Capital Security)
in excess thereof. The Exchange Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Company or the Trust. The Company has agreed to pay all
expenses of the Exchange Offer. See "The Exchange Offer -- Fees and Expenses."
This Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders of Old Capital Securities as of 1997.
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
------------------------
5
<PAGE> 7
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such material filed by the Company with the
Commission may be inspected by anyone without charge at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material may also be obtained at the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of prescribed fees.
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Company does not believe such financial
statements would be material to holders of the Capital Securities because (i)
all of the common securities of the Trust will be owned, directly or indirectly,
by the Company, a reporting company under the Exchange Act, (ii) the Trust has
no independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in its assets and investing the
proceeds thereof in Junior Subordinated Debentures issued by the Company, and
(iii) the obligations of the Trust under the Capital Securities are guaranteed
by the Company to the extent described herein. See "Relationship Among the
Capital Securities, the Junior Subordinated Debentures and the Guarantee."
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed by the Company and the Trust with the Commission
under the Securities Act. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information contained in
the Registration Statement and the exhibits and schedules thereto and reference
is hereby made to the Registration Statement and the exhibits and schedules
there to for further information with respect to the Company, the Trust and the
securities offered hereby. Statements contained herein concerning the provisions
of any documents filed as an exhibit to the Registration Statement or otherwise
filed with the Commission are not necessarily complete, and in each instance
reference is made to the copy of such document so filed. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997 and the Company's Current Reports on Form 8-K
dated March 12, 1997 and September 15, 1997, previously filed by the Company
with the Commission, are incorporated by reference in this Prospectus and shall
be deemed to be a part hereof.
Each document filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of any offering of securities made by
this Prospectus shall be deemed to be incorporated by reference herein and to be
a part hereof 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 a reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT INCLUDED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST FROM THE COMPANY'S TREASURY DIVISION, 425 WALNUT STREET,
CINCINNATI, OHIO 45202, TELEPHONE NUMBER (513) 632-4000. IN ORDER TO ENSURE
TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE AT LEAST FIVE
BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
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PROSPECTUS SUMMARY
This summary is qualified by the more detailed information and financial
statements appearing elsewhere, or incorporated by reference, in this
Prospectus. Holders of Old Capital Securities are urged to read this Prospectus
in its entirety.
THE COMPANY
The Company is organized under the laws of the State of Ohio and maintains
its executive offices in Cincinnati, Ohio. The Company is a bank holding company
(under the Bank Holding Company Act of 1956, as amended) registered with the
Federal Reserve, and accordingly, is subject to regulation and examination by
the Federal Reserve.
As a result of a 1993 and 1996 restructuring of certain of its Ohio,
Kentucky and Indiana banks, the Company presently directly holds one
wholly-owned national bank subsidiary: Star Bank, N.A. (the "Bank"). Through the
Bank and its 278 banking offices, the Company engages in the commercial banking
and trust business and provides a full range of consumer, wholesale, commercial,
trust and investment products (including, but not limited to, deposits,
individual retirement accounts, and mutual funds) and investment services in
Ohio, Kentucky and Indiana. The Bank offers corporate loans, commercial leasing,
commercial and residential mortgages, real estate construction lending, and a
variety of consumer loan products (including installment loans, credit cards and
retail leasing). None of the foregoing types of loans exceeds 30% of the Bank's
diversified loan portfolio. The Bank also offers cash management and
international trade services to commercial clients.
The Company has expanded significantly by acquisition in the last five
years. Since 1992, the Company, in three separate transactions, has purchased 24
branch offices in the Columbus, Ohio area, 47 branch offices in the Cleveland
and Akron, Ohio areas, and 28 additional branches in the Cleveland, Ohio area;
and, on July 26, 1996, the Bank acquired 5 additional branches in Indiana. Most
recently, on February 14, 1997 the Bank acquired 7 branch offices in the
Southwestern Ohio area from Amerifirst Bank, N.A. The Company continues to
explore other acquisition opportunities in its market area.
The Company's other active subsidiaries include: Miami Valley Insurance
Company, an Arizona company engaged solely in the business of issuing credit
life and accident and health insurance in connection with the lending activities
of the Company's Ohio and Indiana branch offices; First National Cincinnati
Company, a subsidiary of the Bank that owns and operates the Company's
headquarters building; and Star Banc Finance, Inc., a consumer finance company
regulated by the Federal Reserve Board that offers a broad mix of credit
products and services, including direct and indirect auto loans, second
mortgages and personal loans; and Star Capital Corporation, an Ohio company
engaged in the business of making investments in securities and other property
permissible for Bank Holding Companies and subsidiaries.
The Company's executive offices are located at 425 Walnut Street,
Cincinnati, Ohio 45202 and its telephone number is (513) 632-4000.
THE EXCHANGE OFFER
The Exchange Offer......... Up to $150,000,000 aggregate liquidation amount of
New Capital Securities are being offered in
exchange for a like aggregate liquidation amount of
Old Capital Securities. Old Capital Securities may
be tendered for exchange in whole or in part in a
Liquidation Amount of $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in
excess thereof, provided that if any Old Capital
Securities are tendered in part, the untendered
Liquidation Amount must be $100,000 or any integral
multiple of $1,000 in excess thereof. The Company
will issue, promptly after the Expiration Date,
$1,000 liquidation amount of New Capital Securities
in exchange for each $1,000 liquidation amount of
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<PAGE> 9
outstanding Old Capital Securities tendered and
accepted in connection with the Exchange Offer. For
a description of the procedures for tendering Old
Capital Securities, see "The Exchange
Offer -- Procedures for Tendering Old Capital
Securities."
Expiration Date............ 5:00 p.m., New York City time, on
, 1997 (such time on such date being hereinafter
called the "Expiration Date") unless the Exchange
Offer is extended by the Company and the Trust (in
which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange
Offer is extended). See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time on or prior to the Expiration Date by
delivering a written notice of such withdrawal to
the Exchange Agent in conformity with certain
procedures set forth below under "The Exchange
Offer -- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained therein
and forward the same by mail, facsimile or hand
delivery, together with any other required
documents, to the Exchange Agent, either with the
Old Capital Securities to be tendered or in
compliance with the specified procedures for
guaranteed delivery of Old Capital Securities.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer, including an
Agent's Message if the tendering holder does not
deliver a Letter of Transmittal. Holders of Old
Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See "The
Exchange Offer -- Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Company or the Trust. Such documents
should only be sent to the Exchange Agent.
Questions regarding how to tender and requests for
information should be directed to the Exchange
Agent. See "The Exchange Offer -- Exchange Agent."
Resales of New Capital
Securities............... The Company and the Trust are making the Exchange
Offer in reliance on the position of the staff of
the Division of Corporation Finance of the
Commission as set forth in certain interpretive
letters addressed to third parties in other
transactions. However, neither the Company nor the
Trust has sought its own interpretive letter and
there can be no assurance that the staff of the
Division of Corporation Finance of the Commission
would make a similar determination with respect to
the Exchange Offer as it has in such interpretive
letters to third parties. Based on these
interpretations by the staff of the Division of
Corporation Finance, and subject to the two
immediately following sentences, the Company and
the Trust believe that New Capital Securities
issued pursuant to this Exchange Offer in exchange
for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a
broker-dealer) without further compliance with the
registration and prospectus delivery requirements
of the Securities
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<PAGE> 10
Act, provided that such New Capital Securities are
acquired in the ordinary course of such holder's
business and that such holder is not participating,
and has no arrangement or understanding with any
person to participate, in a distribution (within
the meaning of the Securities Act) of such New
Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the
Company or the Trust or who intends to participate
in the Exchange Offer for the purpose of
distributing the New Capital Securities, or any
broker-dealer who purchased the Old Capital
Securities from the Trust to resell pursuant to
Rule 144A or any other available exemption under
the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in
the above-mentioned interpretive letters, (b) will
not be permitted or entitled to tender such Old
Capital Securities in the Exchange Offer and (c)
must comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any sale or other transfer of such
Old Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own
account as a result of market-making or other
trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to
exchange Old Capital Securities for New Capital
Securities in the Exchange Offer will be required
to represent that (i) it is not an "affiliate" of
the Company or the Trust, (ii) any New Capital
Securities to be received by it are being acquired
in the ordinary course of its business, (iii) it
has no arrangement or understanding with any person
to participate in a distribution (within the
meaning of the Securities Act) of such New Capital
Securities, and (iv) such holder is not engaged in,
and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such
New Capital Securities. Each broker-dealer that
receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge
that it acquired the Old Capital Securities for its
own account as the result of market-making
activities or other trading activities and must
agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of such New Capital Securities. The
Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the
staff of the Division of Corporation Finance of the
Commission in the interpretive letters referred to
above, the Company and the Trust believe that
broker-dealers who acquired Old Capital Securities
for their own accounts, as a result of
market-making activities or other trading
activities ("Participating Broker-Dealers"), may
fulfill their prospectus delivery requirements with
respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than
Old Capital Securities which represent an unsold
allotment from the original sale of the Old Capital
Securities) with this Prospectus, as it may be
amended or supplemented
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<PAGE> 11
from time to time. Subject to certain limitations
described below under "The Exchange Offer -- Resale
of New Capital Securities," the Company has agreed
that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with
resales of such New Capital Securities for a period
ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is
declared effective. See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate"
of the Company may not rely on such interpretive
letters and must comply with the registration and
prospectus delivery requirements of the Securities
Act in connection with any resale transaction. See
"The Exchange Offer -- Resales of New Capital
Securities."
Accrued Distributions...... Each New Capital Security will pay cumulative
Distributions from the most recent Distribution
Date or, if no Distributions have been paid on such
Old Capital Securities, from June 8, 1997. Holders
of the Old Capital Securities whose Old Capital
Securities are accepted for exchange will not
receive any accumulated Distributions on such Old
Capital Securities and will be deemed to have
waived the right to receive any Distributions on
such Old Capital Securities accumulated from and
after June 8, 1997.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain
conditions, which may be waived by the Company and
the Trust in their sole discretion. The Exchange
Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities being
tendered. See "The Exchange Offer -- Conditions to
the Exchange Offer."
Exchange Agent............. The exchange agent with respect to the Exchange
Offer is The First National Bank of Chicago (the
"Exchange Agent"). The addresses, and telephone and
facsimile numbers, of the Exchange Agent are set
forth below under "The Exchange Offer -- Exchange
Agent" and in the Letter of Transmittal.
Use of Proceeds............ Neither the Company nor the Trust will receive any
cash proceeds from the issuance of the New Capital
Securities offered hereby. The New Capital
Securities will be exchanged for Old Capital
Securities in like liquidation amount, which will
be retired and cancelled. The cash proceeds from
the sale of the Old Capital Securities were used to
purchase Old Junior Subordinated Debentures. See
"Use of Proceeds."
Certain United States
Federal Income Tax
Considerations........... Holders of Old Capital Securities should review the
information set forth under "Certain United States
Federal Income Tax Considerations" prior to
tendering Old Capital Securities in the Exchange
Offer.
Consequences of Failure to
Exchange................. Any Old Capital Securities not tendered and
accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same
rights and will be subject to the same limitations
applicable thereto under the Declaration (except
for those rights which terminate upon consummation
of the Exchange Offer). Following consummation of
the Exchange Offer, the holders of Old Capital
Securities will not be entitled to any increase in
the distribution rate thereon and will continue to
be subject to all of the existing restrictions upon
transfer thereof and neither the
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<PAGE> 12
Company nor the Trust will have any further
obligation to such holders (other than under
certain limited circumstances) to provide for
registration under the Securities Act of the Old
Capital Securities held by them. To the extent that
Old Capital Securities are tendered and accepted in
the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be
adversely affected. See "Risk Factors --
Consequences of a Failure to Exchange Old Capital
Securities."
THE NEW SECURITIES
The Trust.................. Star Capital I, a Delaware statutory business
trust. The sole assets of the Trust are the Junior
Subordinated Debentures.
Securities Offered......... Up to $150,000,000 aggregate liquidation amount of
the Trust's Floating Rate Capital Securities which
have been registered under the Securities Act
(liquidation amount $1,000 per Capital Security).
The terms of the New Capital Securities are
identical in all material respects to the terms of
the Old Capital Securities, except that the New
Capital Securities have been registered under the
Securities Act and therefore are not subject to
certain restrictions on transfer applicable to the
Old Capital Securities and will not provide for any
increase in the distribution rate thereon or any
further registration rights under the Securities
Act, except in certain limited circumstances. See
"The Exchange Offer -- Purpose and Effect of the
Exchange Offer", "Description of Capital
Securities" and "Description of the Old
Securities." The holders of the New Capital
Securities will be entitled to a preference in
certain circumstances with respect to distributions
and amounts payable on liquidation, redemption or
otherwise over the Common Securities.
Distributions.............. Holders of the New Capital Securities will be
entitled to receive cumulative cash distributions
at a variable annual rate equal to LIBOR plus
0.765% of the liquidation amount of $1,000 per
Capital Security, accruing from the date of
original issuance and payable quarterly in arrears
on the fifteenth day of March, June, September and
December of each year commencing on September 15,
1997. The distribution rate and the distribution
and other payment dates for the New Capital
Securities will correspond to the interest rate and
interest and other payment dates on the Junior
Subordinated Debentures. See "Description of
Capital Securities."
Junior Subordinated
Debentures............... The Trust has invested the proceeds from the
issuance of the Old Capital Securities and Common
Securities in an equivalent amount of Old Floating
Rate Junior Subordinated Debentures of the Company.
The Junior Subordinated Debentures mature on June
15, 2027 (the "Stated Maturity"). The Junior
Subordinated Debentures will rank subordinate and
junior in right of payment to all Indebtedness of
the Company. In addition, the Company's obligations
under the Junior Subordinated Debentures are
structurally subordinated to all existing and
future liabilities and obligations of its
subsidiaries. See "Risk Factors -- Ranking of
Subordinated Obligations Under the Guarantee and
the Junior Subordinated Debentures," "Risk
Factors -- Status of Company as Holding Company"
and "Description of Junior Subordinated
Debentures -- Subordination."
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<PAGE> 13
Guarantee.................. Payment of distributions out of moneys held by the
Trust, and payments on liquidation of the Trust or
the redemption of Capital Securities, are
guaranteed by the Company to the extent the Trust
has funds available therefor. If the Company does
not make principal or interest payments on the
Junior Subordinated Debentures, the Trust will not
have sufficient funds to make distributions on the
Capital Securities, in which event the Guarantee
shall not apply to such distribution until the
Trust has sufficient funds available therefor. The
Company's obligations under the Guarantee, taken
together with its obligations under the Junior
Subordinated Debentures and the Indenture,
including its obligation to pay all costs, expenses
and liabilities of the Trust (other than with
respect to the Capital Securities), constitute a
full and unconditional guarantee of all of the
Trust's obligations under the Capital Securities.
See "Description of Guarantee" and "Relationship
Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee." The
obligations of the Company under the Guarantee are
subordinate and junior in right of payment to all
Indebtedness of the Company. See "Risk Factors --
Ranking of Subordinated Obligations Under the
Guarantee and the Junior Subordinated Debentures"
and "Description of Guarantee."
Right to Defer Interest.... The Company has the right to defer payment of
interest on the Junior Subordinated Debentures by
extending the interest payment period on the Junior
Subordinated Debentures, from time to time, for up
to 20 consecutive quarterly periods. There could be
multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated
Debentures. If interest payments on the Junior
Subordinated Debentures are so deferred,
distributions on the Capital Securities will also
be deferred for an equivalent period and the
Company may not, and may not permit any subsidiary
of the Company to, subject to certain exceptions
set forth herein, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, the
Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities
that rank pari passu with or junior to the Junior
Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of
the Company if such guarantee ranks pari passu with
or junior to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the
Company in connection with any employment contract,
benefit plan or other similar arrangement with or
for the benefit of any one or more employees,
officers, directors or consultants or in connection
with a dividend reinvestment or stockholder stock
purchase plan, (b) as a result of an exchange or
conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary
of the Company) for any class or series of the
Company's capital stock or of any class or series
of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the
purchase of fractional interests in shares of the
Company'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 the
adoption of 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
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<PAGE> 14
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). During an Extension Period, interest
on the Junior Subordinated Debentures will continue
to accrue (and the amount of Distributions to which
holders of the Capital Securities are entitled will
accumulate) at a variable rate of LIBOR plus 0.765%
per annum, compounded quarterly. During an
Extension Period, holders of Capital Securities
will be required to include their allocable share
of the stated interest on the Junior Subordinated
Debentures in gross income as original issue
discount ("OID") even though the cash payments
attributable thereto have not been made. See
"Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment
Period" and "Certain United States Federal Income
Tax Consequences -- Interest Income and Original
Issue Discount."
Redemption................. The Junior Subordinated Debentures are redeemable
by the Company in whole or in part on or after June
15, 2007, or at any time in whole upon the
occurrence of a Special Event, in either case
subject to any necessary prior approval of the
Federal Reserve. If the Junior Subordinated
Debentures are redeemed, the Trust must redeem
Trust Securities (as hereinafter defined) having an
aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated
Debentures so redeemed. The Trust Securities will
be redeemed upon maturity of the Junior
Subordinated Debentures. See "Description of
Capital Securities -- Redemption -- Mandatory
Redemption" and "-- Special Event Redemption or
Distribution of Junior Subordinated Debentures."
Liquidation of the Trust... Upon the occurrence and continuation of a Special
Event, the Company will have the right, subject to
any necessary prior approval of the Federal
Reserve, to terminate the Trust and cause the
Junior Subordinated Debentures to be distributed to
the holders of the Capital Securities and the
Common Securities in liquidation of the Trust. See
"Description of Capital
Securities -- Redemption -- Special Event
Redemption or Distribution of Junior Subordinated
Debentures."
In the event of the liquidation of the Trust, after
satisfaction of the claims of creditors of the
Trust, if any, as provided by applicable law, the
holders of the Capital Securities will be entitled
to receive a liquidation amount of $1,000 per
Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which
may be in the form of a distribution of such amount
in Junior Subordinated Debentures as described
above. If such Liquidation Distribution can be paid
only in part because the Trust has insufficient
assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable
directly by the Trust on the Capital Securities
shall be paid on a pro rata basis. The holder of
the Common Securities will be entitled to receive
distributions upon any such liquidation pro rata
with the holders of the Capital Securities, except
that if an Indenture Event of Default has occurred
and is continuing, the Capital Securities shall
have a priority over the Common Securities. See
"Description of Capital Securities -- Liquidation
Distribution Upon Dissolution."
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<PAGE> 15
Ratings.................... The New Capital Securities have been rated "a3" by
Moody's Investors Service, Inc. ("Moody's") and
"BBB" by Standard & Poor's Ratings Services
("S&P"). A security rating is not a recommendation
to buy, sell or hold securities and may be subject
to revision or withdrawal at any time by the
assigning rating organization.
Absence of Market for the
New Capital Securities... The New Capital Securities will be a new issue of
securities for which there currently is no
established trading market. Accordingly, there can
be no assurance as to the development or liquidity
of any market for the New Capital Securities. The
Company currently does not intend to apply for
listing of the New Capital Securities on any
securities exchange or for quotation through the
National Association of Securities Dealers
Automated Quotation System.
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<PAGE> 16
RISK FACTORS
Prospective purchasers of the New Capital Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters. To the extent any of the
information contained or incorporated by reference in this Prospectus
constitutes a "forward-looking statement" as defined in Section 21E(i)(1) of the
Exchange Act, the risk factors set forth below are cautionary statements
identifying important factors that could cause actual results to differ
materially from those in the forward-looking statement.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee issued by the Company
for the benefit of the holders of Capital Securities and under the Junior
Subordinated Debentures are unsecured and rank subordinate and junior in right
of payment to all Indebtedness of the Company. At June 30, 1997, the
Indebtedness of the Company aggregated approximately $152 million. Neither the
Indenture, the Guarantee nor the Declaration (as defined herein) place any
limitation on the amount of secured or unsecured Indebtedness that may be
incurred by the Company. See "Description of Guarantee -- Status of the
Guarantee" and "Description of Junior Subordinated Debentures -- Subordination."
STATUS OF COMPANY AS HOLDING COMPANY
As a holding company, the ability of the Company to make payments of
interest and principal on the Junior Subordinated Debentures will be dependent
primarily upon the receipt of dividends and other distributions from the
Company's subsidiaries. The Company's principal subsidiary is the Bank. There
are various regulatory restrictions on the ability of the Bank to pay dividends
or make other payments to the Company. At June 30, 1997, the Bank could pay an
aggregate of $157 million in dividends to the Company without prior regulatory
approval. In addition, the right of the Company to participate in any
distribution of assets of any subsidiary, including the Bank, upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution),
will be subject to the prior claims of creditors of that subsidiary, except to
the extent that any claims of the Company as a creditor of such subsidiary may
be recognized as such. Accordingly, the Capital Securities will effectively be
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of the Capital Securities should look only to the
assets of the Company for payments on the Capital Securities. As of June 30,
1997, the Company's consolidated subsidiaries had indebtedness and other
liabilities of approximately $9.9 billion.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Trust Enforcement Event (as defined herein) occurs and is continuing,
then the holders of Capital Securities would rely on the enforcement by the
Property Trustee (as defined herein) of its rights as a holder of the Junior
Subordinated Debentures against the Company. The holders of a majority in
liquidation amount of the Capital Securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Property Trustee or to direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration (as defined herein), including
the right to direct the Property Trustee to exercise the remedies available to
it as a holder of the Junior Subordinated Debentures. If the Property Trustee
fails to enforce its rights with respect to the Junior Subordinated Debentures
held by the Trust, any record holder of Capital Securities may institute legal
proceedings directly against the Company to enforce the Property Trustee's
rights under such Junior Subordinated Debentures without first instituting any
legal proceedings against such Property Trustee or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
However, in the event the Company failed to pay interest on or principal of the
Junior Subordinated Debentures on the payment date on which such payment is
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<PAGE> 17
due and payable, then a holder of Capital Securities may directly institute a
proceeding against the Company for enforcement of payment to such holder of the
interest on or principal of Junior Subordinated Debentures having a principal
amount equal to the aggregate liquidation amount of the Capital Securities of
such holder (a "Direct Action"). In connection with such Direct Action, the
Company will be subrogated to the rights of such holder of Capital Securities
under the Declaration to the extent of any payment made by the Company to such
holder of Capital Securities in such Direct Action. Except as set forth herein,
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of Junior Subordinated Debentures or assert
directly any other rights in respect of the Junior Subordinated Debentures. See
"Description of Capital Securities -- Enforcement of Certain Rights by Holders
of Capital Securities," "Description of Guarantee" and "Description of Junior
Subordinated Debentures -- Indenture Events of Default." The Declaration
provides that each holder of Capital Securities by acceptance thereof agrees to
the provisions of the Guarantee and the Indenture.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
The Company has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 20 consecutive quarterly periods, provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of any such deferral, quarterly
Distributions on the Capital Securities by the Trust would be deferred but would
continue to accumulate at a variable rate of LIBOR plus 0.765% per annum,
compounded quarterly during any such Extension Period. During any such Extension
Period, the Company may not, and may not permit any subsidiary of the Company
to, (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank pari passu with or junior to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
with or junior to the Junior Subordinated Debentures (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants or in connection with a dividend reinvestment
or stockholder stock purchase plan, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company'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 the adoption of 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 Company may further extend
the Extension Period, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due on any Interest Payment Date, the Company may
elect to begin a new Extension Period subject to the above requirements. See
"Description of Capital Securities -- Distributions" and "Description of Junior
Subordinated Debentures -- Option to Extend Interest Payment Period."
Should the Company defer payment of interest on the Junior Subordinated
Debentures, a holder of Capital Securities will be required to accrue income (in
the form of OID) for United States federal income tax purposes in respect of its
pro rata share of the Junior Subordinated Debentures held by the Trust. As a
result, a holder of Capital Securities will be required to include such holder's
allocable share of the stated interest on the Junior Subordinated Debentures 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
16
<PAGE> 18
income from the Trust if the holder disposes of the Capital Securities prior to
the record date for the payment of Distributions with respect to such Extension
Period. See "Certain United States Federal Income Tax Consequences -- Interest
Income and Original Issue Discount" and " -- Sales of Capital Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Capital Securities is likely to be
adversely affected. A holder that disposes of its Capital Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Capital Securities. In addition, as a
result of the existence of the Company's right to defer interest payments, the
market price of the Capital Securities (which represent preferred undivided
beneficial interests in the Junior Subordinated Debentures) may be more volatile
than the market prices of other similar securities where the issuer does not
have such right to defer interest payments.
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event, the Company has
the right, subject to any necessary prior approval of the Federal Reserve, to
redeem the Junior Subordinated Debentures in whole (but not in part) at the
redemption price described in the Indenture within 90 days following the
occurrence of such Special Event and thereby cause a mandatory redemption of the
Capital Securities and Common Securities. A "Special Event" means a Tax Event, a
Regulatory Capital Event or an Investment Company Event (each as defined
herein).
LIQUIDATION DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Upon the occurrence and continuation of a Special Event the Company will
have the right, subject to any necessary prior approval of the Federal Reserve,
to terminate the Trust and cause the Junior Subordinated Debentures to be
distributed to the holders of the Capital Securities and the Common Securities
in liquidation of the Trust. In addition, upon liquidation of the Trust and
certain other events, the Junior Subordinated Debentures may be distributed to
such holders. Under current United States federal income tax law and
interpretations thereof and assuming, as expected, the Trust is treated as a
grantor trust for United States federal income tax purposes, a distribution by
the Trust of the Junior Subordinated Debentures pursuant to a liquidation of the
Trust will not be a taxable event to the Trust or to holders of the Capital
Securities and will result in a holder of the Capital Securities receiving
directly such holder's pro rata share of the Junior Subordinated Debentures
(previously held indirectly through the Trust). If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Junior Subordinated
Debentures as a result of the occurrence of a Tax Event or otherwise, the
distribution of Junior Subordinated Debentures to holders of the Capital
Securities by the Trust could be a taxable event to the Trust and each holder,
and holders of the Capital Securities could then be required to recognize gain
or loss as if they had exchanged their Capital Securities for the Junior
Subordinated Debentures they received upon the liquidation of the Trust. See
"Certain United States Federal Income Tax Consequences -- Distribution of Junior
Subordinated Debentures or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures that may be distributed in exchange for Capital
Securities if a liquidation of the Trust occurs. Accordingly, the Capital
Securities that an investor may purchase, whether pursuant to the offer made
hereby or in the secondary market, or the Junior Subordinated Debentures that a
holder of Capital Securities may receive on liquidation of the Trust, may trade
at a discount to the price that the investor paid to purchase the Capital
Securities offered hereby. Because holders of Capital Securities may receive
Junior Subordinated Debentures on termination of the Trust, prospective
purchasers of Capital Securities are also making an investment decision with
regard to the Junior Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures contained herein. See
"Description of Capital Securities -- Redemption -- Special Event Redemption or
Distribution of Junior Subordinated Debentures" and "Description of Junior
Subordinated Debentures -- General."
17
<PAGE> 19
LIMITED VOTING RIGHTS
Holders of New Capital Securities generally will have limited voting rights
relating only to the modification of the New Capital Securities and certain
other matters described herein. Holders of New Capital Securities will not be
entitled to vote to appoint, remove or replace any of the Trustees (as defined
below), which voting rights are vested exclusively in the holder of the Common
Securities. The Trustees and the Company may amend the Declaration without the
consent of holders of Capital Securities to ensure that the Trust will be
classified as a grantor trust for United States federal income tax purposes,
unless such action would materially and adversely affect the interests of such
holders. See "Description of Capital Securities -- Voting Rights; Amendment of
the Declaration" and "-- Removal of Trustees."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities that remain outstanding after consummation of the Exchange Offer will
continue to bear a legend reflecting such restrictions on transfer. In addition,
upon consummation of the Exchange Offer, holders of Old Capital Securities that
remain outstanding will not be entitled to any increase in the distribution rate
thereon or any rights to have such Old Capital Securities registered under the
Securities Act by the Company (subject to certain limited exceptions). The
Company and the Trust do not intend to register under the Securities Act any Old
Capital Securities that remain outstanding after consummation of the Exchange
Offer (subject to such limited exceptions, if applicable).
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a small number of beneficial owners. To the extent that Old
Capital Securities are tendered and accepted in connection with the Exchange
Offer, any trading market for Old Capital Securities that remain outstanding
after the Exchange Offer could be adversely affected.
ABSENCE OF PUBLIC MARKET FOR NEW CAPITAL SECURITIES
Although the New Capital Securities will generally be permitted to be
resold or otherwise transferred by the holders (who are not affiliates of the
Company or the Trust) without compliance with the registration requirements
under the Securities Act, they will constitute a new issue of securities with no
established trading market. Accordingly, no assurance can be given that an
active public or other market will develop for the New Capital Securities or as
to the liquidity of or the trading market for the New Capital Securities. The
Company currently does not intend to apply for listing of the New Capital
Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System. If an active
public market does not develop, the market price and liquidity of the New
Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the New Capital Securities may trade at a discount.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
18
<PAGE> 20
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents. Therefore,
holders of the Old Capital Securities desiring to tender such Old Capital
Securities in exchange for New Capital Securities should allow sufficient time
to ensure timely delivery. The Trust is under no duty to give notification of
defects or irregularities with respect to the tenders of Old Capital Securities
for exchange.
USE OF PROCEEDS
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. The New Capital
Securities will be exchanged for Old Capital Securities of like aggregate
liquidation amount, which will be retired and cancelled. The cash proceeds from
the sale of the Old Capital Securities were used to purchase Old Junior
Subordinated Debentures. The Company intends to use the proceeds from the sale
of the Old Junior Subordinated Debentures for general corporate purposes, which
may include the repurchase of common equity of the Company, the repayment of
indebtedness, investments in or extensions of credit to its subsidiaries and the
financing of possible acquisitions. Pending such use, the net proceeds may be
temporarily invested in short-term obligations. The precise amounts and timing
of the application of proceeds will depend upon the funding requirements of the
Company and its subsidiaries and the availability of other funds.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The Company's consolidated ratios of earnings to fixed charges and
consolidated ratios of earnings to combined fixed charges and preferred stock
dividend requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ---------------------------------
JUNE 30, 1997 1996 1995 1994 1993 1992
------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..................... 5.04 5.17 3.98 4.62 6.77 5.50
Including Interest on Deposits..................... 1.84 1.75 1.61 1.79 1.77 1.48
Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements:
Excluding Interest on Deposits..................... 5.04 5.17 3.97 4.58 6.43 5.21
Including Interest on Deposits..................... 1.84 1.75 1.61 1.79 1.77 1.48
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except interest on deposits), capitalized interest, and the interest factor
included in rents. Fixed charges, including interest on deposits, represent all
interest expense, capitalized interest, and the interest factor included in
rents. Combined fixed charges and preferred stock dividend requirements,
excluding interest on deposits, represent interest expense (except interest on
deposits), capitalized interest, an amount equal to the pre-tax earnings
required to meet applicable preferred stock dividend requirements, and the
interest factor included in rents. Combined fixed charges and preferred stock
dividend requirements, including interest on deposits, represent all interest
expense, capitalized interest, an amount equal to the pre-tax earnings required
to meet applicable preferred stock dividend requirements, and the interest
factor included in rents.
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<PAGE> 21
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The Capital Securities
will be presented in the consolidated balance sheet of the Company in the "Trust
Preferred Securities" line item in the liabilities section and appropriate
disclosures about the Capital Securities, the Guarantee and the Junior
Subordinated Debentures will be included in the notes to the consolidated
financial statements for financial reporting purposes. The Company will record
Distributions payable on the Capital Securities as interest expense in the
consolidated statements of income.
REGULATORY TREATMENT
The Company is required by the Federal Reserve to maintain certain levels
of capital for bank regulatory purposes. The Company expects that the Capital
Securities will be treated as Tier 1 capital of the Company for such purposes.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its subsidiaries as of June 30, 1997.
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
ACTUAL
-------------
(DOLLARS IN
THOUSANDS)
<S> <C>
Long-term debt:
Direct obligations of Company................................................. $ 54,963
Obligations of Company subsidiaries........................................... 247,517
----------
Total long-term debt....................................................... 302,480
Trust preferred securities(1)................................................... 148,557
Shareholders' equity:
Common stock.................................................................. 452,407
Surplus....................................................................... 78,834
Retained earnings............................................................. 459,510
Treasury stock................................................................ (146,365)
Net unrealized gain/(loss) on available-for-sale securities................... 3,251
----------
Total shareholders' equity................................................. 847,637
----------
Total capitalization.................................................. $ 1,298,674
----------
Capital ratios:
Tier 1 capital to risk-based assets........................................... 8.56%
Total capital to risk-based assets............................................ 12.54
Leverage...................................................................... 7.74
</TABLE>
- ---------------
(1) "Trust preferred securities" reflects the Capital Securities. The Trust is a
wholly owned subsidiary of the Company and holds the Junior Subordinated
Debentures as its sole asset.
20
<PAGE> 22
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Company and
the Trust entered into a Registration Rights Agreement (the "Registration Rights
Agreement") with the Initial Purchasers of the Old Capital Securities (the
"Initial Purchasers"), pursuant to which the Company and the Trust agreed to
file and to use their reasonable efforts to cause to become effective with the
Commission a registration statement with respect to the exchange of the Old
Capital Securities for Capital Securities with terms identical in all material
respects to the terms of the Old Capital Securities. A copy of the Registration
Rights Agreement is an exhibit to the Registration Statement of which this
Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company and the Trust under the Registration Rights Agreement. The form and
terms of the New Capital Securities are the same as the form and terms of the
Old Capital Securities except that the New Capital Securities have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities. Upon
consummation of the Exchange Offer, holders of Old Capital Securities will not
be entitled to any increase in the distribution rate thereon or any further
registration rights under the Registration Rights Agreement, except under
certain limited circumstances. See "Risk Factors -- Consequences of a Failure to
Exchange Old Capital Securities" and "Description of Capital Securities."
As soon as practicable after the Expiration Date, the Company will exchange
the Old Guarantee for the New Guarantee and all of the Old Junior Subordinated
Debentures, of which $154,640,000 aggregate principal amount is outstanding, for
a like aggregate principal of the New Junior Subordinated Debentures. The New
Guarantee and New Junior Subordinated Debentures have been registered under the
Securities Act.
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Old Capital Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction. Holders of Old
Capital Securities do not have any appraisal or dissenters' rights in connection
with the Exchange Offer.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company who
desires to deliver such Old Capital Securities by book-entry transfer at The
Depository Trust Company.
TERMS OF THE EXCHANGE
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $150,000,000 aggregate liquidation amount of New Capital
Securities for a like aggregate liquidation amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Trust will issue,
promptly after the Expiration Date, $1,000 liquidation amount of New Capital
Securities in exchange for each $1,000 liquidation amount of outstanding Old
Capital Securities tendered and accepted in connection with the Exchange Offer.
Holders may tender their old Capital Securities in whole or in part in a
Liquidation Amount of not less than $100,000 or any integral multiple of $1,000
in excess thereof, provided that if any Old Capital Securities are tendered in
part, the untendered Liquidation Amount must be $100,000 or any integral
multiple of $1,000 in excess thereof. The New Capital Securities will be issued
and may be held and transferred only in blocks having a minimum Liquidation
Amount of $100,000. Any transfer, sale or other disposition of New Capital
Securities in a block having a Liquidation Amount of less than $100,000 shall be
deemed to be void and of no legal effect. Each holder of Old Capital Securities
who tenders such Old Capital Securities pursuant to the Exchange Offer will, by
participating in the Exchange Offer and executing the Letter of Transmittal, be
deemed to have agreed and consented to (A) this transfer restriction on the New
Capital Securities, and
21
<PAGE> 23
(B) the placement of a legend to the foregoing effect on each certificate
evidencing the New Capital Securities, which agreement and consent shall be
binding upon such holder and all successors and assigns.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$150,000,000 aggregate liquidation amount of the Old Capital Securities is
outstanding.
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof,
each holder who tenders Old Capital Securities will warrant and agree in the
Letter of Transmittal that it has full power and authority to tender, exchange,
sell, assign and transfer the tendered Old Capital Securities, that the Trust
will acquire good, marketable and unencumbered title to the tendered Old Capital
Securities, free and clear of all liens, restrictions, charges and encumbrances,
and that the Old Capital Securities tendered for exchange are not subject to any
adverse claims or proxies. The holder also will warrant and agree that it will,
upon request, execute and deliver any additional documents deemed by the Trust
or the Exchange Agent to be necessary or desirable to complete the exchange,
sale, assignment, and transfer of the Old Capital Securities tendered pursuant
to the Exchange Offer.
The Trust reserves the right in its sole discretion to (a) purchase or make
offers for any Old Capital Securities that remain outstanding subsequent to the
Expiration Date, or, as set forth under "-- Expiration Date; Extensions;
Amendments," to terminate the Exchange Offer and (b) to the extent permitted by
applicable law, purchase Old Capital Securities in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
may differ from the terms of the Exchange Offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Company and the
Trust (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended).
The Company and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Capital Securities for exchange or
to terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Company and the Trust determine,
in their sole and absolute discretion, that any of the events or conditions
referred to under "-- Conditions to the Exchange Offer" have occurred or exist
or have not been satisfied, (ii) to extend the Expiration Date of the Exchange
Offer and retain all Old Capital Securities tendered pursuant to the Exchange
Offer, subject, however, to the right of holders of Old Capital Securities to
withdraw their tendered Old Capital Securities as described under "-- Withdrawal
Rights," and (iii) to waive any condition or otherwise amend the terms of the
Exchange Offer in any respect deemed by them to be advantageous to the holders
of the Old Capital Securities. If the Exchange Offer is amended in a manner
determined by the Company and the Trust to constitute a material change, or if
the Company and the Trust waive a material condition of the Exchange Offer, the
Trust will promptly disclose such amendment by means of a prospectus supplement
that will be distributed to the registered holders of the Old Capital
Securities, and the Company and the Trust will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
22
<PAGE> 24
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Trust may choose to make any public announcement and
subject to applicable law, the Trust shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
RESALES OF NEW CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Company nor the Trust sought
its own interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance, and subject to the two immediately following
sentences, the Company and the Trust believe that New Capital Securities issued
pursuant to this Exchange Offer in exchange for Old Capital Securities may be
offered for resale, resold and otherwise transferred by a holder thereof (other
than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Capital Securities are acquired in the ordinary course of
such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities who is an "affiliate" of the
Company or the Trust (within the meaning of Rule 405 under the Securities Act)
or who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Trust to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) such holder is not
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities. In addition, the Company
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Company and
the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that receives New Capital Securities for its
own account pursuant to the Exchange Offer must acknowledge that it acquired the
Old Capital Securities for its own account as the result of market-making
activities or other trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Capital Securities. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred
23
<PAGE> 25
to above, the Company and the Trust believe that broker-dealers who acquired Old
Capital Securities for their own accounts, as a result of market-making
activities or other trading activities ("Participating Broker-Dealers"), may
fulfill their prospectus delivery requirements with respect to the New Capital
Securities received upon exchange of such Old Capital Securities (other than Old
Capital Securities which represent an unsold allotment from the original sale of
the Old Capital Securities) with this Prospectus, as it may be amended or
supplemented from time to time. Subject to certain provisions set forth in the
Registration Rights Agreement, the Company and the Trust have agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is declared effective. See "Plan of
Distribution." Any Participating Broker-Dealer who is an "affiliate" of the
Company or the Trust may not rely on such interpretive letters and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction.
Each Participating Broker-Dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company or the
Trust of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of New Capital Securities pursuant to this Prospectus until the
Company or the Trust has amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to such Participating Broker-Dealer or the Company or the Trust has
given notice that the sale of the New Capital Securities may be resumed, as the
case may be.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date.
Subject to the terms and conditions of the Exchange Offer, the Trust will
be deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Trust's acceptance for exchange of
Old Capital Securities) or the Trust extend the Exchange Offer or are unable to
accept for exchange or exchange Old Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Company's or the Trust's rights
set forth herein, the Exchange Agent may, nevertheless, on behalf of the Trust
and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old Capital
Securities and such Old Capital Securities may not be withdrawn except to the
extent tendering holders are entitled to withdrawal rights as described under
"-- Withdrawal Rights."
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof)or (in
the case of book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal, with
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any required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under
"-- Exchange Agent," and one of the following must apply: (i) tendered Old
Capital Securities must be received by the Exchange Agent, or (ii) such Old
Capital Securities must be tendered pursuant to the procedures for book-entry
transfer set forth below and a book-entry confirmation must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (iii) the
guaranteed delivery procedures set forth below must be complied with.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent, and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgement from
the tendering participant, which acknowledgement states that such participant
has received and agrees to be bound by the Letter of Transmittal and that the
Trust and the Company may enforce such Letter of Transmittal against such
participant.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal or so indicated in an Agent's
Message in lieu of a Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated. If less than all of the Old Capital Securities are
tendered, a tendering holder should fill in the amount of Old Capital Securities
being tendered in the appropriate box on the Letter of Transmittal and the
untendered Liquidation Amount must be $100,000 or any integral multiple of
$1,000 in excess thereof.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at The Depository Trust Company ("DTC")
for purposes of the Exchange Offer within two business days after the date of
this Prospectus. Any financial institution that is a participant in DTC's book-
entry transfer facility system may make a book-entry delivery of the Old Capital
Securities by causing DTC to transfer such Old Capital Securities into the
Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Old Capital Securities may be effected
through book-entry transfer into the Exchange Agent's account at DTC, the Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in lieu of the
Letter of Transmittal, and any other required documents, must in any case be
delivered to and received by the Exchange Agent at its address set forth under
"-- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or
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<PAGE> 27
(v) a savings association that is a participant in a Securities Transfer
Association (each, an "Eligible Institution"), unless surrendered on behalf of
such Eligible Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with.
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile or mailed to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provisions hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities or of a
book-entry confirmation with respect to such Old Capital Securities and a Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees or (in the case of a book-entry transfer)
an Agent's Message in lieu of the Letter of Transmittal and any other documents
required by the Letter of Transmittal. Accordingly, the delivery of New Capital
Securities might not be made to all tendering holders at the same time, and will
depend upon when Old Capital Securities, book-entry confirmations with respect
to Old Capital Securities and other required documents are received by the
Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder, the Trust and the Company upon the terms
and subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties. The
Trust reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by it not to be in proper form or the
acceptance of which, or exchange for which may, in the view of counsel to the
Trust, be unlawful. The Trust also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "-- Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The Trust's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Capital Securities will be deemed to have
been validly made until all irregularities with respect to such tender have been
cured or waived. Neither the Trust, any affiliates or assigns of the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact,
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officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and unless waived by the
Trust, proper evidence satisfactory to the Trust, in its sole discretion, of
such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth in the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth above under "-- Procedures for
Tendering Old Capital Securities," the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawal of Old
Capital Securities, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written, telegraphic, telex or facsimile
transmission. Withdrawals of tenders of Old Capital Securities may not be
rescinded. Old Capital Securities properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any
subsequent time on or prior to the Expiration Date by following any of the
procedures described above under "-- Procedures for Tendering Old Capital
Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties.
Neither the Trust, any affiliates or assigns of the Trust, the Exchange Agent
nor any other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Capital Securities which have been tendered
but which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES
Each New Capital Security will pay cumulative Distributions from the most
recent Distribution Date on the Old Capital Securities surrendered in exchange
for such New Capital Securities or, if no Distributions have been paid on such
Old Capital Securities, from June 8, 1997. Holders of the Old Capital Securities
whose Old Capital Securities are accepted for exchange will not receive
accumulated Distributions on such Old Capital Securities for any period from and
after the last Distribution Date on such Old Capital Securities prior to the
original issue date of the New Capital Securities or, if no such Distributions
have been paid, will not receive any accumulated Distributions on such Old
Capital Securities, and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after June 8,
1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old
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Capital Securities have theretofore been accepted for exchange) or may waive any
conditions to or amend the Exchange Offer, if any of the following conditions
have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an "affiliate" of
the Company or the Trust within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holders' business
and such holders have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities;
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Trust's judgment, would reasonably be
expected to impair the ability of the Trust or the Company to proceed with
the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Trust's judgment, would reasonably be expected to
impair the ability of the Trust or the Company to proceed with the Exchange
Offer;
(d) a banking moratorium shall have been declared by United States
federal or New York or Ohio state authorities which, in the Trust's
judgment, would reasonably be expected to impair the ability of the Company
or the Trust to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the
over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Trust's
judgment, would reasonably be expected to impair the ability of the Trust
or the Company to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Company or the Trust, threatened for that purpose or any governmental
approval has not been obtained, which approval the Trust shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby; or
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the sole judgment of the Trust, might materially
impair the ability of the Trust or the Company to proceed with the Exchange
Offer.
If the Company and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Company and the Trust may, subject to applicable
law, terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the Company
and the Trust will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities, and the Company and the Trust will extend the Exchange Offer to the
extent and in the manner required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The First National Bank of Chicago has been appointed as Exchange Agent for
the Exchange Offer. Delivery of the Letters of Transmittal and any other
required documents, questions, requests for assistance,
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and requests for additional copies of this Prospectus or of the Letter of
Transmittal should be directed to the Exchange Agent as follows:
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT
(Registered or Certified Mail (Eligible Institutions Only) DELIVERY:
recommended) (212) 240-8938 The First National Bank of
The First National Bank of Chicago
Chicago BY TELEPHONE: c/o First Chicago Trust
c/o First Chicago Trust (212) 240-8801 Company of New York
Company of New York 14 Wall Street
14 Wall Street 8th Floor, Window 2
8th Floor, Window 2 New York, New York 10005
New York, New York 10005
</TABLE>
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Capital Securities, and in handling or tendering
for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Company nor the Trust will make any payment to brokers, dealers
or others for soliciting acceptances of the Exchange Offer.
THE TRUST
The Trust is a statutory business trust formed under the Delaware Business
Trust Act, as amended (the "Trust Act"), pursuant to a declaration of trust (as
so amended and restated, the "Declaration") and the filing of a certificate of
trust as filed with the Secretary of State of the State of Delaware. The Company
acquired Common Securities in an aggregate liquidation amount equal to at least
3% of the total capital of the Trust. The Trust used all the proceeds derived
from the issuance of the Old Capital Securities and the Common Securities to
purchase the Junior Subordinated Debentures and, accordingly, the assets of the
Trust consist solely of the Junior Subordinated Debentures. The Trust exists for
the exclusive purpose of (i) issuing the Trust Securities representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the Trust Securities in the Junior Subordinated Debentures,
and (iii) engaging in only those other activities necessary or incidental
thereto.
Pursuant to the Declaration, there initially are five trustees (the
"Trustees") for the Trust. Three of the Trustees (the "Regular Trustees") are
individuals who are employees or officers of or who are affiliated with the
Company. The fourth trustee is required to be a financial institution that is
unaffiliated with the Company (the "Property Trustee"). The fifth trustee is
required to be an entity that maintains its principal place of business in the
State of Delaware (the "Delaware Trustee"). Initially, The First National Bank
of Chicago, a national banking association, is acting as Property Trustee, and
its affiliate, First Chicago Delaware Inc., a Delaware corporation, is acting as
Delaware Trustee until, in each case, removed or replaced by the Company
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as holder of the Common Securities. The First National Bank of Chicago is also
acting as trustee under the Guarantee (the "Guarantee Trustee").
The Property Trustee holds title to the Junior Subordinated Debentures for
the benefit of the holders of the Trust Securities, and the Property Trustee
will have the power to exercise all rights, powers and privileges with respect
to the Junior Subordinated Debentures under the Indenture (as defined herein) as
the holder of the Junior Subordinated Debentures. In addition, the Property
Trustee will maintain exclusive control of a non-interest bearing bank account
(the "Property Account"), which will not be segregated from other funds except
to the extent required by law, to hold all payments made in respect of the
Junior Subordinated Debentures for the benefit of the holders of the Trust
Securities. The Guarantee Trustee holds the Guarantee for the benefit of the
holders of the Capital Securities. The Company, as the holder of all the Common
Securities, will have the right to appoint, remove or replace any of the
Trustees and to increase or decrease the number of Trustees, provided that the
number of Trustees shall be at least three; provided further that at least one
Trustee shall be a Delaware Trustee, at least one trustee shall be the Property
Trustee and at least one Trustee shall be a Regular Trustee. Under the
Indenture, the Company, as borrower, is required to pay all fees and expenses
related to the organization and operations of the Trust (including any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any other domestic taxing
authority upon the Trust) and the offering of the Capital Securities and be
responsible for all debts and obligations of the Trust (other than with respect
to the Common Securities and the Capital Securities).
For so long as the Capital Securities remain outstanding, the Company has
covenanted (i) to maintain directly or indirectly 100% ownership of the Common
Securities, (ii) to cause the Trust to remain a statutory business trust and not
to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration, (iii) to use its commercially reasonable efforts
to ensure that the Trust will not be an "investment company" for purposes of the
Investment Company Act of 1940, as amended, and (iv) to take no action that
would be reasonably likely to cause the Trust to be classified as an association
or a publicly traded partnership taxable as a corporation for United States
federal income tax purposes.
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration and the Trust Indenture Act. See "Description of Capital
Securities." The Declaration and the Guarantee also incorporate by reference the
terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o Star
Banc Corporation, 425 Walnut Street, Cincinnati, Ohio 45202, and its telephone
number is (513) 632-4000.
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Regular Trustees on behalf of
the Trust have issued the Old Capital Securities and the Common Securities. The
Old Capital Securities represent, and the New Capital Securities will represent,
undivided beneficial ownership interests in the assets of the Trust and the
holders thereof will be entitled to a preference in certain circumstances with
respect to Distributions and amounts payable on redemption or liquidation over
the Common Securities, as well as other benefits as described in the
Declaration. This summary of certain provisions of the Capital Securities and
the Declaration does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Declaration, including the definitions therein of certain terms, and the Trust
Indenture Act. Wherever particular defined terms of the Declaration (as
supplemented or amended from time to time) are referred to herein, the
definitions of such defined terms are incorporated herein by reference.
GENERAL
The Capital Securities rank pari passu, and payments will be made thereon
pro rata, with the Common Securities except as described under "-- Subordination
of Common Securities." Legal title to the Junior Subordinated Debentures will be
held by the Property Trustee in trust for the benefit of the holders of the
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Capital Securities and the Common Securities. The Guarantee executed by the
Company for the benefit of the holders of the Capital Securities is a guarantee
on a subordinated basis with respect to the Capital Securities but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of the Capital Securities when the Trust does not have sufficient
funds available to make such payments. See "Description of Guarantee." In such
event, the remedy of a holder of Capital Securities is to vote to direct the
Property Trustee to enforce the Property Trustee's rights under the Junior
Subordinated Debentures. See "-- Voting Rights; Amendment of the Declaration"
below. The Company's obligations under the Guarantee, taken together with its
obligations under the Junior Subordinated Debentures and the Indenture,
including its obligation to pay all costs, expenses and liabilities of the Trust
(other than with respect to the Common Securities and the Capital Securities),
constitute a full and unconditional guarantee of all of the Trust's obligations
under the Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
DISTRIBUTIONS
Distributions on each Capital Security will be payable at a variable annual
rate of LIBOR plus 0.765% of the liquidation amount of $1,000, payable quarterly
in arrears on March 15, June 15, September 15 and December 15 of each year.
Distributions will accumulate from June 8, 1997, the date of original issuance,
and commence on September 15, 1997. The amount of Distributions payable for any
period will be computed on the basis of the actual number of days elapsed in a
year of twelve 30-day months.
Distributions on the Capital Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions. The revenue of the Trust available for distribution to holders of
its Capital Securities will be limited to payments under the Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures." If the Company
does not make interest payments on the Junior Subordinated Debentures, the
Property Trustee will not have funds available to pay Distributions on the
Capital Securities.
The Company has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 20 consecutive quarterly periods (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity (as defined below) of the Junior Subordinated Debentures. As a
consequence of any such extension, quarterly Distributions on the Capital
Securities will be deferred by the Trust during any such Extension Period.
Distributions to which holders of the Capital Securities are entitled will
accumulate and compound quarterly at a variable rate per annum of LIBOR plus
0.765% thereof from the relevant payment date for such Distributions. The term
"Distributions" as used herein shall include any such compounded amounts unless
the context otherwise requires. During any such Extension Period, the Company
may not, and may not permit any subsidiary of the Company to, (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
with or junior to the Junior Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu with or junior
in interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants or in connection with a dividend reinvestment or
stockholder stock purchase plan, (b) as a result of an exchange or conversion of
any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company'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 the adoption of 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
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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 Company may further extend
the Extension Period, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period. See "Description of Junior
Subordinated Debentures -- Option to Extend Interest Payment Period" and
"Certain United States Federal Income Tax Consequences -- Interest Income and
Original Issue Discount." The Company has no current intention of exercising its
right to defer payments of interest by extending the interest payment period of
the Junior Subordinated Debentures.
In the event that any date on which Distributions are payable on the
Capital Securities is not a Business Day, then payment of the Distributions
payable on such date will be made on the next succeeding day that is a Business
Day (and without any additional Distributions or other payment in respect of any
such delay), with the same force and effect as if made on the date such payment
was originally payable (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in New York City, Chicago, Illinois or Cincinnati, Ohio are
authorized or required by law or executive order to remain closed or a day on
which the corporate trust office of the Property Trustee or the Indenture
Trustee (as defined herein) is closed for business.
Distributions on the Capital Securities (other than distributions on a
Redemption Date) will be payable to the holders thereof as they appear on the
register of the Trust on the relevant record dates, which shall be the 1st day
of the month in which the relevant Distribution Date occurs. Distributions
payable on any Capital Securities that are not punctually paid on any
Distribution Date will cease to be payable to the person in whose name such
Capital Securities are registered on the relevant record date, and such
defaulted distribution will instead be payable to the person in whose name such
Capital Securities are registered on the special record date or other specified
date determined in accordance with the Declaration.
REDEMPTION
Mandatory Redemption. Unless a Special Event has occurred, the Capital
Securities will not be redeemable prior to June 15, 2007. Upon the repayment or
redemption of the Junior Subordinated Debentures, whether at Stated Maturity or
upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem the
Capital Securities and Common Securities on a pro rata basis, upon not less than
30 nor more than 60 days notice prior to the date fixed for repayment or
redemption. If less than all of the Junior Subordinated Debentures are to be
repaid or redeemed on a Redemption Date, then the proceeds from such repayment
or redemption shall be allocated to the redemption pro rata of the Capital
Securities and the Common Securities.
Special Event Redemption or Distribution of Junior Subordinated
Debentures. If a Special Event shall occur and be continuing, the Company will
have the right, subject to the receipt of any necessary prior approval of the
Federal Reserve, to either (i) redeem within 90 days following the occurrence of
such Special Event the Junior Subordinated Debentures on the date of redemption
(the "Redemption Date") in whole (but not in part) and thereby cause a mandatory
redemption of the Capital Securities in whole (but not in part) at a redemption
price with respect to the Capital Securities equal to 100% of the liquidation
amount thereof plus accrued and unpaid Distributions thereon or (ii) dissolve
the Trust and, after satisfaction of the claims of creditors of the Trust as
provided by applicable law, cause the Junior Subordinated Debentures to be
distributed to the holders of the Capital Securities in liquidation of the
Trust. Under current United States federal income tax law and interpretations
thereof and assuming, as expected, the Trust is treated as a grantor trust, a
distribution of the Junior Subordinated Debentures would not be a taxable event
to holders of the Capital Securities. Should there be a change in law, a change
in legal interpretation, certain Tax Events or other circumstances, however,
such distribution could be a taxable event to holders of the Capital Securities.
See "Certain United States Federal Income Tax Consequences -- Distribution of
Junior Subordinated Debentures to Holders of Capital Securities."
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If the Company does not elect either option described above, the Capital
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures, whether at maturity or redemption, and in the event a
Tax Event has occurred and is continuing, the Company will be obligated to pay
any additional taxes, duties, assessments and other governmental charges (other
than withholding taxes) to which the Trust has become subject as a result of a
Tax Event. See "Description of Junior Subordinated Debentures".
A "Special Event" means a Tax Event, a Regulatory Capital Event or an
Investment Company Event. A "Tax Event" means the receipt by the Company of an
opinion of counsel, rendered by a law firm having a recognized national tax
practice, to the effect that, as a result of any amendment to, change in or
announced proposed change in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is adopted or which proposed change, pronouncement or
decision is announced or which action is taken on or after the date of original
issuance of the Capital Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Junior Subordinated Debentures, (ii) interest payable by the
Company on such Junior Subordinated Debentures is not, or within 90 days of the
date of such opinion, will not be, deductible by the Company, in whole or in
part, for United States federal income tax purposes, or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges. A
"Regulatory Capital Event" means that the Company shall have received an opinion
of independent bank regulatory counsel experienced in such matters to the effect
that, as a result of (a) any amendment to or change (including any announced
prospective change) in the laws (or any regulations thereunder) of the United
States or any rules, guidelines or policies of the Federal Reserve or (b) any
official administrative pronouncement or judicial decision for interpreting or
applying such laws or regulations which amendment or change is effective or such
pronouncement or decision is announced on or after the date of original issuance
of the Capital Securities, the Capital Securities do not constitute, or within
90 days of the date thereof, will not constitute Tier 1 capital (or its then
equivalent); provided, however, that the distribution of the Junior Subordinated
Debentures in connection with the liquidation of the Trust by the Company shall
not in and of itself constitute a Regulatory Capital Event unless such
liquidation shall have occurred in connection with a Tax Event or an Investment
Company Event. "Investment Company Event" means the receipt by the Trust of an
opinion of counsel, rendered by a law firm having a recognized national
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the Capital
Securities.
REDEMPTION PROCEDURES
Capital Securities redeemed on each Redemption Date shall be redeemed at
the redemption price in respect of the Junior Subordinated Debentures (the
"Redemption Price") with the applicable proceeds from the contemporaneous
redemption or payment at Stated Maturity of the Junior Subordinated Debentures.
Redemptions of the Capital Securities shall be made and the Redemption Price
shall be payable on each Redemption Date only to the extent that the Trust has
sufficient funds available for the payment of such Redemption Price. See also
"-- Subordination of Common Securities."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Capital Securities to be
redeemed at its registered address. If the Trust gives a notice of redemption in
respect of the Capital Securities, then, by 12:00 noon, New York City time, on
the Redemption Date, to the extent funds are available, the Property Trustee
will deposit irrevocably with The Depository Trust Company ("DTC") or its
nominee funds sufficient to pay the applicable Redemption Price for all
securities held in DTC and will give DTC irrevocable instructions and authority
to pay the Redemption
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Price to the holders of the Capital Securities. See "-- Book-Entry Issuance." If
any Capital Securities are held in definitive form, the Trust, to the extent
funds are available, will irrevocably deposit with the paying agent for the
Capital Securities held in definitive form funds sufficient to pay the
applicable Redemption Price and will give the paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing the Capital Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Capital Security called for redemption shall be payable
to the holders of such Capital Security on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have been given and
funds deposited as required, then upon the date of such deposit, all rights of
the holders of such Capital Securities so called for redemption will cease,
except the right of the holders of such Capital Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Capital Securities will cease to be outstanding. In the event that any date
fixed for redemption of Capital Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. In the event that payment of the Redemption
Price in respect of Capital Securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by the Company pursuant
to the Guarantee as described under "Description of Guarantee," Distributions on
such Capital Securities will continue to accrue at the then applicable rate,
from the Redemption Date originally established by the Trust for the Capital
Securities to the date such Redemption Price is actually paid, in which case the
actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all quarterly Distribution periods terminating on or
prior to the date of redemption. If less than all of the Capital Securities and
Common Securities issued by the Trust are to be redeemed on a Redemption Date,
then the aggregate amount of such Capital Securities and Common Securities to be
redeemed shall be allocated pro rata among the Capital Securities and the Common
Securities. The particular Capital Securities to be redeemed shall be selected
on a pro rata basis not more than 60 days prior to the Redemption Date by the
Property Trustee from the outstanding Capital Securities not previously called
for redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or integral multiples of $1,000 in excess thereof) of the
liquidation amount of Capital Securities of denominations larger than $1,000.
The Property Trustee shall promptly notify the trust registrar in writing of the
Capital Securities selected for redemption and, in the case of any Capital
Security selected for partial redemption, the liquidation amount thereof to be
redeemed. For all purposes of the Declaration, unless the context otherwise
requires, all provisions relating to the redemption of Capital Securities shall
relate, in the case of any Capital Security redeemed or to be redeemed only in
part, to the portion of the aggregate liquidation amount of Capital Securities
which has been or is to be redeemed.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the liquidation amount of such Capital Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date an Indenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such
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Redemption Price on all of the outstanding Capital Securities then called for
redemption, shall have been made or provided for, and all funds available to the
Property Trustee shall first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Capital Securities then due and
payable.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Declaration, the Trust shall automatically dissolve on the
first to occur of: (i) June 15, 2057, (ii) certain events of bankruptcy,
dissolution or liquidation of the holder of the Common Securities or the Company
or all or substantially all of their properties; (iii) the distribution of the
Junior Subordinated Debentures to the holders of the Capital Securities or
Common Securities; (iv) the redemption of all of the Capital Securities in
connection with the maturity or redemption of all of the Junior Subordinated
Debentures and (v) the entry by a court of competent jurisdiction of a decree of
judicial dissolution of the Company or the Trust.
If a dissolution occurs as described in clause (ii), (iv) or (v) above, the
Trust shall be liquidated by the Trustees as expeditiously as the Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the holders of the
Capital Securities and Common Securities their pro rata interest in the Junior
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practical, in which event such holders will be entitled to
receive out of the assets of the Trust available for distribution to holders,
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the aggregate of the liquidation amount
thereof plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"). If such Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
pro rata basis. The holder(s) of the Common Securities will be entitled to
receive distributions upon any such liquidation pro rata with the holders of the
Capital Securities, except that if an Indenture Event of Default has occurred
and is continuing, the Capital Securities shall have a priority over the Common
Securities.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Capital Securities (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee,
as a record holder of Capital Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution and (iii) any certificates representing
Capital Securities not held by DTC or its nominee will be deemed to represent
Junior Subordinated Debentures having a principal amount equal to the
liquidation amount of such Capital Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on such
Capital Securities until such certificates are presented for cancellation
whereupon the Company will issue to such holder, and the Indenture Trustee will
authenticate, a certificate representing such Junior Subordinated Debentures.
TRUST ENFORCEMENT EVENTS
An Indenture Event of Default constitutes a Trust Enforcement Event under
the Declaration with respect to the Trust Securities, provided that pursuant to
the Declaration, the holder of the Common Securities will be deemed to have
waived any Trust Enforcement Event with respect to the Common Securities until
all Trust Enforcement Events with respect to the Capital Securities have been
cured, waived or otherwise eliminated. Until such Trust Enforcement Event with
respect to the Capital Securities has been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf of
the holders of the Capital Securities and only the holders of the Capital
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration, and therefore the Indenture.
Upon the occurrence of a Trust Enforcement Event, the Indenture Trustee (as
defined herein) or the Property Trustee as the holder of the Junior Subordinated
Debentures will have the right under the Indenture to declare the principal of
and interest on the Junior Subordinated Debentures to be immediately due and
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payable. Each of the Company and the Trust is required to file annually with the
Property Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights with respect to the
Junior Subordinated Debentures held by the Trust, any record holder of Capital
Securities may institute legal proceedings directly against the Company to
enforce the Property Trustee's rights under such Junior Subordinated Debentures
without first instituting any legal proceedings against such Property Trustee or
any other person or entity. In addition, if a Trust Enforcement Event has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest, principal or other required payments on the Junior
Subordinated Debentures issued to the Trust on the date such interest, principal
or other payment is otherwise payable, then a record holder of Capital
Securities may, on or after the respective due dates specified in the Junior
Subordinated Debentures, institute a proceeding directly against the Company for
enforcement of payment on Junior Subordinated Debentures having a principal
amount equal to the aggregate liquidation amount of the Capital Securities held
by such holder. In connection with such Direct Action, the Company will be
subrogated to the rights of such record holder of Capital Securities to the
extent of any payment made by the Company to such record holder of Capital
Securities.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under "Description of Guarantee -- Amendments
and Assignment" and as otherwise required by law and the Declaration, the
holders of the Capital Securities will have no voting rights.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
executing any trust or power conferred on the Property Trustee with respect to
such Junior Subordinated Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or such Junior Subordinated Debentures, where such consent
shall be required, without, in each case, obtaining the prior approval of the
holders of a majority in aggregate liquidation amount of all outstanding Capital
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior consent of each holder of Capital Securities. The Trustees shall not
revoke any action previously authorized or approved by a vote of the holders of
the Capital Securities except pursuant to a subsequent vote of the holders of
the Capital Securities. The Property Trustee shall notify each holder of record
of the Capital Securities of any notice of default which it receives with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of the Capital Securities, prior to taking
any of the foregoing actions, the Trustees shall receive an opinion of counsel
experienced in such matters to the effect that the Trust will not be classified
as other than a grantor trust for United States federal income tax purposes on
account of such action.
The Declaration may be amended from time to time by the Company and a
majority of the Regular Trustees (and in certain circumstances the Property
Trustee and the Delaware Trustee), without the consent of the holders of the
Capital Securities, (i) to cure any ambiguity, correct or supplement any
provisions in the Declaration that may be inconsistent with any other provision,
or to make any other provisions with respect to matters or questions arising
under the Declaration that shall not be inconsistent with the other provisions
of the Declaration, or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified as a grantor trust for United States federal income tax purposes
at all times that any Capital Securities and Common Securities are outstanding
or to ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act, provided, however, that such action
shall not adversely affect in any material respect the interests of any holder
of Capital Securities or Common Securities, and any amendments of the
Declaration shall become effective when notice thereof is given to the holders
of Capital Securities and Common Securities. The Declaration may be amended by
the Company and a majority of the Regular Trustees with (i) the consent of
holders representing not less than a majority (based upon liquidation amounts)
of the outstanding Capital Securities
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and Common Securities and (ii) receipt by the Regular Trustees of an opinion of
counsel to the effect that such amendment or the exercise of any power granted
to the Regular Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status as an "investment company" under the
Investment Company Act, provided, further that without the consent of each
holder of Capital Securities and Common Securities affected thereby, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Capital Securities and Common Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Capital Securities and Common Securities as of a specified date or (ii)
restrict the right of a holder of Capital Securities or Common Securities to
institute suit for the enforcement of any such payment on or after such date.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel its Capital Securities in accordance with the
Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Trustees or any affiliate of the
Company or any Trustees, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Capital Securities) and all
costs and expenses of the Trust (including costs and expenses relating to the
organization of the Trust, the fees and expenses of the Trustees and the costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes and all costs and expenses with respect thereto (other than United States
withholding taxes) to which the Trust might become subject. The foregoing
obligations of the Company under the Indenture are for the benefit of, and shall
be enforceable by, any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether or not such Creditor has
received notice thereof. Any such Creditor may enforce such obligations of the
Company directly against the Company, and the Company has irrevocably waived any
right or remedy to require that any such Creditor take any action against the
Trust or any other person before proceeding against the Company. The Company has
also agreed in the Indenture to execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required (i) to register or cause to be
registered the transfer or exchange of the Capital Securities during a period
beginning at the opening of business 15 days before the day of the mailing of
the relevant notice of redemption and ending at the close of business on the day
of mailing of such notice of redemption or (ii) to register or cause to be
registered the transfer or exchange of any Capital Securities so selected for
redemption, except in the case of any Capital Securities being redeemed in part,
any portion thereof not to be redeemed.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such Trust Enforcement
Event, must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any holder of Capital
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Trust Enforcement Event
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
Declaration or is unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of Capital Securities are entitled
under the Declaration to vote, then the Property Trustee may, but shall be under
no duty to, take such action as is directed by the Company and, if not so
directed, shall take such action as it deems advisable and in the best interests
of the holders of the Capital Securities and the Common Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
PAYMENT AND PAYING AGENCY
Payments in respect of the Global Certificates shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Capital Securities are held in definitive form, such payments shall
be made by check mailed to the address of the holder entitled thereto as such
address shall appear on the register maintained by the Property Trustee. The
paying agent (the "Paying Agent") shall initially be the New York affiliate of
The First National Bank of Chicago and any co-paying agent chosen by the
Property Trustee and acceptable to the Regular Trustees and the Company. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and the Company. In the event that the Property
Trustee shall no longer be the Paying Agent, the Regular Trustees shall appoint
a successor (which shall be a bank or trust company acceptable to the Regular
Trustees and the Company) to act as Paying Agent.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Trust may, at the request of the Company, with the consent
of the Regular Trustees and without the consent of the holders of the Capital
Securities, merge with or into, consolidate, amalgamate, be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State; provided that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Capital Securities or (b) substitutes for the Capital
Securities other securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Capital Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Company expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Junior
Subordinated Debentures, (iii) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Capital Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Capital
Securities (including any Successor Securities) in any material respect, (v)
such successor entity has a purpose identical to that of the Trust, (vi) prior
to such merger, consolidation, amalgamation, replacement, conveyance, transfer,
or lease, the Company has received an opinion from independent counsel to the
Trust experienced in such matters to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Capital Securities (including any Successor Securities) in any material respect
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, (1) neither the Trust nor such successor entity
will be required to register as an investment
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company under the Investment Company Act and (2) the Trust or the successor
entity will continue to be classified as a grantor trust for United States
federal income tax purposes, (vii) the Company or any permitted successor or
assignee owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee, (viii) such
successor entity expressly assumes all of the obligations of the Trust with
respect to the Trustees and (ix) 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 Capital
Securities are then listed. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in aggregate liquidation amount of
the Capital Securities, consolidate, amalgamate, merge with or into, be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
MERGER OR CONSOLIDATION OF TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or
any Regular Trustee that is not a natural person may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Trustee, shall be the successor of such Trustee under the Declaration,
provided such corporation shall be otherwise qualified and eligible.
MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act or classified as other than a grantor trust for United States federal income
tax purposes and so that the Junior Subordinated Debentures will be treated as
indebtedness of the Company for United States federal income tax purposes. In
this connection, the Company and the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or the
Declaration, that the Company and the Regular Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Capital Securities.
The Trust may not borrow money nor issue debt nor mortgage or pledge any of
its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures are to be issued under a Junior Subordinated Indenture
(the "Indenture"), between the Company and The First National Bank of Chicago,
as trustee (the "Indenture Trustee"). This summary of certain terms and
provisions of the Junior Subordinated Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture.
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Old Junior Subordinated Debentures
issued by the Company. Pursuant to the Exchange Offer, the Company will exchange
the Old Junior Subordinated Debentures for the New Junior Subordinated
Debentures as soon as practicable after the Expiration Date. No Old Junior
Subordinated Debentures will remain outstanding after such exchange. The
following is a description of the Junior Subordinated Debentures.
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The Junior Subordinated Debentures will be in the principal amount equal to
the aggregate liquidation amount of the Capital Securities plus the Company's
concurrent investment in the Common Securities. The Junior Subordinated
Debentures will bear interest at a variable annual rate of LIBOR plus 0.765% of
the principal amount thereof, payable quarterly in arrears on the fifteenth day
of March, June, September and December of each year (each, an "Interest Payment
Date"), commencing September 15, 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the 1st day of the month in which the relevant Interest
Payment Date occurs. It is anticipated that, until the liquidation, if any, of
the Trust, each Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Capital
Securities and the Common Securities. The amount of interest payable for any
period will be computed on the actual number of days elapsed in a year of twelve
30-day months. In the event that any date on which interest is payable on the
Junior Subordinated 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 variable rate per annum of LIBOR plus 0.765% thereof,
compounded quarterly. The term "interest" as used herein shall include quarterly
interest payments and interest on quarterly interest payments not paid on the
applicable Interest Payment Date, as applicable.
The Junior Subordinated Debentures will mature on June 15, 2027 (the
"Stated Maturity").
The Junior Subordinated Debentures are unsecured and rank junior and
subordinate in right of payment to all Indebtedness (as defined below) of the
Company. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, whether under the Indenture or any
existing or other indenture that the Company may enter into in the future or
otherwise. See "-- Subordination."
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
INTEREST
The First National Bank of Chicago, as Calculation Agent (the "Calculation
Agent"), will calculate the interest rate for each quarterly interest period
based on LIBOR determined as of two London Business Days (defined as any day,
other than a Saturday or Sunday, on which banks are open for business in London)
prior to the first day of such interest period (each, a "Determination Date").
"LIBOR" means, with respect to a quarterly interest period relating to an
Interest Payment Date (in the following order of priority):
(i) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the related Determination Date;
(ii) if such rate does not appear on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date, LIBOR will be the
arithmetic mean (if necessary rounded upwards to the nearest whole multiple
of .00001%) of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear on Reuters
Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such Determination Date;
(iii) if such rate does not appear on Reuters Page LIBO as of 11:00
a.m. (London time) on the related Determination Date, the Calculation Agent
will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations
(expressed as percentages per annum) to prime banks in the London interbank
market for Eurodollar deposits having a three-month maturity as of 11:00
a.m. (London time) on such Determination Date. If at least two
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quotations are provided, LIBOR will be the arithmetic mean (if necessary
rounded upwards to the nearest whole multiple of .00001%) of such
quotations;
(iv) if fewer than two such quotations are provided as requested in
clause (iii) above, the Calculation Agent will request four major New York
City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in Eurodollars
as of 11:00 a.m. (London time) on such Determination Date. If at lease two
such quotations are provided, LIBOR will be the arithmetic mean (if
necessary rounded upwards to the nearest whole multiple of .00001%) of such
quotations; and
(v) if fewer than two such quotations are provided as requested in
clause (iv) above, LIBOR will be LIBOR as determined on the immediately
preceding Determination Date.
If the rate for Eurodollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 or Reuters Page LIBO, as the case may
be, as of 11:00 a.m. (London time) on the related Determination Date is
superseded on Telerate Page 3750 or Reuters Page LIBO, as the case may be, by a
corrected rate before 12:00 noon (London time) on such Determination Date, the
corrected rate as so substituted on the applicable page will be the applicable
LIBOR for such Determination Date.
Absent manifest error, the Calculation Agent's determination of LIBOR and
its calculation of the applicable dividend rate for each interest period will be
final and binding. Investors may obtain the interest rates for the current and
preceding interest period by writing Investor Relations at the Calculation Agent
at The First National Bank of Chicago, One First National Plaza, Suite 0134,
Chicago, Illinois 60670, or by calling (800) 524-9472 or (312) 407-4660.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
at any time or from time to time for a period not exceeding 20 consecutive
quarterly periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. At the end of such Extension Period, the Company must
pay all interest then accrued and unpaid (together with interest thereon at a
variable annual rate of LIBOR plus 0.765%, compounded quarterly, to the extent
permitted by applicable law). During an Extension Period, interest will continue
to accrue and holders of Junior Subordinated Debentures (or holders of Capital
Securities while the Capital Securities are outstanding) will be required to
accrue interest income for United States federal income tax purposes. See
"Certain United States Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Junior Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu or junior in interest to the
Junior Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants or in
connection with a dividend reinvestment or stockholder stock purchase plan, (b)
as a result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company'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 the adoption of 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
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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 Company may further extend
the Extension Period, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the end
thereof. The Company must give the Property Trustee, the Regular Trustees and
the Indenture Trustee notice of its election of such Extension Period not less
than one Business Day prior to such record date. The Property Trustee shall give
notice of the Company's election to begin a new Extension Period to the holders
of the Capital Securities.
REDEMPTION
The Junior Subordinated Debentures are not redeemable prior to June 15,
2007 unless a Special Event has occurred. The Junior Subordinated Debentures are
redeemable prior to maturity at the option of the Company, subject to the
receipt of any necessary prior approval of the Federal Reserve, on or after June
15, 2007, in whole or in part, at any time at a redemption price equal to 100%
of the principal amount of the Junior Subordinated Debentures to be redeemed
plus any accrued but unpaid interest (including any Additional Interest), if
any, to the date of redemption.
The Junior Subordinated Debentures are also redeemable at any time in whole
(but not in part) at a redemption price (the "Special Event Prepayment Price")
equal to 100% of the principal amount of such Junior Subordinated Debentures
plus accrued but unpaid interest thereon to the date of prepayment.
If the Junior Subordinated Debentures are redeemed, the Trust must redeem
the Capital Securities having an aggregate liquidation amount equal to the
aggregate principal amount of Junior Subordinated Debentures so redeemed. See
"Description of Capital Securities -- Redemption -- Mandatory Redemption."
Notice of any redemption will be mailed at least 30 days (provided that the
Indenture Trustee shall itself have received notice not less than 45 days prior
to the redemption date) but not more than 60 days before the redemption date to
each Holder of Junior Subordinated Debentures to be redeemed at its registered
address. Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest ceases to accrue on such Junior Subordinated
Debentures or portions thereof called for redemption.
CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted in the Indenture that if and so long as the
Trust is the holder of all Junior Subordinated Debentures, the Company, as
borrower, will pay to the Trust all fees and expenses related to the Trust and
the offering of the Capital Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trust (including any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any domestic taxing authority
upon the Trust but excluding obligations under the Capital Securities).
The Company has also covenanted that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Junior Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants or in
connection with a dividend reinvestment or stockholder stock purchase plan, (b)
as a result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital
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stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company'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 the adoption of 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 (x) there shall have occurred any event of which the Company has
actual knowledge that (I) with the giving of notice or the lapse of time, or
both, would constitute an Indenture Event of Default with respect to Junior
Subordinated Debentures and (II) in respect of which the Company shall not have
taken reasonable steps to cure, (y) the Company shall be in default with respect
to its payment of any obligations under the Guarantee or (z) the Company shall
have given notice of its election of an Extension Period as provided in the
Indenture and shall not have rescinded such notice, or such Extension Period, or
any extension thereof, shall be continuing.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinated and junior in
right of payment to all Indebtedness to the extent provided in the Indenture.
Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Indebtedness will first be
entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Indebtedness before the holders of Junior Subordinated
Debentures or the Property Trustee on behalf of the holders of Capital
Securities will be entitled to receive or retain any payment in respect of the
principal of and premium, if any, or interest, if any, on the Junior
Subordinated Debentures; provided, however, that holders of Indebtedness shall
not be entitled to receive payment of any such amounts to the extent that such
holders would be required by the subordination provisions of such Indebtedness
to pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of the Company's business.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Indebtedness outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
then due thereon (including any amounts due upon acceleration) before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the principal of or premium, if any, or interest, if
any, on the Junior Subordinated Debentures; provided, however, that holders of
Indebtedness shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Indebtedness to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Company's
business.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to
Indebtedness, or an event of default with respect to any Indebtedness resulting
in the acceleration of the maturity thereof, or if any judicial proceeding shall
be pending with respect to any such default.
"Indebtedness" means with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent, (i)
every obligation of such person for money borrowed; (ii) every obligation of
such person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; (vi) every
obligation of such
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person for claims (as defined in Section 101(4) of the United States Bankruptcy
Code of 1978, as amended) in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar arrangements;
and (vii) every obligation of the type referred to in clauses (i) through (vi)
of another person and all dividends of another person the payment of which, in
either case, such person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise; provided that "Indebtedness" shall not
include (i) any obligations which, by their terms, are expressly stated to rank
pari passu in right of payment with, or to not be superior in right of payment
to, the Junior Subordinated Debentures, (ii) any Indebtedness of the Company
which when incurred and without respect to any election under Section 1111(b) of
the United States Bankruptcy Code of 1978, as amended, was without recourse to
the Company, (iii) any Indebtedness of the Company to any of its subsidiaries,
(iv) Indebtedness to any employee of the Company or (v) any indebtedness in
respect of debt securities issued to any trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a financing
entity of the Company in connection with the issuance of such financing entity
of securities that are similar to the Capital Securities.
The Indenture places no limitation on the amount of additional Indebtedness
that may be incurred by the Company or any indebtedness or other liabilities
that may be incurred by the Company's subsidiaries. As of June 30, 1997,
Indebtedness of the Company aggregated approximately $152 million, and the
Company's consolidated subsidiaries had indebtedness and other liabilities of
approximately $9.9 billion to which the Junior Subordinated Debentures would be
effectively subordinated.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes an "Indenture Event of Default" with respect to the
Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated
Debentures when due whether at maturity, upon redemption by declaration or
otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Indenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of outstanding Junior Subordinated
Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of Junior Subordinated Debentures may declare the
principal due and payable immediately upon an Indenture Event of Default, and,
should the Indenture Trustee or such holders of such Junior Subordinated
Debentures fail to make such declaration, the holders of at least 25% in
aggregate liquidation amount of the Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the non-payment of the principal of Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee,
and should the holders of such Junior Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
liquidation amount of the Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default, except a default
in the payment of principal or interest (unless such default has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee) or
a default in respect of a covenant or provision
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which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debentures, and should the
holders of such Junior Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate liquidation amount of the Capital Securities
shall have such right. The Company is required to file annually with the
Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Indenture.
In case an Indenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Junior Subordinated Debentures and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If an Indenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable, a holder of Capital Securities may institute a Direct Action
for payment. The Company may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Capital Securities. Notwithstanding any payment made to such
holder of Capital Securities by the Company in connection with a Direct Action,
the Company shall remain obligated to pay the principal of or interest on the
Junior Subordinated Debentures held by the Trust or the Property Trustee and the
Company shall be subrogated to the rights of the holder of such Capital
Securities with respect to payments on the Capital Securities to the extent of
any payments made by the Company to such holder in any Direct Action. The
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless (i) in case the Company
consolidates with or merges into another Person or conveys, transfers or leases
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes the
Company's obligations on the Junior Subordinated Debentures issued under the
Indenture; (ii) immediately after giving effect thereto, no Indenture Event of
Default, and no event which, after notice or lapse of time or both, would become
an Indenture Event of Default, shall have happened and be continuing; (iii) if
at the time any Capital Securities are outstanding, such transaction is
permitted under the Declaration and Guarantee and does not give rise to any
breach or violation of the Declaration or Guarantee, (iv) any such lease shall
provide that it will remain in effect so long as any Junior Subordinated
Debentures are outstanding, and (v) certain other conditions as prescribed in
the Indenture are met.
MODIFICATION OF INDENTURE
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Company and the Indenture Trustee, with the consent of the
holders of not less than a majority in principal amount of outstanding Junior
Subordinated Debentures affected, to modify the Indenture in a manner affecting
the rights of the holders of such Junior Subordinated Debentures; provided that
no such modification may, without the consent of the holder of each outstanding
Junior Subordinated Debentures so affected, (i) change the stated maturity of
Junior Subordinated Debentures, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon (except such
extension as is contemplated hereby) or (ii) reduce the percentage of principal
amount of Junior
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Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture, provided that, so long as any Capital
Securities remain outstanding, no such modification may be made that adversely
affects the holders of such Capital Securities in any material respect, and no
termination of the Indenture may occur, and no waiver of any Indenture Event of
Default or compliance with any covenant under the Indenture may be effective,
without the prior consent of the holders of at least a majority of the aggregate
liquidation amount of the outstanding Capital Securities unless and until the
principal of the Junior Subordinated Debentures and all accrued and unpaid
interest thereon have been paid in full and certain other conditions are
satisfied.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at the Company's option: (a) will
be discharged from any and all obligations in respect of the Junior Subordinated
Debentures (except for certain obligations to register the transfer or exchange
of Junior Subordinated Debentures, replace stolen, lost or mutilated Junior
Subordinated Debentures, maintain paying agencies and hold moneys for payment in
trust) or (b) need not comply with certain restrictive covenants of the
Indenture (including that described in the second paragraph under "Certain
Covenants of the Company"), in each case if the Company deposits, in trust with
the Indenture Trustee or a defeasance agent, money or U.S. Government
Obligations which through the payment of interest thereon and principal thereof
in accordance with their terms will provide money, in an amount sufficient to
pay all the principal of, and interest and premium, if any, on the Junior
Subordinated Debentures on the dates such payments are due in accordance with
the terms of such Junior Subordinated Debentures. To exercise any such option,
the Company is required to deliver to the Indenture Trustee or a defeasance
agent, if any, an opinion of counsel to the effect that the deposit and related
defeasance would not cause the holders of the Junior Subordinated Debentures to
recognize income, gain or loss for United States federal income tax purposes
and, in the case of a discharge pursuant to clause (a), such opinion shall be
accompanied by a private letter ruling to such effect received by the Company
from the United States Internal Revenue Service or revenue ruling pertaining to
a comparable form of transaction to such effect published by the United States
Internal Revenue Service.
DISTRIBUTIONS OF JUNIOR SUBORDINATED DEBENTURES; BOOK-ENTRY ISSUANCE
Under certain circumstances involving the termination of the Trust, Junior
Subordinated Debentures may be distributed to the holders of the Capital
Securities in liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law. If distributed to holders
of Capital Securities in liquidation, the Junior Subordinated Debentures will
initially be issued in the form of global securities. DTC, or any successor
depositary, will act as depositary for such global securities. It is anticipated
that the depositary arrangements for such global securities would be
substantially identical to those in effect for the Capital Securities. For a
description of such procedures, see "Book-Entry Issuance."
There can be no assurance as to the market price of any Junior Subordinated
Debentures that may be distributed to the holders of Capital Securities.
PAYMENT AND PAYING AGENTS
The Company initially will act as Paying Agent with respect to the Junior
Subordinated Debentures except that, if the Junior Subordinated Debentures are
distributed to the holders of the Capital Securities in liquidation of such
holders' interests in the Trust, the Indenture Trustee will act as the Paying
Agent. The Company at any time may designate additional Paying Agents or rescind
the designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent at the place of payment.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of and
premium, if any, or interest on any Junior Subordinated Debentures and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of
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such Junior Subordinated Debentures shall thereafter look, as a general
unsecured creditor, only to the Company for payment thereof.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of the Capital Securities. As soon as practicable
after the Expiration Date, the Old Guarantee will be exchanged by the Company
for the New Guarantee. The First National Bank of Chicago will act as guarantee
trustee ("Guarantee Trustee") under the New Guarantee. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
Guarantee, including the definitions therein of certain terms. The Guarantee
Trustee will hold the New Guarantee for the benefit of the holders of the
Capital Securities.
GENERAL
The Company has irrevocably and unconditionally agreed to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the Capital Securities, to the extent not paid by or on behalf of the
Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has funds on hand available therefor at
the time, (ii) the redemption price with respect to any Capital Securities
called for redemption, to the extent that the Trust has funds on hand available
therefor at such time, or (iii) upon a voluntary or involuntary dissolution,
winding up or liquidation of the Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Capital Securities), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions to the date of payment and (b) the amount of assets of the Trust
remaining available for distribution to holders of Capital Securities. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the applicable
Capital Securities or by causing the Trust to pay such amounts to such holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of the
Trust's obligations under the Capital Securities, but will apply only to the
extent that the Trust has funds on hand available to make such payments, and is
not a guarantee of collection.
If the Company does not make interest payments on the Junior Subordinated
Debentures held by the Trust, the Trust will not be able to pay Distributions on
the Capital Securities and will not have funds legally available therefor. The
Guarantee will rank subordinate and junior in right of payment to all general
liabilities of the Company. See "-- Status of the Guarantee." The Guarantee does
not limit the incurrence or issuance of other secured or unsecured debt of the
Company, whether under the Indenture or any existing or other indenture that the
Company may enter into in the future or otherwise.
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The Company has, through the Guarantee, the Junior Subordinated Debentures
and the Indenture, taken together, fully and unconditionally guaranteed all of
the Trust's obligations under the Capital Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full and unconditional guarantee of
the Trust's obligations under the Capital Securities. See "Relationship Among
the Capital Securities, the Junior Subordinated Debentures and the Guarantee --
General."
STATUS OF THE GUARANTEE
The Guarantee constitutes an unsecured obligation of the Company and ranks
subordinate and junior in right of payment to Indebtedness of the Company. The
Guarantee does not place a limitation on the amount of additional Indebtedness
that may be incurred by the Company.
The Guarantee constitutes a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Capital Securities.
The Guarantee will not be discharged except by payment of the Guarantee Payments
in full to the extent not paid by the Trust or upon distribution of the Junior
Subordinated Debentures to the holders of the Capital Securities in exchange for
all of the Capital Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate liquidation amount of the
outstanding Capital Securities. The manner of obtaining any such approval will
be as set forth under "Description of Capital Securities -- Voting Rights;
Amendment of the Declaration." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate liquidation amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee or
any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in each Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care and
skill as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Guarantee Trustee is under no obligation
to exercise any of the powers vested in it by the Guarantee at the request of
any holder of any Capital Security unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
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TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of all of the Capital Securities, upon full
payment of the amounts payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Capital
Securities in exchange for all of the Capital Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Capital Securities must restore payment of any sums paid
under the Capital Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
DESCRIPTION OF THE OLD SECURITIES
The terms of the Old Securities are identical in all material respect to
the New Securities, except that the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except under
limited circumstances). Holders of Old Capital Securities should review the
information set forth under "Risk Factors -- Certain Consequences of a Failure
to Exchange Old Capital Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of Guarantee." If and to the extent that the
Company does not make payments under the Junior Subordinated Debentures, the
Trust will not pay Distributions or other amounts due on the Capital Securities.
The Guarantee does not cover payment of Distributions when the Trust does not
have sufficient funds to pay such Distributions. A holder of Capital Securities
may institute a legal proceeding directly against the Company to enforce payment
of such Distributions to such holder after the respective due dates. Taken
together, the Company's obligations under the Junior Subordinated Debentures,
the Indenture and the Guarantee provide, in the aggregate, a full and
unconditional guarantee of payments of Distributions and other amounts due on
the Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full and unconditional guarantee of the Trust's
obligations under the Capital Securities. The obligations of the Company under
the Guarantee and the Junior Subordinated Debentures are subordinate and junior
in right of payment to all Indebtedness of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the
Capital Securities and the Common Securities; (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
related Capital Securities; (iii) the Company shall pay for all and any costs,
expenses and liabilities of the Trust except the Trust's obligations under the
Capital Securities; and (iv) the Declaration further provides that the Trust
will not engage in any activity that is not consistent with the limited purposes
of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
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ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of Capital Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Indebtedness of the Company will
not constitute a default or Indenture Event of Default. In addition, in the
event of payment defaults under, or acceleration of, Indebtedness of the
Company, the subordination provisions of the Indenture provide that no payments
may be made in respect of the Junior Subordinated Debentures until such
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on the Junior Subordinated
Debentures would constitute an Indenture Event of Default under the Indenture.
LIMITED PURPOSE OF TRUST
The Capital Securities evidence a beneficial interest in the Trust, and the
Trust exists for the sole purpose of issuing the Capital Securities and the
Common Securities and investing the proceeds thereof in Junior Subordinated
Debentures. A principal difference between the rights of a holder of Capital
Securities and a holder of Junior Subordinated Debentures is that a holder of
Junior Subordinated Debentures is entitled to receive from the Company the
principal amount of and interest accrued on Junior Subordinated Debentures held,
while a holder of Capital Securities is entitled to receive Distributions from
the Trust (or from the Company under the Guarantee) if and to the extent the
Trust has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the Junior Subordinated Debentures, the
holders of the Capital Securities will be entitled to receive, out of assets
held by the Trust, the liquidation distribution in cash. See "Description of
Capital Securities -- Liquidation Distribution Upon Dissolution." Upon any
voluntary or involuntary liquidation or bankruptcy of the Company, the Property
Trustee, as holder of the Junior Subordinated Debentures, would be a
subordinated creditor of the Company, subordinated in right of payment to all
Indebtedness, but entitled to receive payment in full of principal and interest
before any stockholders of the Company receive payments or distributions. Since
the Company is the guarantor under the Guarantee and has agreed to pay for all
costs, expenses and liabilities of the Trust (other than the Trust's obligations
to the holders of the Capital Securities), the positions of a holder of Capital
Securities and a holder of the Junior Subordinated Debentures relative to other
creditors and to stockholders of the Company in the event of liquidation or
bankruptcy of the Company would be substantially the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Simpson Thacher & Bartlett, special United States federal
income tax counsel to the Company and the Trust ("Tax Counsel"), the following
summary accurately describes the material United States federal income tax
consequences that may be relevant to the purchase, ownership and disposition of
the Capital Securities. Unless otherwise stated, this summary deals only with
Capital Securities held as capital assets by United States persons (defined
below) who purchase the Capital Securities upon original issuance. As used
herein, a "United States person" means (i) a person that is a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is subject to United
States federal income taxation regardless of its source, or (iv) a trust if a
court within the United States is able to exercise primary supervision over the
administration of such trust and one or more United States fiduciaries have the
authority to control all the substantial decisions of such trust. The tax
treatment of a holder may vary depending on such holder's particular situation.
This summary does not address all the tax consequences that may be relevant to a
particular holder or to holders who may be subject to special tax treatment,
such as banks, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, or tax-exempt
investors. In addition, this summary does not include any description of any
alternative minimum tax consequences or the tax laws of any state, local or
foreign government that may be applicable to a holder of
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Capital Securities. This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), the Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis. The authorities
on which this summary is based are subject to various interpretations and the
opinions of Tax Counsel are not binding on the Internal Revenue Service ("IRS")
or the courts, either of which could take a contrary position. Moreover, no
rulings have been or will be sought from the IRS with respect to the
transactions described herein. Accordingly, there can be no assurance that the
IRS will not challenge the opinions expressed herein or that a court would not
sustain such a challenge. Nevertheless, Tax Counsel has advised that it is of
the view that, if challenged, the opinions expressed herein would be sustained
by a court with jurisdiction in a properly presented case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE CAPITAL
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE CAPITAL
SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF CAPITAL
SECURITIES -- REDEMPTION -- SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF JUNIOR
SUBORDINATED DEBENTURES."
TAX CONSEQUENCES OF THE EXCHANGE
The Exchange will not be a taxable event for United States federal income
tax purposes. Accordingly, holders who exchange their Old Capital Securities for
New Capital Securities pursuant to the Exchange Offer will not recognize any
gain or loss on such exchange for such purposes, such exchanging holders will
have a tax basis in their New Capital Securities that is equal to the adjusted
tax basis they had in their Old Capital Securities immediately before the
Exchange and the holding period for their New Capital Securities will include
the period during which they held their Old Capital Securities.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Capital Securities, Tax Counsel is
of the opinion that under current law and assuming full compliance with the
terms of the Declaration, the Trust will be classified as a grantor trust for
United States federal income tax purposes and not as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
beneficial owner (a "holder") of Capital Securities generally will be considered
the owner of an undivided interest in the Junior Subordinated Debentures and,
thus, will be required to include in gross income its allocable share of the
income paid or accrued on the Junior Subordinated Debentures.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Company, the Trust and the holders of the Capital Securities (by
acceptance of a beneficial interest in a Capital Security) will agree to treat
the Junior Subordinated Debentures as indebtedness for all United States tax
purposes. In connection with the issuance of the Junior Subordinated Debentures,
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the Junior
Subordinated Debentures will be classified as indebtedness for United States
federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the applicable Treasury regulations, the Junior Subordinated
Debentures will not be treated as issued with original issue discount ("OID")
within the meaning of Section 1273(a) of the Code. Accordingly, except as set
forth below, the stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder of Capital Securities as ordinary income at the time
it is paid or accrued in accordance with such holder's regular method of tax
accounting.
If, however, the Company exercises its right to defer payments of interest
on the Junior Subordinated Debentures, the Junior Subordinated Debentures will
become OID instruments at such time and all holders of
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Capital Securities will be required to accrue their allocable share of the
stated interest (and de minimis OID, if any) on the Junior Subordinated
Debentures on a daily economic accrual basis (using the constant-yield-to-
maturity method of accrual described in Section 1272 of the Code) during the
Extension Period even though the Company will not pay such interest until the
end of the Extension Period, and even though some holders may use the cash
method of tax accounting. Moreover, thereafter the Junior Subordinated
Debentures will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of an Extension Period, all holders would
be required to continue to include their allocable share of the stated interest
(and de minimis OID, if any) on the Junior Subordinated Debentures in income on
a daily economic accrual basis, regardless of their method of tax accounting and
in advance of receipt of the cash attributable to such income. Under the OID
economic accrual rules, a holder would accrue an amount of interest income each
year that approximates the stated amount of Distributions called for under the
terms of the Capital Securities, and actual cash payments in respect of such
Distributions would not be reported separately as taxable income. Any amount of
OID included in a holder's gross income (whether or not during an Extension
Period) with respect to a Capital Security will increase such holder's adjusted
tax basis in such Capital Security, and the amount of Distributions received by
a holder in respect of such accrued OID will reduce the adjusted tax basis of
such Capital Security.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the Internal Revenue Service ("IRS"), and it
is possible that the IRS could take a contrary position. If the IRS were to
assert successfully that the stated interest on the Junior Subordinated
Debentures was OID regardless of whether the Company exercises its option to
defer payments of interest on such debentures, all holders of Capital Securities
would be required to include such stated interest in income on a daily economic
accrual basis as described above.
Corporate holders of Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized by such
holders with respect to the Capital Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
TRUST
As described under the caption "Description of Junior Subordinated
Debentures -- Distribution of Junior Subordinated Debentures," Junior
Subordinated Debentures may be distributed to holders in exchange for the
Capital Securities and in liquidation of the Trust. Under current law, such a
distribution would be non-taxable, and will result in the holder receiving
directly its pro rata share of the Junior Subordinated Debentures previously
held indirectly through the Trust, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such holder had in its
Capital Securities before such distributions. If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Junior Subordinated
Debentures, the distribution of the Junior Subordinated Debentures to holders
would be a taxable event to the Trust and to each holder and a holder would
recognize gain or loss as if the holder had exchanged its Capital Securities for
the Junior Subordinated Debentures it received upon liquidation of the Trust.
A holder would accrue interest in respect of the Junior Subordinated
Debentures received from the Trust in the manner described above under
"-- Interest Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of Capital
Securities -- Special Event Redemption or Distribution of Junior Subordinated
Debentures"), the Junior Subordinated Debentures may be redeemed for cash, with
the proceeds of such redemption distributed to holders in redemption of their
Capital Securities. Under current law, such a redemption would constitute a
taxable disposition of the redeemed Capital Securities for United States federal
income tax purposes, and a holder would recognize gain or loss as if it sold
such redeemed Capital Securities for cash. See "-- Sales of Capital Securities."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities will recognize gain or loss equal to
the difference between the amount realized by the holder on the sale or
redemption of the Capital Securities (except to the extent that such amount
realized is characterized as a payment in respect of accrued but unpaid interest
on such holder's allocable share of the Junior Subordinated Debentures that such
holder has not included in gross income
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previously) and the holder's adjusted tax basis in the Capital Securities sold
or redeemed. Such gain or loss generally will be a capital gain or loss and
generally will be a long-term capital gain or loss if the Capital Securities
have been held for more than one year. The Taxpayer Relief Act of 1997 generally
reduces the tax rates on capital gains recognized by individuals on the sale or
other taxable disposition of capital assets held for more than 18 months.
Holders are advised to consult with their own tax advisors as to the
consequences in their particular circumstances of the capital gain provisions of
the Taxpayer Relief Act of 1997. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any holder that
is not a "United States person". As discussed above, the Capital Securities will
be treated as evidence of an indirect beneficial ownership interest in the
Junior Subordinated Debentures. See "-- Classification of the Trust." Thus,
under present United States federal income tax law, and subject to the
discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any paying agent of
principal or interest (which for purposes of this discussion includes any
OID) with respect to the Capital Securities (or on the Junior Subordinated
Debentures) to a Non-United States Holder, provided (i) that the beneficial
owner of the Capital Securities (or Junior Subordinated Debentures)
("Beneficial Owner") does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of the Company
entitled to vote within the meaning of Section 871(h)(3) of the Code and
the regulations thereunder, (ii) the Beneficial Owner is not a controlled
foreign corporation that is related to the Company through stock ownership,
(iii) the Beneficial Owner is not a bank whose receipt of interest with
respect to the Capital Securities (or on the Junior Subordinated
Debentures) is described in Section 881(c)(3)(A) of the Code and (iv) the
Beneficial Owner satisfies the statement requirement (described generally
below) set forth in Section 871(h) and Section 881(c) of the Code and the
regulations thereunder; and
(b) no withholding of United States federal income tax will be
required with respect to any gain realized by a Non-United States Holder
upon the sale or other disposition of the Capital Securities (or Junior
Subordinated Debentures).
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Capital Securities (or Junior
Subordinated Debentures) on behalf of such owner, must provide, in accordance
with specified procedures, to the Trust or its paying agent, a statement to the
effect that the Beneficial Owner is not a United States Holder. Pursuant to
current temporary Treasury regulations, these requirements will be met if (1)
the Beneficial Owner provides his name and address, and certifies, under
penalties of perjury, that it is not a United States person (which certification
may be made on an IRS Form W-8 (or successor form)) or (2) a financial
institution holding the Capital Securities (or Junior Subordinated Debentures)
on behalf of the Beneficial Owner certifies, under penalties of perjury, that
such statement has been received by it and furnishes a paying agent with a copy
thereof.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium, if
any, and interest (including any OID) made to such Non-United States Holder with
respect to the Capital Securities (or on the Junior Subordinated Debentures)
will be subject to a 30% United States Federal withholding tax unless the
Beneficial Owner provides the Company or its paying agent (a "Paying Agent"), as
the case may be, with a properly executed (1) IRS Form 1001 (or successor form)
claiming an exemption from, or a reduction of, such withholding tax under the
benefit of a United States income tax treaty or (2) IRS Form 4224 (or successor
form) stating that interest paid with respect to the Capital Securities (or on
the Junior Subordinated Debentures) is not subject to withholding tax because it
is effectively connected with the Beneficial Owner's conduct of a trade or
business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest with respect to the Capital Securities (or on the
Junior Subordinated Debentures) is effectively connected with the
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conduct of such trade or business, the Non-United States Holder, although exempt
from the withholding tax discussed above, will be subject to United States
federal income tax on such interest on a net income basis in the same manner as
if it were a United States person. In addition, if such Non-United States Holder
is a foreign corporation, it may be subject to a branch profits tax equal to 30%
of its effectively connected earnings and profits for the taxable year, subject
to adjustments. For this purpose, such interest would be included in such
foreign corporation's earnings and profits.
Any gain realized upon the sale or other taxable disposition of the Capital
Securities (or Junior Subordinated Debentures) generally will not be subject to
United States federal income tax unless (i) such gain is effectively connected
with a trade or business carried on in the United States by a Non-United States
Holder, (ii) in the case of a Non-United States Holder who is an individual,
such individual is present in the United States for 183 days or more in the
taxable year of such sale or disposition and certain other conditions are met,
and (iii) in the case of any gain representing accrued interest with respect to
the Capital Securities (or Junior Subordinated Debentures), the requirements
described above are not satisfied.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the Capital Securities (or Junior Subordinated Debentures) held
of record by United States Holders (other than corporations and other exempt
holders) will be reported annually to such holders and to the IRS. The Regular
Trustees currently intend to deliver such reports to holders of record prior to
January 31 following each calendar year. It is anticipated that persons who hold
Capital Securities (or Junior Subordinated Debentures) as nominees for
beneficial holders will report the required tax information to beneficial
holders on Form 1099.
"Backup withholding" at a rate of 31% will apply to payments of interest to
non-exempt United States persons unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
No information reporting or backup withholding will be required with
respect to payments made by the Trust or any Paying Agent to Non-United States
Holders if a statement described in (a)(iv) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium with respect to the Capital
Securities (or on the Junior Subordinated Debentures) are paid or collected by a
foreign office of a custodian, nominee or other foreign agent on behalf of the
Beneficial Owner, or if a foreign office of a broker (as defined in applicable
Treasury regulations) pays the proceeds of the sale of the Capital Securities
(or Junior Subordinated Debentures) to the owner thereof. If, however, such
nominee, custodian, agent or broker is, for United States federal income tax
purposes, a United States person, a controlled foreign corporation or a foreign
person that derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States, such payments will not be
subject to backup withholding but will be subject to information reporting,
unless (1) such custodian, nominee, agent or broker has documentary evidence in
its records that the Beneficial Owner is not a United States person and certain
other conditions are met or (2) the Beneficial Owner otherwise establishes an
exemption.
Payment of the proceeds from disposition of Capital Securities (or Junior
Subordinated Debentures) to or through a United States office of a broker is
subject to information reporting and backup withholding unless the holder or
beneficial owner establishes an exemption from information reporting and backup
withholding.
Any amounts withheld from a holder of the Capital Securities (or Junior
Subordinated Debentures) under the backup withholding rules will be allowed as a
refund or a credit against such holder's United States federal income tax
liability, provided the required information is furnished to the IRS.
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BOOK-ENTRY ISSUANCE
The New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (the "Global Capital Securities").
The Global Capital Securities will be deposited upon issuance with the Property
Trustee as custodian for The Depository Trust Company ("DTC"), in New York, New
York, and registered in the name of DTC or its nominee, in each case for credit
to an account of a direct or indirect participant in DTC as described below. The
New Capital Securities may be held, transferred and exchanged only in blocks
having a minimum Liquidation Amount of $100,000.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below.
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Capital Securities, DTC will
credit the accounts of Participants with their respective portions of the
principal amount of the Global Capital Securities and (ii) ownership of such
interests in the Global Capital Securities will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC (with
respect to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial interests in the Global
Capital Securities).
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will not
received physical delivery of Capital Securities in certificated form and will
not be considered the registered owners or holders thereof for any purpose.
Payments in respect of the Global Capital Security registered in the name
DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder. The Property Trustee will treat the persons
in whose names the Capital Securities, including the Global Capital Securities,
are registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Property Trustee nor any agent thereof has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Capital Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and the Company that its current practice, upon receipt of any
payment in respect of securities such as the Capital Securities, is to credit
the accounts of the relevant Participants with the payment on the payment date
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Capital Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee or the Trust. Neither the Trust nor the Property
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Capital Securities, and the Trust and
the Property Trustee may conclusively rely on and will be protected in relying
on instructions from DTC or its nominee for all purposes.
55
<PAGE> 57
Interests in the Global Capital Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such interests
will therefore settle in immediately available funds, subject in all cases to
the rules and procedures of DTC and its participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited. However, if there is an Event of Default, DTC
reserves the right to exchange the Global Capital Securities for legended
Capital Securities in certificated form and to distribute such Capital
Securities to its Participants.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Capital Securities among participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Trust nor the
Property Trustee will have any responsibility for the performance by DTC, or its
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
A Global Capital Security is exchangeable for Capital Securities in
registered certificated for if (1) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depository for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the Trust
in its sole discretion elects to cause the issuance of the Capital Securities in
certificated form or (iii) there shall have occurred and be continuing an Event
of Default or any event which after notice or lapse of time or both would be an
Event of Default under the Declaration. In all cases, certificated Capital
Securities delivered in exchange for any Global Capital Security or beneficial
interests therein will be registered in the names, and issued in any approved
dominations, requested by or on behalf of the Depositary (in accordance with its
customary procedures).
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Code ("Plans"), may purchase Capital Securities, subject to the investing
fiduciary's determination that the investment in Capital Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.
The Department of Labor ("DOL") has issued a regulation (29 C.F.R. Section
2510.3-101) (the "DOL Regulation") concerning the definition of what constitutes
the assets of a Plan. The DOL Regulation provides that as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a plan makes an "equity" investment will be
deemed for purposes of ERISA to be assets of the investing plan unless certain
exceptions apply.
There can be no assurance that any of the exceptions set forth in the DOL
Regulation will apply to the purchase of Capital Securities offered hereby and,
as a result, an investing Plan's assets could be considered to include an
undivided interest in the Junior Subordinated Debentures held by the Trust. In
the event that the assets of the Trust are considered assets of an investing
Plan, the Company, the Trustees and other persons, in providing services with
respect to the Junior Subordinated Debentures, may be considered fiduciaries to
such Plan and subject to the fiduciary responsibility provisions of Title I of
ERISA (including the prohibited transaction provisions thereof). In addition,
the prohibited transaction provisions of Section 4975 of the Code could apply
with respect to transactions engaged in by any "disqualified person," as defined
below, involving such assets unless a statutory or administrative exemption
applies.
Even if they are not fiduciaries, the Company and/or any of its affiliates
may be considered a "party in interest" (within the meaning of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to certain Plans. The acquisition and ownership of Capital Securities by
a Plan (including an individual retirement arrangement or other plan described
in Section 4975(e)(1) of the Code)
56
<PAGE> 58
may constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code, unless such Capital Securities are acquired pursuant to and in
accordance with an applicable exemption. As a result, Plans with respect to
which the Company or any of its affiliates is a party in interest or a
disqualified person should not acquire Capital Securities unless such Capital
Securities are acquired pursuant to and in accordance with an applicable
prohibited transaction exemption.
Notwithstanding the foregoing, it is possible that the New Capital
Securities may qualify as "publicly offered securities" under the DOL Regulation
if, in addition to the Exchange Offer, they are also "widely held" and "freely
transferable" at the time of the Exchange Offer. Under the DOL Regulation, a
class of securities is "widely held" only if it is a class of securities owned
by 100 or more investors independent of the issuer and each other. Although it
is possible that at the time of the Exchange Offer the New Capital Securities
will be "widely held", no assurances can be given that that will be true. If the
New Capital Securities are "publicly offered securities" at the time of the
Exchange Offer, the assets of the Trust would not be assets of any Plan
purchasing such securities as of such time. If the New Capital Securities did
not qualify as "publicly offered securities", the foregoing discussion about
plan assets would also apply to the New Capital Securities.
Any Plans or other entities whose assets include Plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire Capital Securities or New
Capital Securities should consult with their own counsel.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is declared effective. See "The
Exchange Offer -- Resales of New Capital Securities." The Company will not
receive any cash proceeds from the issuance of the New Capital Securities
offered hereby. New Capital Securities received by broker-dealers for their own
accounts in connection with the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Capital Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Capital Securities. Any broker-dealer that resells New Capital Securities that
were received by it for its own account in connection with the Exchange Offer
and any broker or dealer that participates in a distribution of such New Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Capital Securities and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the New Capital
Securities will be passed upon for the Company and the Trust by Richards, Layton
& Finger, special Delaware counsel to the Company and the Trust. The validity of
the New Junior Subordinated Debentures and the New Guarantee will be passed upon
for the Company and the Trust by Jennie P. Carlson, Senior Vice President,
General Counsel and Secretary for the Company, and by Simpson Thacher & Bartlett
(a partnership which includes professional
57
<PAGE> 59
corporations). Certain United States federal income taxation matters also will
be passed upon for the Company and the Trust by Simpson Thacher & Bartlett.
INDEPENDENT AUDITORS
The consolidated financial statements of the Company and its affiliates as
of December 31, 1996 and for the year then ended incorporated by reference in
this Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report appearing therein.
58
<PAGE> 60
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 6
Incorporation of Certain Documents by
Reference........................... 6
Prospectus Summary.................... 7
Risk Factors.......................... 15
Use of Proceeds....................... 19
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................... 19
Accounting Treatment.................. 20
Regulatory Treatment.................. 20
Capitalization........................ 20
The Exchange Offer.................... 21
The Trust............................. 29
Description of Capital Securities..... 30
Description of Junior Subordinated
Debentures.......................... 39
Description of Guarantee.............. 47
Description of the Old Securities..... 49
Relationship Among the Capital
Securities, the Junior Subordinated
Debentures and the Guarantee........ 49
Certain United States Federal Income
Tax Consequences.................... 50
Book-Entry Issuance................... 55
ERISA Considerations.................. 56
Plan of Distribution.................. 57
Legal Matters......................... 57
Independent Auditors.................. 58
</TABLE>
======================================================
======================================================
STAR CAPITAL I
OFFER TO EXCHANGE ITS FLOATING RATE
CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
FOR ITS OUTSTANDING
FLOATING RATE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER
CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
TO THE EXTENT DESCRIBED HEREIN, BY
STAR BANC CORPORATION
------------------------
PROSPECTUS
------------------------
, 1997
======================================================
<PAGE> 61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Ohio Revised Code, Section 1701.13(E), allows indemnification by the
Company to any person made or threatened to be made a party to any proceedings,
other than a proceeding by or in the right of the Company, by reason of the fact
that he is or was a director, officer, employee or agent of the Company, against
expenses, including judgment and fines, if he acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to criminal actions, in which he had no reasonable
cause to believe that his conduct was unlawful. Similar provisions apply to
actions brought by or in the right of the Company, except that no
indemnification shall be made in such cases when the person shall have been
adjudged to be liable for negligence or misconduct to the Company unless deemed
otherwise by the court. Indemnification is to be made by a majority vote of a
quorum of disinterested directors or the written opinion of independent counsel
or by the shareholders or by the court. The Company's Code of Regulations
extends such indemnification.
Under the Declaration, the Debenture Issuer agreed to indemnify each
Company Indemnified Person (as defined therein) who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Debenture Issuer Indemnified Person against expenses
(including attorney fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
<TABLE>
<C> <S>
ITEM 21. EXHIBITS
4.1* Junior Subordinated Indenture, dated as of June 8, 1997, between the Company and The
First National Bank of Chicago, as Indenture Trustee
4.2* Restated Certificate of Trust of Star Capital I
4.3* Amended and Restated Declaration of Trust of Star Capital I, dated as of June 8, 1997
4.4* Form of Capital Security Certificate for Star Capital I (included in Exhibit 4.3)
4.5* Form of Junior Subordinated Debenture of the Company (included in Exhibit 4.1)
4.6* Guarantee Agreement, dated as of June 8, 1997, between the Company and The First
National Bank of Chicago, as Guarantee Trustee
4.7* Registration Rights Agreement, dated as of June 8, 1997, among Star Capital I, the
Company, Credit Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated and
Salomon Brothers Inc
4.8* Form of Guarantee Agreement to be entered into by the Company and The First National
Bank of Chicago, as Guarantee Trustee, relating to the New Guarantee
4.9* Calculation Agency Agreement between Star Banc Corporation and The First National Bank
of Chicago, dated as of June 8, 1997
5.1* Opinion of Jennie P. Carlson, Senior Vice President, General Counsel and Secretary for
the Company relating to the legality of the Junior Subordinated Debentures and the
Guarantee to be issued by the Company
5.2* Opinion of Simpson Thacher & Bartlett, special counsel, relating to the legality of
the Junior Subordinated Debentures and the Guarantee to be issued by the Company
5.3* Opinion of Richards, Layton & Finger, special Delaware counsel, relating to the
legality of the Capital Securities to be issued by Star Capital I
8.1* Opinion of Simpson Thacher & Bartlett, special tax counsel, as to certain United
States federal income tax matters
</TABLE>
II-1
<PAGE> 62
<TABLE>
<C> <S>
12.1* Statement re: Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Dividends
23.1 Consent of Arthur Andersen LLP
23.2* Consent of Jennie P. Carlson (included in Exhibit 5.1 hereto)
23.3* Consent of Richards, Layton & Finger, special Delaware counsel (included in Exhibit
5.3 hereto)
23.4* Consent of Simpson Thacher & Bartlett (included in Exhibits 5.2 and 8.1 hereto)
24.1* Powers of Attorney (included on the signature page of this Registration Statement)
25.1* Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of
The First National Bank of Chicago, as Trustee for the Junior Subordinated Indenture
25.2* Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of
The First National Bank of Chicago, as Guarantee Trustee for the Guarantee for Star
Capital I
25.3* Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of
The First National Bank of Chicago, as Property Trustee for the Amended and Restated
Declaration of Star Capital I
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Exchange Agent Agreement
</TABLE>
- ---------------------
* Previously filed.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants, hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
Registrant pursuant to the provisions, or otherwise, each Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by each Registrant of expenses incurred
or paid by a director, officer of controlling person of each Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, each Registrant will, unless in the opinion of its counsel the
matter has been settled by the controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE> 63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Star Banc
Corporation has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Cincinnati, Ohio on
October 3, 1997.
Star Banc Corporation
By: /s/ DAVID M. MOFFETT
--------------------------------------
Name: David M. Moffett
Title: Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons as of the
3rd day of October, 1997 in the capacities indicated:
<TABLE>
<S> <C>
* *
- ------------------------------------------ ------------------------------------------
Jerry A. Grundhofer J.P. Hayden, Jr.
Chairman of the Board, President, Chief Director
Executive Officer and Director
* *
- ------------------------------------------ ------------------------------------------
David M. Moffett Roger L. Howe
Executive Vice President and Chief Director
Financial Officer
* *
- ------------------------------------------ ------------------------------------------
James D. Hogan Thomas J. Klinedinst, Jr.
Controller Director
* *
- ------------------------------------------ ------------------------------------------
James R. Bridgeland, Jr. Charles S. Mechem, Jr.
Director Director
* *
- ------------------------------------------ ------------------------------------------
Laurence L. Browning, Jr. Daniel J. Meyer
Director Director
*
- ------------------------------------------ ------------------------------------------
Victoria B. Buyniski David B. O'Maley
Director Director
* *
- ------------------------------------------ ------------------------------------------
Samuel M. Cassidy O'dell M. Owens
Director Director
*
- ------------------------------------------ ------------------------------------------
V. Anderson Coombe Thomas E. Petry
Director Director
* *
- ------------------------------------------ ------------------------------------------
John C. Dannemiller Oliver W. Waddell
Director Director
By: /s/ JENNIE P. CARLSON
- ------------------------------------------
Jennie P. Carlson
Attorney-in-Fact
</TABLE>
II-3
<PAGE> 64
Pursuant to the requirements of the Securities Act of 1933, Star Capital I
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Cincinnati, Ohio on October 3, 1997.
Star Capital I
By: /s/ JAMES D. HOGAN
------------------------------------
Title: Regular Trustee
By: /s/ BRUCE BARNES
------------------------------------
Title: Regular Trustee
By: /s/ JENNIE CARLSON
------------------------------------
Title: Regular Trustee
II-4
<PAGE> 65
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C> <C>
4.1 * Junior Subordinated Indenture, dated as of June 8, 1997, between the Company
and The First National Bank of Chicago, as Indenture Trustee
4.2 * Restated Certificate of Trust of Star Capital I
4.3 * Amended and Restated Declaration of Trust of Star Capital I, dated as of June
8, 1997
4.4 * Form of Capital Security Certificate for Star Capital I (included in Exhibit
4.3)
4.5 * Form of Junior Subordinated Debenture of the Company (included in Exhibit 4.1)
4.6 * Guarantee Agreement, dated as of June 8, 1997, between the Company and The
First National Bank of Chicago, as Guarantee Trustee
4.7 * Registration Rights Agreement, dated as of June 8, 1997, among Star Capital I,
the Company, Credit Suisse First Boston Corporation, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc
4.8 * Form of Guarantee Agreement to be entered into by the Company and The First
National Bank of Chicago, as Guarantee Trustee, relating to the New Guarantee
4.9 * Calculation Agency Agreement between Star Banc Corporation and The First
National Bank of Chicago, dated as of June 8, 1997
5.1 * Opinion of Jennie P. Carlson, Senior Vice President, General Counsel and
Secretary for the Company relating to the legality of the Junior Subordinated
Debentures and the Guarantee to be issued by the Company
5.2 * Opinion of Simpson Thacher & Bartlett, special counsel, relating to the
legality of the Junior Subordinated Debentures and the Guarantee to be issued
by the Company
5.3 * Opinion of Richards, Layton & Finger, special Delaware counsel, relating to the
legality of the Capital Securities to be issued by Star Capital I
8.1 * Opinion of Simpson Thacher & Bartlett, special tax counsel, as to certain
United States federal income tax matters
12.1 * Statement re: Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Dividends
23.1 Consent of Arthur Andersen LLP
23.2 * Consent of Jennie P. Carlson (included in Exhibit 5.1 hereto)
23.3 * Consent of Richards, Layton & Finger, special Delaware counsel (included in
Exhibit 5.3 hereto)
23.4 * Consent of Simpson Thacher & Bartlett (included in Exhibits 5.2 and 8.1 hereto)
24.1 * Powers of Attorney (included on the signature page of this Registration
Statement)
25.1 * Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 of The First National Bank of Chicago, as Trustee for the Junior
Subordinated Indenture
25.2 * Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 of The First National Bank of Chicago, as Guarantee Trustee for the
Guarantee for Star Capital I
25.3 * Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 of The First National Bank of Chicago, as Property Trustee for the Amended
and Restated Declaration of Star Capital I
99.1 * Form of Letter of Transmittal
99.2 * Form of Notice of Guaranteed Delivery
99.3 * Form of Exchange Agent Agreement
</TABLE>
- ---------------------
* Previously filed.
<PAGE> 1
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
January 13, 1997 incorporated by reference in Star Banc Corporation's Form 10-K
for the year ended December 31, 1996 and Form 8-K filed March 12, 1997,
respectively, and to all references to our Firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
ATHUR ANDERSEN LLP
Cincinnati, Ohio
October 3, 1997
