<PAGE> 1
Filed to Pursuant to Rule 424 (b)(2)
PROSPECTUS SUPPLEMENT Registration No. 33-49813
(TO PROSPECTUS DATED JULY 19, 1994) Registration No. 33-42226
$200,000,000
FIRST OF AMERICA BANK CORPORATION
7 3/4% SUBORDINATED NOTES DUE JULY 15, 2004
------------------------------
Interest on the 7 3/4% Subordinated Notes Due July 15, 2004 (the "Notes") is
payable by First of America Bank Corporation (the "Company") semi-annually on
January 15 and July 15 of each year, beginning January 15, 1995. The Notes are
not subject to redemption prior to maturity. The Notes will initially be
represented by a global security (a "Global Security") registered in the name of
the nominee of The Depository Trust Company, New York, New York (the
"Depositary"). Beneficial interests in the Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary
(with respect to its participants' interests) and its participants. See
"Description of the Notes," herein.
The Notes will be unsecured and subordinated in right of payment to the
prior payment in full of all present and future Senior Indebtedness of the
Company. See "Description of the Debt Securities -- Subordinated Securities" in
the accompanying Prospectus. Payment of principal of the Notes may be
accelerated only in the case of certain events of bankruptcy, insolvency or
reorganization of the Company. There will be no right of acceleration in the
case of a default in the payment of interest on the Notes or in the performance
of any covenant of the Company. The Notes will trade in the Depositary's
Same-Day Funds Settlement System until maturity, and secondary market trading
activity for the Notes will therefore settle in immediately available funds. See
"Description of the Notes" herein and "Description of the Debt Securities" in
the accompanying Prospectus.
------------------------------
THE NOTES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS, OR OTHER
OBLIGATIONS OF ANY INSURED DEPOSITARY INSTITUTION OR OTHER SUBSIDIARY
OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.................................... 99.347% .650% 98.697%
- -----------------------------------------------------------------------------------------------------------
Total....................................... $198,694,000 $1,300,000 $197,394,000
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest from July 15, 1994.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $175,000.
------------------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Notes will be made on or about July 26, 1994, only in book-entry
form through the facilities of the Depositary in New York, New York, against
payment therefor in same-day funds.
------------------------------
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
CHEMICAL SECURITIES INC.
KEEFE, BRUYETTE & WOODS, INC.
JULY 19, 1994
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
DESCRIPTION OF THE NOTES
GENERAL
The following is a brief description of the terms of the Notes. This
description does not purport to be complete, should be read in conjunction with
the statements under "Description of the Debt Securities" in the accompanying
Prospectus and is subject to and qualified in its entirety by such description
and the Subordinated Indenture dated as of November 1, 1991 as supplemented by
the First Supplemental Indenture dated as of July 1, 1994 (collectively, the
"Subordinated Indenture"), between the Company and Continental Bank, as Trustee
(the "Trustee"). The Indenture is an exhibit to the Registration Statement of
which the accompanying Prospectus and this Prospectus Supplement form a part.
The Notes offered hereby will mature on July 15, 2004, and are limited to
$200,000,000 aggregate principal amount. The Notes will bear interest at the
rate of 7 3/4% per annum, commencing on July 15, 1994. Interest will be payable
semi-annually on January 15 and July 15 of each year, commencing January 15,
1995, to the person in whose name the Note is registered at the close of
business on the December 31 or June 30, as the case may be, next proceeding such
interest payment date and at maturity to the persons to whom principal is
payable.
The Notes are not subject to redemption prior to maturity. No sinking fund
is provided for the Notes. The Notes will be issuable in fully registered form
without coupons, in denominations of $1,000 and any integral multiple thereof.
Upon issuance, the Notes will be represented by a Global Security registered in
the name of the nominee of the Depositary, as described below.
The Notes will be unsecured and subordinated in right of payment to the
prior payment in full of all present and future Senior Indebtedness of the
Company as described under the caption "Description of the Debt Securities --
Subordinated Securities" in the accompanying Prospectus. As of June 30, 1994,
the Company had $197.0 million principal amount of Senior Indebtedness
outstanding.
Payment of principal of the Notes may be accelerated only in the case of
certain events of bankruptcy, insolvency or reorganization of the Company. There
will be no right of acceleration of the payment of principal of the Notes upon a
default in the payment of interest on the Notes or in the performance of any
covenant of the Company.
BOOK-ENTRY NOTES
Upon issuance, all of the Notes will be represented by a single Global
Security issued in registered form. Such Global Security representing the Notes
will be deposited with, or on behalf of, the Depositary and registered in the
name of a nominee of the Depositary. The Depositary has advised the Company and
the Underwriters that the Depositary is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Depositary was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
in such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
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<PAGE> 3
dealers (including the Underwriters), banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Ownership of the Notes will be limited to institutions that have accounts
with such Depositary or its nominee ("participants") or persons that may hold
interests through such participants. Ownership of the Notes by participants will
only be evidenced by, and the transfer of that ownership interest will be
effected only through, records maintained by the Depositary or its nominee, as
the case may be. Ownership of the Notes by persons that hold through
participants will only be evidenced by, and the transfer of that ownership
interest with such participant will be effected only through, records maintained
by such participant. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such laws may impair the ability to transfer the Notes.
The Company has been advised by the Depositary that upon the issuance of a
permanent Global Security and the deposit of such permanent Global Security with
the Depositary, the Depositary will immediately credit, on its book-entry
registration and transfer system, the respective principal amounts of the Notes
represented by such permanent Global Security to the accounts of participants.
The accounts to be credited shall be designated by the Underwriters.
Payments of principal of and interest on the Notes represented by any
permanent Global Security registered in the name of or held by the Depositary or
its nominee will be made to the Depositary or its nominee, as the case may be,
as the registered owner and the holder of the permanent Global Security
representing such Notes. Such payments to the Depositary or its nominee, as the
case may be, will be made by the Trustee by wire transfer of immediately
available funds to a separate account of the Depositary or its nominee at the
Federal Reserve Bank of New York; provided that, in the case of payments made at
maturity of such Global Security, the Global Security is presented to the
Trustee in time for the Trustee to make such payments in accordance with its
normal procedures. Neither the Company nor the Trustee nor any agent of the
Company or the Trustee will have any responsibility or liability for any aspect
of the Depositary's records or any participant's records relating to, or
payments made on account of, the Notes or for maintaining, supervising or
reviewing any of the Depositary's records or any participant's records relating
to such Notes.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or interest on a permanent Global Security, the
Depositary will immediately credit, on its book-entry registration and transfer
system, accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such permanent Global
Security as shown on the records of the Depositary. Payments by participants to
owners of the Notes held through such participants will be governed by standing
instructions and customary practices as is now the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants.
No permanent Global Security described above may be transferred except as a
whole by the Depositary for such permanent Global Security to a nominee of the
Depositary or to a successor depositary or by a nominee of the Depositary to the
Depositary, another nominee of the Depositary or to a successor depositary.
Notes represented by a permanent Global Security are exchangeable for
certificated Notes in registered form, of like tenor and of an equal aggregate
principal amount, only if (a) the Depositary notifies the Company that it is
unwilling or unable to continue as the Depositary for such permanent Global
Security or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, (b) the Company in its
sole discretion determines that such Notes shall be exchangeable for definitive
Notes in registered form, or (c) an Event of Default has occurred and is
continuing with respect to the Securities. Any permanent Global Security
representing the Notes that is exchangeable pursuant to the preceding sentence
shall be exchangeable in whole for certificated Notes in registered form, of
like tenor and of an equal aggregate principal amount, in denominations of
$1,000 and integral multiples thereof. Such Notes shall be registered in the
name or names of such person or persons as the Depositary shall instruct the
Security Registrar. It is expected that such instructions will be based upon
directions received by the Depositary from its participants with respect to
ownership of the Notes.
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<PAGE> 4
Except as provided above, owners of the Notes will not be entitled to
receive physical delivery of the Notes in definitive form and will not be
considered the holders thereof for any purpose under the Subordinated Indenture,
and no permanent Global Security representing the Notes shall be exchangeable,
except for another permanent Global Security of like denomination and tenor to
be registered in the name of the Depositary or its nominee. Accordingly, each
person owning a Note must rely on the procedures of the Depositary and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a holder under the
Subordinated Indenture. The Subordinated Indenture provides that the Depositary,
as a holder, may appoint agents and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver, or
other action which a holder is entitled to give or take under the Subordinated
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of holders or an owner of a Note
desires to give or take any action that a holder is entitled to give or take
under the Subordinated Indenture, the Depositary would authorize the
participants owning the relevant Notes to give or take such action and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, unless otherwise exchanged for certificated Notes as described above,
and therefore the Depositary will require secondary trading activity in the
Notes to be settled in immediately available funds. Secondary trading in
long-term notes and debentures of corporate issuers is generally settled in
clearing-house or next-day funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on secondary trading activity
in the Notes.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Notes for
general corporate purposes, which include the reduction of indebtedness
currently outstanding under two $150 million Competitive Advance and Revolving
Credit Facility Agreements (one with a 364-day maturity and one with a
three-year maturity) with variable interest rates (LIBOR plus 36 basis points
and LIBOR plus 32 basis points, respectively, as of June 30, 1994). The
Competitive Advance and Revolving Credit Facility Agreements were used to fund
recent acquisitions, the repurchase of common shares and general corporate
purposes. The precise amounts and timing of the application of the proceeds will
depend upon funding requirements of the Company and its affiliates and the
availability of other funds and other opportunities.
THE COMPANY
The Company is a Michigan corporation and a multi-bank holding company
headquartered in Kalamazoo, Michigan. It owns 20 affiliate financial
institutions which operate general commercial banking businesses from 611
offices located in Michigan, Indiana, Illinois, and Florida. The Company also
has divisions and non-banking subsidiaries which provide mortgage, trust, data
processing, pension consulting, revolving credit, securities brokerage, and
investment advisory services. At June 30, 1994, the Company had assets of $23.1
billion, deposits of $19.1 billion, and shareholders' equity of $1.5 billion.
RECENT DEVELOPMENTS
On April 15, 1994, the Company entered into a definitive agreement to
acquire First Park Ridge Corporation ("First Park Ridge"), a bank holding
company based in Park Ridge, Illinois with $323 million in assets. It is
anticipated that First Park Ridge's 65,139 common shares will be exchanged
tax-free for shares of the common stock of the Company. The exchange ratio will
equal $1,228.14 divided by the average closing price of the Company's common
stock during the last twenty trading days ending on the tenth day before the
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<PAGE> 5
consummation of the transaction. The transaction has an indicated value of
approximately $80 million. The Company intends to account for the acquisition as
a purchase. The acquisition, subject to approval by First Park Ridge
shareholders and regulatory authorities, is currently expected to be consummated
by October 1, 1994, and will include the merger of First Park Ridge's subsidiary
banks into First of America Bank-Northeast Illinois, N.A.
On June 14, 1994, the Company entered into a definitive agreement to
acquire F&C Bancshares, Inc. ("F&C"), a savings and loan holding company based
in Port Charlotte, Florida with $406 million in assets. It is anticipated that
F&C's 3,242,209 shares will be exchanged tax-free for shares of the common stock
of the Company. The exchange ratio will equal $23.25 divided by the average
closing price of the Company's common stock during the last 15 trading days
immediately before, but not including, the third business day before the
consummation of the transaction; however, the exchange ratio will not be greater
than .6436 and will not be less than .5519. On the basis of the current market
price of the Company's common stock, the transaction has an indicated value of
approximately $72 million. The Company intends to account for the acquisition as
a pooling of interests. The acquisition, subject to approval by F&C shareholders
and regulatory authorities, is currently expected to be consummated by year end
1994, and will include the merger of F&C's subsidiary, First Federal Savings
Bank of Charlotte County, into First of America Bank-Florida, F.S.B.
On June 28, 1994, the Company entered into a definitive agreement to
acquire Presidential Holding Company ("Presidential"), a savings and loan
holding company based in Sarasota, Florida with $224 million in assets. It is
anticipated that Presidential's 716,188 common shares will be exchanged tax-free
for shares of the common stock of the Company. The exchange ratio will equal
$33.25 divided by the average closing price of the Company's common stock during
the last 15 trading days immediately before, but not including, the third
business day before the consummation of the transaction; however, the exchange
ratio will not be greater than .9837 and will not be less than .8375. On the
basis of the current market price of the Company's common stock, the transaction
has an indicated value of approximately $24 million. The Company intends to
account for the acquisition as a pooling of interests. The acquisition, subject
to approval by regulatory authorities, is currently expected to be consummated
late in the fourth quarter of 1994 or early in the first quarter of 1995, and
will include the merger of Presidential's subsidiary, Presidential Bank, F.S.B.,
into First of America Bank-Florida, F.S.B.
RECENT FINANCIAL RESULTS
The Company's net income for the three and six months ended June 30, 1994,
was $53.2 million and $111.5 million, respectively, compared with $59.6 million
and $118.2 million reported for the same periods in 1993. Earnings per share for
the second quarter and year to date 1994 were $.88 and $1.86, respectively. For
the same periods of 1993, earnings per share were $1.00 and $1.98, respectively.
Management believes that all adjustments (consisting only of normal recurring
accruals) necessary for a fair statement of the recent results have been made.
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UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated July 19, 1994 (the "Underwriting Agreement"), the Company has agreed to
sell to each of the Underwriters named below and each of the Underwriters has
severally agreed to purchase the principal amount of the Notes set forth
opposite its name below. In the Underwriting Agreement, the several Underwriters
have agreed, subject to the terms and conditions set forth therein, to purchase
all the Notes offered hereby if any of the Notes are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
---------------------------------------------------------------- ------------
<S> <C>
Bear, Stearns & Co. Inc......................................... $ 80,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... 80,000,000
Chemical Securities Inc......................................... 20,000,000
Keefe, Bruyette & Woods, Inc.................................... 20,000,000
------------
Total................................................... $200,000,000
===========
</TABLE>
The Company has been advised that the Underwriters propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .40% of the principal amount of the Notes.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of .25% of the principal amount of the Notes to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the Underwriters may be required to make in respect
thereof.
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given
that a secondary market for the Notes will develop.
Chemical Securities Inc. is an affiliate of Chemical Bank, which is the
administrative agent for and a lender to the Company under certain credit
facilities of the Company. As further described under "Use of Proceeds", the
Company expects to use the net proceeds of the offering of the Securities to,
among other things, repay certain outstanding borrowings under such credit
facilities. Chemical Bank also participates on a regular basis in various
general financing and banking transactions with the Company. In addition,
certain of the other Underwriters have engaged, and may in the future engage in,
investment banking transactions with the Company.
S-6
<PAGE> 7
PROSPECTUS
FIRST OF AMERICA BANK CORPORATION
DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
First of America Bank Corporation (the "Company") may offer and sell from
time to time, separately or together as units consisting of one or more
securities ("Units"), the following securities (collectively, the "Securities")
having an aggregate initial public offering price of up to $500,000,000: (i) one
or more series of its unsecured debt securities consisting of senior debt
securities (the "Senior Debt Securities") and/or subordinated debt securities
(the "Subordinated Debt Securities" and, together with the Senior Debt
Securities, the "Debt Securities") (if any Debt Securities are issued with
original issue discount, the aggregate initial offering price may be such
greater principal amount as shall result in an aggregate initial public offering
price of up to $500,000,000); (ii) shares of one or more series of its preferred
stock, stated value one dollar ($1.00) per share (the "Preferred Shares"), which
may be offered in the form of depositary shares (the "Depositary Shares")
represented by depositary receipts (the "Depositary Receipts"); (iii) contracts
under which the counterpart may be required to purchase Debt Securities,
Preferred Shares and/or Depositary Receipts ("Purchase Contracts"); and (iv)
shares of its common stock, par value ten dollars ($10.00) per share (the
"Common Stock"). This Prospectus also relates to an indeterminate number of
Preferred Shares, shares of Common Stock and other capital securities that may
be issuable in the event that the Company offers Securities that are convertible
into or exchangeable for Preferred Shares, shares of Common Stock or capital
securities. The Securities will be offered in amounts, at prices and on terms to
be determined at the time of sale.
One or more supplements to this Prospectus (a "Prospectus Supplement") will
set forth the specific terms of the particular Securities, or series thereof,
offered including such terms as, where applicable, the following: (i) with
respect to the Debt Securities, the specific designation, priority, aggregate
principal amount, authorized denominations, maturity, premium, interest rate or
rates, interest payment dates, any terms for optional or mandatory redemption by
the Company or repayment by the holder, any sinking fund provisions, any
conversion provisions, any initial public offering price, and the proceeds to
the Company; and (ii) with respect to the Preferred Shares, the number of
shares, title, liquidation preference, issuance price, dividend rate or rates
(or method of calculation), dividend payment dates, any redemption or sinking
fund provisions, any voting rights, and any conversion provisions. A Prospectus
Supplement will also set forth, where applicable, the amounts, prices, and other
terms, conditions and covenants of any Purchase Contracts or Units offered.
The Senior Debt Securities will rank equally with all unsubordinated and
unsecured indebtedness of the Company. The Subordinated Debt Securities will be
subordinated to all existing and future Senior Indebtedness (as defined herein)
of the Company. Unless otherwise specified in the applicable Prospectus
Supplement, the Subordinated Debt Securities will be subject to acceleration of
maturity only in the event of certain events of bankruptcy, insolvency or
reorganization of the Company. See "Description of the Debt Securities."
The Securities may be offered and sold through one or more underwriters,
directly by the Company or through dealers or agents. The names of any
underwriters, dealers or agents involved in the distribution of the Securities,
any applicable discounts, commissions or allowances, any initial public offering
price and the proceeds to the Company from the sale of such Securities will be
set forth in the applicable Prospectus Supplement. See "Plan of Distribution."
------------------------------
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY OF THE COMPANY AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
("FDIC") OR ANY OTHER GOVERNMENT 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.
------------------------------
This Prospectus may not be used to consummate sales of the Securities unless
accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS JULY 19, 1994
<PAGE> 8
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, the Company files reports and other information with the Securities
and Exchange Commission (the "Commission"). The reports, proxy and information
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at certain of its regional
offices located at 7 World Trade Center, New York, New York 10048 and 500 West
Madison Street, Chicago, Illinois 60661. In addition, reports, proxy and
information statements and other information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005. The Company has filed a registration statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement and Exhibits thereto. The Registration
Statement and the Exhibits thereto may be inspected and copied, at prescribed
rates, at the public reference facilities maintained by the Commission at the
addresses set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission by the Company (File
No.1-10534) pursuant to the Exchange Act, are incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1993;
(2) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994;
(3) the Company's Current Report on Form 8-K dated July 14, 1994; and
(4) the description of the Company's Common Stock and its Series A
Junior Participating Preferred Stock Purchase Rights contained in the
Company's Registration Statements on Form 8-A dated April 30, 1990 and July
18, 1990, respectively, filed with respect to such securities pursuant to
Section 12 of the Exchange Act, and all amendments or reports filed for
purposes of updating such descriptions.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby are hereby incorporated by reference and
such documents are deemed to be a part hereof from the date of filing such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be modified or superseded
for the purposes of the Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not, except as so modified or
superseded, constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, on the
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents.
Requests for such copies should be directed to Thomas W. Lambert, Executive Vice
President and Chief Financial Officer, First of America Bank Corporation, 211
South Rose Street, Kalamazoo, Michigan 49007, Telephone No. (616) 376-9000.
2
<PAGE> 9
THE COMPANY
The Company is a Michigan corporation and a bank holding company registered
under the Bank Holding Company Act of 1956, as amended (the "Bank Holding
Company Act"). Its principal activity consists of owning and supervising 20
financial institutions which operate general commercial banking business from
611 offices and facilities located in Michigan, Illinois, Florida and Indiana.
The Company owns eight banks located in Michigan with combined assets of $13.6
billion at June 30, 1994, nine banks in Illinois with combined assets of $7.4
billion, two banks in Indiana with combined assets of $1.5 billion and one
savings and loan association in Florida with assets of $0.5 billion. The Company
also has divisions and non-banking subsidiaries which provide mortgage, trust,
data processing, pension consulting, securities brokerage, revolving credit and
investment advisory services. At June 30, 1994 the Company had consolidated
assets of $23.1 billion, deposits of $19.1 billion and shareholders equity of
$1.5 billion. At year-end 1993, the Company was the third largest bank holding
company in Michigan. The company's principal executive offices are located at
211 South Rose Street, Kalamazoo, Michigan 49007. Its telephone number is (616)
376-9000.
The Company was incorporated in 1971 by its lead bank, First of America
Bank-Michigan, N.A., Kalamazoo, Michigan, established in 1863. It became a bank
holding company in 1972 in a transaction in which First of America
Bank-Michigan, N.A. and two other banks became wholly owned affiliates. The
Company, as the parent company, provides certain management functions to its
affiliate financial institutions relating to loan policies and procedures,
profit planning and accounting, external and internal audit, legal advice and
compliance with government regulations and general coordination of investment,
trust and human resources administration, data processing and product
development activities.
The Company's affiliate financial institutions offer a broad range of
lending, depository and related financial services to individual, commercial,
industrial, financial and governmental customers, including demand, savings and
time deposits, secured and unsecured loans, lease financing, letters of credit,
money transfers, corporate and personal trust services, cash management and
other financial services.
The Company is a legal entity separate and distinct from its subsidiary
banks and other subsidiaries. There are legal limitations on the extent to which
the Company's subsidiary banks can lend or otherwise supply funds to the Company
or certain of its affiliates. Federal law limits the ability of the Company to
borrow from its subsidiary banks unless the loans are secured by specified
collateral and, with respect to the Company and any non-bank affiliate, such
loans and extensions of credit by any subsidiary bank are generally limited to
10 percent of the subsidiary bank's capital and surplus and, with respect to the
Company and all of its non-bank affiliates, to an aggregate of 20 percent of the
subsidiary bank's capital and surplus. In addition, payment of dividends to the
Company by subsidiary banks is subject to various state and federal regulatory
limitations. Under applicable law, the subsidiary banks of the Company could
have declared an additional $157.3 million of aggregate dividends at December
31, 1993, without prior regulatory approval. Federal bank regulatory agencies
also have statutory authority to prohibit banks from engaging in what the
regulator determines to be an unsafe or unsound practice in conducting its
business. The ability of a subsidiary bank to pay dividends could be deemed an
unsafe or unsound practice depending on the bank's financial condition,
including the maintenance of adequate capital for such bank and other factors.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
contains a "cross-guarantee" provision which could result in insured depository
institutions owned by the Company being assessed for losses incurred by the
Federal Deposit Insurance Corporation ("FDIC") in connection with assistance
provided to, or the failure of, any other insured depositary institution owned
by the Company.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") revised sections of the Federal Deposit Insurance Act affecting bank
regulation, deposit insurance and provisions for funding of the Bank Insurance
Fund ("BIF") administered by the FDIC. FDICIA also revised bank regulatory
structures embodied in several other banking statutes, links federal bank
regulators' authority to intervene to the deterioration of a bank's capital
level, places limits on real estate lending and tightens audit requirements.
Among the significant revisions that could have an impact on the Company and its
banking subsidiaries is the authority granted the FDIC to impose special
assessments on insured depository institutions to repay FDIC borrowings from the
United States Treasury or other sources and to establish semi-annual assessment
rates on
3
<PAGE> 10
BIF-insured banks so as to maintain the BIF at the designated reserve ratio
defined in FDICIA. FDICIA also provides for implementation of a system of
risk-based deposit insurance premiums, which became effective in 1993, pursuant
to which the premiums paid by a depository institution are based on the capital
strength of each institution within certain defined categories. The new premium
assessment rules are not expected to materially affect the Company. FDICIA also
prescribes various supervisory actions by federal regulatory agencies based on
an insured depository institution's level of capital. These prescribed actions
increase restrictions on, and heighten regulatory scrutiny of, the institution
as its capital declines. All of the Company's subsidiaries meet current
regulatory capital requirements.
Proposals to change the laws and regulations governing banks, companies
that control banks, and other financial institutions are frequently raised in
Congress, in the state legislatures and before the various bank regulatory
agencies. The likelihood of any changes and the impact any changes might have
are impossible to determine.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be used for general
corporate purposes, which may include repurchase of outstanding common stock,
reduction of short or long term indebtedness, investments in its affiliates and
future expansion. The precise amounts and timing of the application of the
proceeds will depend upon funding requirements of the Company and its affiliates
and the availability of other funds and other opportunities.
RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following are the consolidated ratios of earnings to fixed charges and
to combined fixed charges and preferred stock dividends for the three month
periods ended March 31, 1994 and 1993 and each of the years in the five year
period ended December 31, 1993:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to fixed charges....................... 1.62x 1.52 1.56 1.36 1.28 1.25 1.25
Earnings to fixed charges (excluding interest on
deposits)..................................... 7.91x 9.36 8.52 7.82 7.69 5.86 4.99
Earnings to combined fixed charges and preferred
stock dividends............................... 1.62x 1.50 1.54 1.32 1.25 1.22 1.22
Earnings to combined fixed charges and preferred
stock dividends (excluding interest on
deposits)..................................... 7.91x 7.55 7.18 5.20 4.67 3.84 3.35
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, income
before income taxes and cumulative effect of change in accounting principle plus
fixed charges has been divided by fixed charges. For purposes of computing the
ratios of earnings to combined fixed charges and preferred stock dividends,
income before income taxes and cumulative effect of change in accounting
principle plus fixed charges has been divided by fixed charges and pre-tax
earnings required to cover preferred stock dividends. Fixed charges, excluding
interest on deposits, represents interest expense plus the estimated interest
component of net rental expense. Fixed charges, including interest on deposits,
consists of the forgoing items plus interest on deposits. Pre-tax earnings
required to cover preferred stock dividends have been computed by dividing
preferred stock dividends by one minus the statutory income tax rate.
4
<PAGE> 11
DESCRIPTION OF THE DEBT SECURITIES
The Senior Debt Securities will be issued under a Senior Indenture (the
"Senior Indenture") and the Subordinated Debt Securities under a Subordinated
Indenture, dated as of November 1, 1991 and as supplemented by the First
Supplemental Indenture (the "First Supplemental Indenture") dated as of July 1,
1994, (together, the "Subordinated Indenture" and, together with the Senior
Indenture, the "Indentures") between the Company and Continental Bank
("Continental") as Trustee for both the Senior Debt Securities and the
Subordinated Debt Securities (the "Trustee"). Pursuant to the Trust Indenture
Act of 1939 as amended (the "Trust Indenture Act"), the Trustee will have a
"conflicting interest" if the Debt Securities issued under either Indenture are
in default. In such event, the Trustee may be required to resign its trusteeship
under the defaulted Indenture, and the Company would thereupon endeavor to
appoint a successor trustee under such Indenture. A copy of each of the
Indentures has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The following summaries of certain provisions of
the Indentures do not purport to be complete and are subject to, and are
qualified in their entirety by reference to all the provisions of the
Indentures, including the applicable definitions therein of certain terms used
in this initial Prospectus. Whenever particular Sections, Articles or defined
terms of the Indentures are referred to, it is intended that such Sections,
Articles or defined terms shall be incorporated herein by reference.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement (the "Offered Debt Securities") and the extent, if
any, to which such general provisions may apply to the Offered Debt Securities
will be described in the Prospectus Supplement relating to such Offered Debt
Securities. Unless otherwise indicated, Section references contained herein
refer collectively to the Senior Indenture and the Subordinated Indenture.
Since the Company is a holding company, the right of the Company, and hence
the right of creditors and shareholders of the Company, including the Holders of
the Debt Securities offered hereby, to participate in any distribution of assets
of any subsidiary upon its liquidation, reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that the claims of the Company itself as a creditor of the
subsidiary may be recognized.
GENERAL
The Debt Securities will be unsecured obligations of the Company. The Debt
Securities to be offered by this Prospectus are limited to the amounts described
on the cover of this Prospectus. The Indentures, however, do not limit the
amount of Debt Securities which can be issued thereunder and provide that the
Debt Securities of any series may be issued thereunder up to the aggregate
principal amount which may be authorized from time to time by the Company. The
Senior Debt Securities will rank on a parity with all other unsecured
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
will be subordinated as described below under "Subordinated Debt Securities".
Neither the Indentures nor the Securities will limit or otherwise restrict the
amount of other indebtedness which may be incurred or other securities which may
be issued by the Company. The Debt Securities will not be deposits or other
obligations of a bank and will not be insured by the FDIC or any other
government agency.
The Prospectus Supplement and any applicable pricing supplements will set
forth the following specific terms relating to the Offered Debt Securities
(Section 301): (i) title; (ii) whether the Offered Debt Securities will be
Senior Debt Securities or Subordinated Debt Securities and, if Subordinated Debt
Securities, the applicable subordination provisions (iii) any limit on the
aggregate principal amount or price; (iv) ranking as Senior Debt Securities or
Subordinated Debt Securities; (v) maturity date or dates; (vi) interest rate per
annum or the method of determining the interest rate or rates per annum; (vii)
dates from and on which such interest will accrue and be payable and the
designated record dates for such interest payments; (viii) place or places where
principal (and premium, if any) and interest shall be payable; (ix) any optional
redemption terms; (x) any mandatory or optional sinking fund or analogous
provisions; (xi) any conversion provisions; and (xii) any other terms of the
Offered Debt Securities not inconsistent with the applicable Indenture.
5
<PAGE> 12
Interest on the Debt Securities of any series will be payable to the
persons in whose names the Debt Securities are registered at the close of
business on the record date designated for an interest payment date (Section
307). The Debt Securities may be presented for the payment of principal and
interest, if any, transfer and exchange at the office of the Trustee, 231 South
LaSalle Street, Chicago, IL 60697 (Sections 305 and 1002). At the option of the
Company, interest may be paid by mailing a check to the address of the person
entitled thereto as it appears on the register for the Debt Securities (Section
307). Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000 (Section 302). No
service charge will be made for any exchange or registration or transfer of a
Debt Security, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge (Section 305).
The Indentures do not contain any terms which would afford protection to
Holders of the Securities in the event of a change of control, a highly
leveraged transaction, a recapitalization or any other restructuring involving
the Company that results in a downgrade of the Company's public debt rating.
SUBORDINATED DEBT SECURITIES
The obligation of the Company to make any payment on account of the
principal of and premium, if any, and interest on the Subordinated Debt
Securities of any series will be subordinated and junior in right of payment to
the Company's obligations to the Holders of Senior Indebtedness of the Company
to the extent described in the next paragraph and the applicable Indenture.
Senior Indebtedness of the Company includes any Senior Debt Securities and means
any indebtedness or other obligations of the Company, whether outstanding on the
date of execution of the First Supplemental Indenture or thereafter incurred or
created, except such indebtedness and obligations as are by their terms
expressly stated to be subordinated in right of payment to the Subordinated Debt
Securities or to rank on a parity with the Subordinated Debt Securities
(Subordinated Indenture Section 101). As of June 30, 1994, the Company had
$197.0 million principal amount of debt which would constitute Senior
Indebtedness.
In the case of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceedings or any liquidation, dissolution or
winding-up of or relating to the Company as a whole, whether voluntary or
involuntary, all obligations of the Company to holders of Senior Indebtedness of
the Company shall be entitled to be paid in full before any payment shall be
made on account of the principal of or interest on the Subordinated Debt
Securities. In the event of any such proceeding, after payment in full of all
sums owing with respect to Senior Indebtedness of the Company, the holders of
the Subordinated Debt Securities, together with the holders of any obligations
of the Company ranking on a parity with the Subordinated Debt Securities, shall
be entitled to be paid from the remaining assets of the Company the amounts at
the time due and owing on account of unpaid principal of and interest on the
Subordinated Debt Securities before any payment or other distribution, whether
in cash, property or otherwise, shall be made on account of any capital stock or
any obligations of the Company ranking junior to the Subordinated Debt
Securities. By reason of such subordination, in the event of the insolvency of
the Company, holders of Senior Indebtedness of the Company may receive more,
ratably, and holders of the Subordinated Debt Securities having a claim pursuant
to the Subordinated Debt Securities may receive less, ratably, than the other
creditors of the Company. Such subordination will not prevent the occurrence of
any Event of Default in respect of the Subordinated Debt Securities
(Subordinated Indenture, Article Fifteen).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary identified in the Prospectus
Supplement relating to such series. Global Securities may be issued in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for individual certificates evidencing Debt Securities in definitive form
represented thereby, a Global Security may not be transferred except as a whole
by the depositary for such Global Security to a nominee of such depositary or by
a nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor of such
depositary or a nominee of such successor.
6
<PAGE> 13
The specific terms of the depositary arrangement with respect to a series
of Global Securities will be described in the Prospectus Supplement relating to
such series.
RESTRICTIVE COVENANTS
The Senior Indenture contains a covenant by the Company that, except as
otherwise provided below, the Company will not sell, assign, pledge, transfer or
otherwise dispose of, or permit the issuance of, or permit a Subsidiary to sell,
assign, pledge, transfer or otherwise dispose of, any shares of Capital Stock of
any Subsidiary or any securities convertible into Capital Stock of any
Subsidiary which is: (i) a Principal Constituent Bank, or (ii) a Subsidiary
which owns shares of Capital Stock or any securities convertible into Capital
Stock of a Principal Constituent Bank; provided, however, that such covenant
does not prohibit (a) any dispositions made by the Company or any Subsidiary (1)
acting in a fiduciary capacity for any Person other than the Company or any
Subsidiary or (2) to the Company or any of its wholly owned (except for
director's qualifying shares) Subsidiaries or (b) the merger or consolidation of
a Principal Constituent Bank with and into a Constituent Bank or the merger or
consolidation of any Principal Constituent Bank with and into any other
Principal Constituent Bank. Such covenant also does not prohibit sales,
assignments, pledges, transfers, issuances or other dispositions of shares of
Capital Stock of a corporation referred to in (i) or (ii) above where (a) the
sales, assignments, pledges, transfers, issuances or other dispositions are
made, in the minimum amount required by law, to any Person for the purpose of
the qualification of such Person to serve as a director; or (b) the sales,
assignments, pledges, transfers, issuances or other dispositions are made in
compliance with an order of a court or a regulatory authority of competent
jurisdiction or as a condition imposed by any such court or authority to the
acquisition by the Company, directly or indirectly, of any other corporation or
entity; or (c) in the case of a disposition or issuance of shares of Capital
Stock or any securities convertible into Capital Stock of a Principal
Constituent Bank, or sales of Capital Stock or any securities convertible into
Capital Stock of any Subsidiary included in (ii) above, the sales, assignments,
pledges, transfers, issuances or other dispositions are for fair market value
(as determined by the Board of Directors of the Company and the Subsidiary
disposing of such shares or securities, such determination being evidenced by a
Board Resolution) and after giving effect to such disposition and to any
potential dilution (if the shares or securities are convertible into Capital
Stock), the Company and its directly or indirectly wholly owned (except for
directors' qualifying shares) Subsidiaries, will own directly not less than 80
percent of the Voting Stock of such Principal Constituent Bank or Subsidiary; or
(d) a Principal Constituent Bank sells additional shares of Capital Stock to its
stockholders at any price, so long as immediately after such sale the Company
owns, directly or indirectly, at least as great a percentage of the Voting Stock
of such Principal Constituent Bank as it owned prior to such sale of additional
shares. A Constituent Bank is a Subsidiary which is a Bank. A Principal
Constituent Bank is generally a Constituent Bank (i) the consolidated assets of
which constitute more than 10 percent of the Company's consolidated assets; (ii)
with respect to which the Company's investment in and advances to exceeds 10
percent of the consolidated assets of the Company; or (iii) with respect to
which the Company's equity in the income from continuing operations before
income taxes, extraordinary items and cumulative effect of a change in
accounting principle exceeds 10 percent of such income on a consolidated basis
for the Company, in each case on the date of determination (Section 101). At the
date of this Prospectus, First of America Bank-Southeast Michigan, N.A. and
First of America Bank-Michigan, N.A. are the only Principal Constituent Banks of
the Company (Senior Indenture Section 1006).
The Senior Indenture contains a covenant prohibiting the Company from
acquiring Capital Stock of any corporation or acquiring substantially all the
assets and liabilities of any corporation, unless, immediately after such
acquisition, the Company would be in full compliance with such Indenture (Senior
Indenture, Section 1008). In addition, the Senior Indenture contains a covenant
prohibiting the Company from creating or permitting any liens upon any shares of
Capital Stock of any Constituent Bank to secure any indebtedness without
securing the Senior Debt Securities equally and ratably with all indebtedness
secured thereby (Senior Indenture, Section 1007).
7
<PAGE> 14
EVENTS OF DEFAULT AND RIGHTS OF ACCELERATION
An Event of Default with respect to any series of Senior Debt Securities is
defined in the Senior Indenture as being: (i) default for 30 days in payment of
any interest on Senior Debt Securities of such series; (ii) default in the
payment of the principal of and premium, if any, on the Senior Debt Securities
of such series; (iii) default in the deposit of any sinking fund payment, when
and as due by the terms of the Senior Debt Securities of such series; (iv)
default in performance of any of the covenants or agreements in the Senior
Indenture applicable to the Senior Debt Securities of such series which shall
not have been remedied for a period of 90 days after written notice to the
Company by the Trustee or to the Company and the Trustee by the Holders of not
less than 25 percent in principal amount of the Senior Debt Securities of such
series; (v) acceleration of indebtedness in principal amount in excess of $25
million for money borrowed by the Company or a Principal Constituent Bank under
the terms of the instrument under which such indebtedness is issued or secured
if such acceleration is not annulled, or such indebtedness is not discharged
within 30 days after written notice to the Company by the Trustee or to the
Company and the Trustee by the Holders of not less than 25 percent in principal
amount of the Senior Debt Securities of such series then outstanding; (vi)
certain events of bankruptcy, insolvency or reorganization of the Company or a
Principal Constituent Bank; and (vii) any other Event of Default provided with
respect to Senior Debt Securities of that series (Senior Indenture, Section
501).
An Event of Default is defined under the Subordinated Indenture with
respect to the Subordinated Debt Securities of any series issued thereunder as
certain events in bankruptcy, insolvency or reorganization of the Company
(Subordinated Indenture, Section 501).
The Subordinated Indenture does not provide for any right of acceleration
of the payment of the principal of a series of Subordinated Debt Securities upon
a default in the payment of principal or interest or a default in the
performance of any covenant or agreement in the Subordinated Debt Securities of
a particular series or in the Subordinated Indenture. In the event of a default
in the payment of interest or principal, the Holder of a Subordinated Debt
Security (or the Trustee under the Subordinated Indenture on behalf of the
Holders of all of the series of Subordinated Debt Securities so affected) may,
subject to certain limitations and conditions, seek to enforce payment of such
interest or principal.
Each Indenture provides that if an Event of Default shall have occurred and
be continuing, either the Trustee or the Holders of not less than 25 percent in
principal amount of the then outstanding Debt Securities of the series as to
which the Event of Default has occurred may declare the principal of all the
Debt Securities of such series, or such lesser amount as may be provided for in
the Debt Securities of that series, to be due and payable immediately by a
notice in writing to the Company, and upon any such declaration, such principal
or such lesser amount shall become immediately due and payable. However, at any
time after such a declaration of acceleration with respect to Debt Securities of
any series has been made and before a judgment or decree based on such
acceleration has been obtained by the Trustee, the Holders of not less than a
majority in principal amount of Outstanding Debt Securities of that series may,
under certain circumstances, rescind and annul such acceleration if all Events
of Default, except, in the case of Senior Debt Securities, the non-payment of
principal of that series which has become due solely by such declaration of
acceleration, have been cured or waived as provided in the Indentures (Section
502).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive any past default under the applicable Indenture with respect
to that series, except a default in the payment of the principal of (and
premium, if any) or interest on any Debt Security of such series or in respect
of a covenant or provision which under the terms of the applicable Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security of such series affected (Section 513).
MODIFICATION OF THE INDENTURES AND WAIVER
Each Indenture provides that modifications and amendments may be made by
the Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of each series
affected thereby; provided, however, that no such modifications or amendments
8
<PAGE> 15
may, without the consent of the Holder of each Outstanding Debt Security
affected thereby, (i) change the stated maturity date of the principal of, or
any installment of interest on, any Debt Security; (ii) reduce the principal
amount thereof, or the rate of interest on, or any premium payable upon the
redemption of any Debt Security; (iii) change the place of payment; (iv) impair
the right to institute suit for the enforcement of any payment on or after the
stated maturity date thereof or, in the case of redemption, on or after the
redemption date; (v) reduce the above-stated percentage in principal amount of
Outstanding Debt Securities of any series, the consent of the Holders of which
is required to modify or amend the Indenture; (vi) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
the Holders of which is required for waiver of compliance with certain
provisions of the related Indenture or for waiver of certain defaults; (vii)
modify (with certain exceptions) any provision of such Indenture relating to
modification and amendment of such Indenture or waiver of compliance with
conditions and defaults thereunder; or (viii) with respect to the Subordinated
Indenture, alter in any respect the provisions regarding subordination of the
Debt Securities issued thereunder in a manner adverse to the Holders thereof, or
adversely affect the right to convert any Subordinated Debt Security subject to
conversion (Section 902).
Modification and amendment of the Indentures may be made by the Company and
the Trustee without the consent of any Holder for any of the following purposes:
(i) to evidence the succession of another Person to the Company; (ii) to add to
the covenants of the Company for the benefit of the Holders of all or any series
of Debt Securities; (iii) to add Events of Default; (iv) add to, delete from or
revise the conditions, limitations and restrictions on the authorized amount,
terms or purposes of issue, authentication and delivery of Debt Securities, as
set forth in the applicable Indenture; (v) to establish the form or terms of
Debt Securities of any series; (vi) to provide for the acceptance of appointment
by a successor Trustee; (vii) to cure any ambiguity, defect or inconsistency in
the applicable Indenture, provided such action is not inconsistent with the
provisions of the applicable Indenture and does not adversely affect the
interests of Holders of Debt Securities of any series in any material respect
under such Indenture; (viii) to modify, eliminate or add to the provisions of
any of the Indentures to such extent as is necessary to conform the obligations
of the Company and the Trustee under the applicable Indenture to the Trust
Indenture Act (Section 901).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as that series is concerned, compliance by the
Company and the Trustee, with certain restrictive provisions of the Indentures
(Senior Indenture, Section 1011; Subordinated Indenture, Section 1009). The
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series may on behalf of the Holders of all Debt Securities of that series
waive any past default under the applicable Indenture with respect to that
series, except a default in the payment of the principal of (and premium, if
any) or interest on any Debt Security of such series or in respect of a covenant
or provision which under the terms of the applicable Indenture cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security of such series affected (Section 513).
ADDITIONAL PROVISIONS
No holder of any Debt Security of any series will have the right to
institute any proceeding, judicial or otherwise, with respect to the Indenture
under which such Holder's Debt Securities were issued for any remedy thereunder,
unless: (i) such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default with respect to the Debt Securities of
such series; (ii) the Holders of not less than 25 percent in principal amount of
the Outstanding Debt Securities of that series shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
Trustee; (iii) the Trustee shall not have received from the Holders of a
majority in principal amount of the Outstanding Debt Securities within 60 days
after receipt of written notice of the continuing event of default, of that
series a direction inconsistent with such request; and (iv) the Trustee shall
have failed to institute such proceeding within 60 days after its receipt of
such notice, request and offer of indemnity (Section 507). Notwithstanding the
forgoing, the Holder of any Debt Security will have an absolute and
unconditional right to receive payment of the principal of (and premium, if
any), and interest, if any, in respect of such Debt Security on or after the due
dates expressed in such Debt Security and to institute suit for the enforcement
of any such payment (Section 508).
9
<PAGE> 16
CONCERNING THE TRUSTEE
Continental is Trustee under both the Senior Indenture and the Subordinated
Indenture. Notices to the Trustee should be directed to Continental Bank
Corporation Trust Services, 231 South LaSalle Street, Chicago, Illinois 60697.
Each Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any right or power under the related Indenture at
the request of Holders of the Debt Securities issued under such Indentures
unless said Holders shall have offered the Trustee reasonable indemnity (Section
602). Each Indenture also provides that, subject to the provisions for
indemnification described above, the Holders of a majority in principal amount
of the Outstanding Debt Securities of any series may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the Debt
Securities of such series (Section 512).
Each Indenture contains a covenant that the Company will file annually with
the Trustee a certificate as to the absence of any default that exists (Section
1005).
In addition to serving as Trustee under the Indentures, Continental has
certain other banking relationships with the Company, which, in addition to
ordinary correspondent banking relationships, include the following. Continental
has made commitments of $8.75 million under each of two $150 million Competitive
Advance and Revolving Credit Facility Agreements (one with a 364-day maturity
and one with a three-year maturity), each dated as of March 25, 1994, among the
Company, 24 banks including Continental and Chemical Bank as agent for the 24
banks.
DESCRIPTION OF PREFERRED SHARES
The following description of the terms of the Preferred Shares sets forth
certain general terms and provisions of the Preferred Shares to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Shares offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of the Preferred Shares. If so
indicated in the Prospectus Supplement, the terms of any such series may differ
from the terms set forth below. The description of certain provisions of the
Preferred Shares set forth below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the resolution adopted by the Company's Board of Directors
prescribing the designation, powers and relative rights and preferences of the
applicable series of the Preferred Shares (the "Resolution").
GENERAL
Under the Company's Restated Articles of Incorporation, as amended (the
"Articles"), the Board of Directors of the Company has the authority, without
further shareholder action, to provide for the issuance from time to time of a
maximum of 10,000,000 shares of preferred stock, including shares issued or
reserved for issuance, in one or more series and with such terms and at such
times and for such consideration as the Board of Directors of the Company may
determine. The authority of the Board of Directors of the Company includes the
determination of the following with respect to the shares of any series thereof:
(i) the number of shares constituting that series and the distinctive
designation of that series; (ii) the dividend rate on the shares of that series,
whether dividends shall be cumulative, and if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares of
that series; (iii) whether shares of that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights; (iv) whether shares of that series shall be convertible into
shares of any class or into shares of any series of any class at the option of
the holder or the Company, or upon the happening of a specified event; and, if
so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine; (v) whether or not the shares of that series shall be redeemable, and
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may
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vary under different conditions and at different redemption dates; (vi) whether
that series shall have a sinking fund for the redemption or purchase of shares
of that series, and, if so, the terms and amount of such sinking fund; (vii) the
rights of the shares of that series in the event of voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, and the
relative rights of priority, if any, of payment of shares of that series and
(viii) any other relative rights, preferences and limitations of that series as
well as other variations in the relative rights and preferences as among
different series.
As described under "Description of Depositary Shares" below, the Company
may, at its option, elect to offer Depositary Shares evidenced by Depositary
Receipts, representing a fractional interest (to be specified in the Prospectus
Supplement relating to a particular series of the Preferred Shares) in a share
of the particular series of the Preferred Shares issued and deposited with a
Depositary (as defined below).
Under regulations adopted by the Board of Governors of the Federal Reserve
System ("Federal Reserve Board"), if, pursuant to specification in the
applicable resolution as described in the applicable Prospectus Supplement, the
holders of any series of the Preferred Shares become entitled to vote for the
election of directors because of dividends on such series are in arrears, as
described under "Voting Rights" below, such series may then be deemed a "class
of voting securities" and a holder of 25 percent or more of such series (or a
holder of 5 percent or more if it otherwise exercises a "controlling influence"
over the company) may then be subject to regulation as a bank holding company in
accordance with the Bank Holding Company Act. In addition, at such time as such
series is deemed a class of voting securities, any other bank holding company
may be required to obtain the prior approval of the Federal Reserve Board to
acquire 5 percent or more of such series, and any person other than a bank
holding company may be required to obtain the prior approval of the Federal
Reserve Board to acquire 10 percent or more of such series.
The Preferred Shares shall have the dividend, liquidation, redemption,
voting and conversion rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Shares.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Shares offered thereby for specific terms.
The Preferred Shares will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Shares, each series of the Preferred Shares will rank on
a parity in all respects with the outstanding shares of the Company's currently
outstanding convertible preferred stock described below and will rank senior to
the Company's Series A Junior Participating Preferred Stock, no par value
("Series A Preferred"), described below and to the Common Stock of the Company.
The Preferred Shares will have no preemptive rights to subscribe for any
additional securities which may be issued by the Company.
Set forth below are brief summaries of certain provisions that the Company
anticipates will be contained in the Resolution authorizing the issuance of a
series of Preferred Shares. These statements do not purport to be complete and
are qualified in their entirety by reference to such Resolution, the form of
which will be filed as an exhibit to the Registration Statement and as part of
the Articles. The Resolution will be adopted by the Board of Directors prior to
the issuance of the related series of Preferred Shares and such Resolution will
be filed with the Department of Commerce of the State of Michigan as soon
thereafter as reasonably practicable.
DIVIDENDS
The holders of the Preferred Shares of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds legally available therefor, cash dividends at such rates and on such
dates as will be set forth in the Prospectus Supplement relating to such series.
Such rates may be fixed or variable or both. If variable, the formula used for
determining the dividend rate for each dividend period will be set forth in the
Prospectus Supplement. Dividends will be payable to the holders of record as
they appear in the stock registry of the Company on such record dates as will be
fixed by the Board of Directors of the Company.
Dividends on any series of the Preferred Shares may be cumulative
("Cumulative Preferred Shares") or noncumulative ("Noncumulative Preferred
Shares"), as provided in the applicable Prospectus Supplement. If
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the Board of Directors of the Company fails to declare a dividend payable on a
dividend payment date on any series of Noncumulative Preferred Shares, then the
holders of such series of the Preferred Shares will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment date,
and the Company will have no obligation to pay the dividend accrued for such
period, whether or not dividends on such series are declared payable on any
future dividend payment dates.
No full dividends will be declared or paid or set apart for payment on any
stock of the Company ranking, as to dividends, on a parity with or junior to the
Preferred Shares for any period unless full dividends on the Preferred Shares of
each series (including any accumulated dividends on the Cumulative Preferred
Shares) have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment. When
dividends are not paid in full upon any series of the Preferred Shares and any
other preferred stock of the Company ranking on a parity as to dividends with
the Preferred Shares, all dividends declared or made upon Preferred Shares of
each series and any other preferred stock of the Company ranking on a parity as
to dividends with the Preferred Shares shall be declared pro rata so that the
amount of dividends declared per share on Preferred Shares of each series and
such other preferred stock shall in all cases bear to each other the same ratio
that accrued dividends per share (which, in the case of Noncumulative Preferred
Shares, shall not include any accumulation in respect of unpaid dividends for
prior dividend periods) on shares of each series of the Preferred Shares and
such other preferred stock bear to each other. Except as provided in the
preceding sentence, no dividend (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Common Stock or any other stock of the Company ranking junior to the
Preferred Shares as to dividends and upon liquidation) shall be declared or paid
or set aside for payment or other distribution declared or made upon the Common
Stock or any other stock of the Company ranking junior to or on a parity with
the Preferred Shares as to dividends or upon liquidation. No Common Stock or any
other stock of the Company ranking junior to or on a parity with the Preferred
Shares as to dividends or upon liquidation shall be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Company (except by conversion into or exchange for stock of the Company
ranking junior to the Preferred Shares as to dividends and upon liquidation)
unless, in each case, the full dividends on each series of the Preferred Shares
shall have been paid or declared and set aside for payment. No interest, or sum
of money in lieu of interest shall be payable in respect of any dividend payment
or payments on any series of the Preferred Shares which may be in arrears.
REDEMPTION
A series of the Preferred Shares may be redeemable, in whole or in part, at
the option of the Company, and may be subject to mandatory redemption pursuant
to a sinking fund or otherwise, in each case upon terms, at the times and at the
redemption prices set forth in the Prospectus Supplement relating to such
series. Shares of Preferred Shares redeemed by the Company may, by resolution of
the Board of Directors, be restored to the status of authorized but unissued
shares of preferred stock.
The Prospectus Supplement relating to a series of the Preferred Shares
which is subject to mandatory redemption will specify the number of shares of
such series of the Preferred Shares which shall be redeemed by the Company in
each year commencing after a date to be specified, at a redemption price per
share to be specified, together with an amount equal to all accrued and unpaid
dividends thereon to the date of redemption. The redemption price may be payable
in cash or other property, as specified in the Prospectus Supplement relating to
such series of the Preferred Shares. If the redemption price is payable only
from the net proceeds of the issuance of capital stock of the Company, the terms
of such series may provide that, if no such capital stock shall have been issued
or to the extent the net proceeds from any issuance are insufficient to pay in
full the aggregate redemption price then due, the applicable shares of such
series of the Preferred Shares shall automatically and mandatorily be converted
into shares of the applicable capital stock of the Company pursuant to
conversion provisions specified in the Prospectus Supplement relating to such
series of the Preferred Shares.
If fewer than all of the outstanding shares of any series of the Preferred
Shares are to be redeemed, the number of shares to be redeemed will be
determined by the Board of Directors of the Company and such
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<PAGE> 19
shares shall be redeemed pro rata (to the nearest whole share per holder) from
the holders of record of such shares in proportion to the number of such shares
held by such holders (with adjustment to avoid redemption of fractional shares).
Notwithstanding the foregoing, if any dividends, including any applicable
accumulation, on the Preferred Shares of any series are in arrears, no Preferred
Shares of such series shall be redeemed unless all outstanding Preferred Shares
of such series are simultaneously redeemed, and the Company shall not purchase
or otherwise acquire any Preferred Shares of such series; provided, however,
that the foregoing shall not prevent the purchase or acquisition of Preferred
Shares of such series pursuant to a purchase or exchange offer made on the same
terms to all holders of such series of the Preferred Shares.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 30 nor more than 60 days
prior to the date fixed for redemption thereof, to the respective addresses of
such holders as the same shall appear in the stock registry of the Company. Each
such notice shall state: (i) the redemption date; (ii) the number of shares and
series of the Preferred Shares to be redeemed; (iii) the redemption price; (iv)
the place or places where certificates for such shares of Preferred Shares are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights as to such shares, if any, shall
terminate. If fewer than all shares of any series of the Preferred Shares held
by any holder are to be redeemed, the notice mailed to such holder shall also
specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, from and after the redemption date
for the shares of the series of the Preferred Shares called for redemption
(unless default shall be made by the Company in providing money for the payment
of the redemption price of the shares so called for redemption), dividends on
the shares of Preferred Shares so called for redemption shall cease to accrue
and such shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as shareholders of the Company (except the right to receive
the redemption price) shall cease. Upon surrender in accordance with such notice
of the certificates representing any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Company shall so require
and the notice shall so state), the redemption price set forth above shall be
paid out of funds provided by the Company. If fewer than all of the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
CONVERSION
The Prospectus Supplement relating to a series of Preferred Shares which is
convertible will state the terms on which shares of that series are convertible
into capital stock or other securities of the Company.
LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, the holders of shares of each series
of the Preferred Shares and any other preferred stock ranking on a parity with
such series of the Preferred Shares upon liquidation will be entitled to receive
out of the assets of the Company available for distribution to shareholders,
before any distribution of assets is made to holders of the Common Stock or any
other class or series of stock of the Company ranking junior to such series of
the Preferred Shares upon liquidation, liquidating distributions in the amount
set forth in the Prospectus Supplement relating to such series of the Preferred
Shares plus an amount equal to the sum of all accrued and unpaid dividends
(whether or not earned or declared) for the then-current dividend period and, as
to Cumulative Preferred Shares, for all dividend periods prior thereto. Neither
the sale of all or substantially all of the property and assets of the Company,
nor the merger or consolidation of the Company into or with any other
corporation nor the merger or consolidation of any other corporation into or
with the Company shall be deemed to be a dissolution, liquidation or winding up
of the affairs of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the assets
of the Company available for distribution to the holders of the Preferred Shares
of any series and any other shares of stock of
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<PAGE> 20
the Company ranking as to any such distribution on a parity with such series of
the Preferred Shares shall be insufficient to pay in full all amounts to which
such holders are entitled, no such distribution shall be made on account of any
shares of any other series of the Preferred Shares or other securities of the
Company ranking as to any such distribution on parity with the Preferred Shares
of such series upon such dissolution, liquidation or winding up of the affairs
of the Company unless proportionate distributive amounts shall be paid on
account of the Preferred Shares of such series, ratably, in proportion to the
full distributive amounts for which holders of all such shares are respectively
entitled upon such dissolution, liquidation or winding up of the affairs of the
Company. After payment of the full amount of the liquidation distribution to
which they are entitled, the holders of such series of the Preferred Shares will
have no right or claim to any of the remaining assets of the Company.
VOTING
Except as indicated below or in the Prospectus Supplement relating to a
particular series of the Preferred Shares, or except as expressly required by
applicable law, the holders of the Preferred Shares will not be entitled to
vote. In the event the Company issues a series of Preferred Shares with voting
rights, including any voting rights in the case of dividend arrearage, unless
otherwise specified in the Prospectus Supplement relating to such series, each
share will be entitled to one vote on matters on which holders of such shares
are entitled to vote. However, as more fully described under "Description of
Depositary Shares," if the Company elects to provide for the issuance of
Depositary Shares representing fractional interests in a share of such series of
the Preferred Shares, the holders of each such Depositary Share will, in effect,
be entitled through the Depositary to such fraction of a vote, rather than a
full vote. In the case of any series of Preferred Shares having one vote per
share on matters on which holders of such series are entitled to vote, the
voting power of such series, on matters on which holders of such series and
holders of any other series of the Preferred Shares or another series of
preferred stock of the Company are entitled to vote as a single class, will
depend on the number of shares in such series, not the aggregate stated value,
liquidation preference or initial offering price of the shares of such series of
the Preferred Shares.
So long as any Preferred Shares remain outstanding, the Company will not,
without the affirmative vote or consent of the holders of at least a majority of
the Preferred Shares of each series outstanding at the time (voting separately
as a single class with all other series of preferred stock ranking on a parity
with the Preferred Shares of such series either as to dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the Company and upon which like voting rights have been conferred and
are then exercisable), given in person or by proxy, either in writing or at a
meeting, (i) authorize, create or issue, or increase the authorized or issued
amount of, any class or series of stock ranking prior to the Preferred Shares
with respect to payment of dividends or the distribution of assets on
liquidation, dissolution or winding up of the affairs of the Company, or (ii)
amend, alter or repeal, whether by merger, consolidation or otherwise, the
provisions of the Articles or of the Resolution for any series of the Preferred
Shares designating such series of the Preferred Shares and the rights and
preferences thereof, so as to materially and adversely affect any rights and
preferences of the Preferred Shares or the holders thereof; provided, however,
that any increase in the amount of the authorized preferred stock or the
creation and issuance of other series of preferred stock, or any increase in the
amount of authorized shares of Preferred Shares of any series, in each case
ranking on a parity with or junior to the Preferred Shares with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the affairs of the Company will not be deemed to
materially and adversely affect such rights and preferences, privileges or
voting powers.
SERIES A PREFERRED
The Company has reserved 500,000 shares of preferred stock for issuance as
Series A Preferred upon the exercise of certain preferred stock purchase rights
(each a "Right") issued to holders of and in tandem with shares of the Common
Stock. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), dated July 18, 1990, between the Company and
First of America Bank-Michigan, N.A., as Rights Agent. The Rights Agreement was
filed with the Commission as an exhibit to the
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Company's Registration Statement dated July 18, 1990 on Form 8-A under the
Exchange Act and is incorporated herein by reference.
Shares of the Series A Preferred will rank junior to the Preferred Shares.
Each share of Series A Preferred shall be entitled to 100 votes on all matters
submitted to a vote of the shareholders of the Company. Additionally, in the
event the Company fails to pay dividends on the Series A Preferred for four full
quarters, holders of the Series A Preferred have certain rights to elect
additional directors of the Company. Except as described in the Rights
Agreement, holders of the Series A Preferred have no preemptive rights to
subscribe for additional securities which the Company may issue. The Series A
Preferred will not be redeemable. Each share of Series A Preferred will, subject
to the rights of the Preferred Shares and any other preferred stock the Company
may issue ranking senior to the Series A Preferred, if any, be entitled to
preferential quarterly dividends equal to the greater of $10.00, or subject to
certain adjustments, 100 times the dividend declared per share of Common Stock.
Upon liquidation of the Company, holders of Series A Preferred will, subject to
the rights of senior securities, be entitled to a preferential liquidation
payment equal to $190.00 per share, plus accrued and unpaid dividends. In the
event of any merger, consolidation, or other transaction in which shares of
Common Stock are exchanged, each share of Series A Preferred will, subject to
the rights of senior securities, be entitled to receive 100 times the amount
received per share of Common Stock. The rights of the Series A Preferred are
protected by customary antidilution provisions.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject to
and qualified in its entirety by reference to the Deposit Agreement and
Depositary Receipts relating to each series of the Preferred Shares which will
be filed with the Commission at or prior to the time of the offering of such
series of the Preferred Shares.
GENERAL
The Company may, at its option, elect to offer fractional interests in the
Preferred Shares, rather than full Preferred Shares. In the event such option is
exercised, the Company will provide for the issuance by a Depositary to the
public of Depositary Receipts evidencing Depositary Shares, each of which will
represent a fractional interest (to be set forth in the Prospectus Supplement
relating to a particular series of the Preferred Shares) in a share of a
particular series of the Preferred Shares as described below.
The shares of any series of the Preferred Shares underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Company and a bank or trust company selected by the
Company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 (the "Depositary"). The Prospectus
Supplement relating to a series of Depositary Shares will set forth the name and
address of the Depositary. Subject to the terms of the Deposit Agreement, each
owner of a Depositary Share will be entitled, in proportion to the applicable
fractional interest in a share of Preferred Shares underlying such Depositary
Share, to all the rights and preferences of the Preferred Shares underlying such
Depositary Share (including dividend, voting, redemption, conversion and
liquidation rights).
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Company, issue temporary Depositary Receipts
substantially identical to (and entitling the holders thereof to all the rights
pertaining to) the definitive Depositary Receipts but not in definitive form.
Definitive Depositary Receipts will be prepared thereafter without unreasonable
delay, and temporary Depositary Receipts will be exchangeable for definitive
Depositary Receipts at the Company's expense.
Upon surrender of the Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption), the owner of the Depositary Shares evidenced thereby is entitled to
delivery at such office, to or upon his order, of the number of whole shares of
Preferred Shares and any money or other property represented by such Depositary
Shares. Partial shares of Preferred
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Shares will not be issued. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of whole shares of Preferred Shares to be
withdrawn, the Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of shares of Preferred Shares thus withdrawn will not thereafter be entitled to
deposit such shares under the Deposit Agreement to receive Depositary Shares
therefor. The Company does not expect that there will be any public trading
market for the Preferred Shares except as represented by the Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Shares to the record holders
of Depositary Shares relating to such Preferred Shares in proportion to the
number of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction of
one cent, and any balance not so distributed shall be added to and treated as
part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription of similar rights offered by the Company to holders of
the Preferred Shares shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Shares underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Shares held by the Depositary. The Depositary
shall mail notice of redemption not less than 25 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depository Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Shares. Whenever the Company redeems Preferred Shares held by
the Depositary, the Depositary will redeem as of the same redemption date the
number of Depositary Shares relating to Preferred Shares so redeemed. If less
than all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
monies payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
CONVERSION
With respect to a series of the Preferred Shares underlying the Depositary
Shares that is convertible into Common Stock, a holder of Depositary Receipts
may participate in the conversion in the manner specified in the pertinent
Resolution for holders of the underlying Preferred Shares. If the Depositary
Shares represented by a Depositary Receipt are to be converted in part only, a
new Depositary Receipt or Depositary Receipts will be issued by the Depositary
for the Depositary Shares not to be converted. No fractional shares of Common
Stock will be issued upon conversion, and if such conversion would result in a
fractional share being issued, an amount will be paid in cash by the Company
equal to the value of the fractional interest based upon the closing price of
the Common Stock on the last trading day prior to the date of conversion.
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VOTING THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Shares. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Shares) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the number of shares of Preferred Shares
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of Preferred Shares underlying such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all action which may be deemed necessary by the Depositary in
order to enable the Depositary to do so. The Depositary will abstain from voting
Preferred Shares to the extent it does not receive specific instructions from
the holders of Depositary Shares relating to such Preferred Shares.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the existing holders of Depositary Shares
will not be effective unless such amendment has been approved by the record
holders of at least a majority of the Depositary Shares then outstanding. The
Deposit Agreement may be terminated by the Company or the Depositary only if (i)
all outstanding Depositary Shares relating thereto have been redeemed; or (ii)
there has been a final distribution in respect of the Preferred Shares of the
relevant series in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of the
related Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of the
Preferred Shares and any redemption of the Preferred Shares. Holders of
Depositary Shares will pay other transfer and other taxes and governmental
charges and such other charges as are expressly provided in the Deposit
Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from the Company which are delivered to the Depositary and
which the Company is required to furnish to the holders of the Preferred Shares.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Shares unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or information provided by persons presenting
Preferred Shares for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
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DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 100,000,000 shares of Common Stock, par
value $10 per share. As of June 30, 1994, there were 59,171,456 shares of Common
Stock outstanding, held of record by approximately 29,900 persons. As of that
date, there were also outstanding options to purchase 950,933 shares of Common
Stock, held by officers of the Company and its subsidiaries.
Subject to the prior rights of the holders of any preferred stock, holders
of Common Stock are entitled to receive dividends if and when declared by the
Board of Directors out of any funds legally available therefore. Subject to the
rights of holders of the Company's preferred stock, holders of Common Stock are
entitled to receive pro rata upon liquidation, dissolution, or winding up of the
Company all of the assets of the Company remaining after provision for the
payment of creditors. Subject to the rights of holders of the Company's
preferred stock to elect additional directors in the case of dividend
arrearages, holders of Common Stock are vested with exclusive voting rights,
each share being entitled to one vote. Holders of Common Stock have no
cumulative voting rights in electing directors. Holders of Common Stock have no
preemptive rights to subscribe for any additional shares which the Company may
issue. The Company's Common Stock is neither convertible nor redeemable. All
outstanding shares of Common Stock are fully paid and nonassessable.
CERTAIN PROVISIONS OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION AND BY-LAWS
The Company's Articles provide that Directors of the Company are divided
into three classes, and at each annual meeting of shareholders, one class is
elected for a three year term. Under the Articles, the number of Directors is
fixed from time to time by resolution adopted by a number of Directors
constituting not less than 80 percent of the Company's full Board of Directors.
Subject to the rights of holders of any particular class or series of equity
securities of the Company, any newly created directorship resulting from an
increase in the total number of authorized Directors may be filled by an 80
percent vote of the Directors then in office, or by a sole remaining Director,
or by a majority vote of the shareholders. Any vacancy resulting from death,
resignation, retirement, disqualification, removal from office or other cause
may be filled only by an 80 percent vote of the Directors then in office, or by
a sole remaining Director. Any Director elected to fill any newly created
directorship or vacancy shall serve for the remainder of the full term of the
class to which such Director has been elected. The Articles provide that
Directors may be removed only for cause and only by the affirmative vote of
holders of not less than 66 2/3 percent of the outstanding shares of capital
stock of the Company entitled to vote generally in the election of Directors
("Voting Stock"). The Company's By-Laws provide that nomination of Directors by
shareholders may be made only in person or by proxy at a meeting at which the
nominating shareholder is entitled to vote, and only if written notice of such
shareholder's intent to make such nomination has been received by the Company at
least 30 days but not more than 90 days before the anniversary date of the
record date for determination of shareholders entitled to vote at the
immediately preceding annual meeting of shareholders. The notice must contain
certain information as specified in the Company's By-Laws.
The Articles further provide that the Company's shareholders may not act by
written consent without a shareholder meeting. Special meetings called by
shareholders may be called only by holders of not less than 66 2/3 percent of
the Voting Stock, and such meetings require 30 days notice stating all purposes
of the meeting.
The Company's By-Laws provide that only such business as set forth in a
notice of a special meeting of shareholders shall be conducted at the meeting.
The Company's By-laws set forth procedures for shareholders to give notice of
matters proposed to be brought before the annual meeting of shareholders. These
procedures require that the shareholder's notice be received by the Company's
Secretary at least 30 but not more than 90 days before the anniversary of the
record date for determination of shareholders entitled to vote at the
immediately preceding annual meeting of shareholders. The notice must include
information about the business desired to be brought before the annual meeting,
and any material interest of the shareholders therein, and the shareholder's
beneficial ownership of the Company's securities.
18
<PAGE> 25
The described provisions may have the effect of assisting incumbent
management in retaining their positions and discouraging business combination
transactions, such as a merger, which management does not first approve.
Under the Articles, except where a greater vote is required by the Michigan
Business Corporation Act, the affirmative vote of 66 2/3 percent of the Voting
Stock and a majority of the Voting Stock not held by the beneficial owner of 10
percent or more of the Voting Stock of the Company (an "Interested Shareholder")
is required to approve certain business combination transactions with an
Interested Shareholder not approved by the Company's Board of Directors, unless
the price per share to be received by all shareholders is at least equal to the
highest price paid for shares of Voting Stock purchased by the Interested
Shareholder within the preceding two years. The Articles also provide that any
merger with another corporation other than a subsidiary, sale or disposition of
substantially all assets, or liquidation or dissolution requires the affirmative
vote of at least 66 2/3 percent of the Voting Stock, unless it is approved by a
majority of the Company's Directors, other than those affiliated with the other
party to the transaction.
The Articles discourage business combination transactions, such as a
merger, between the Company and a holder of a substantial block of Voting Stock,
unless management approves the transaction. Thus, the described provisions may
have the effect of giving a minority shareholder or group of shareholders,
including management, the ability to defeat a transaction which may be desired
by or viewed as beneficial to other shareholders.
The provisions of the Articles described herein may be amended or repealed
only by the affirmative vote of at least 66 2/3 percent of the Voting Stock. The
provisions of the Company's By-Laws described above and certain other By-Law
provisions may be amended or repealed only by the affirmative vote of at least
66 2/3 percent of the Voting Stock or 80 percent of the Company's full Board of
Directors.
The Articles provide that when the Board of Directors is evaluating a
tender or exchange offer of another person, an offer to merge, or to purchase
all the assets of the Company, it shall consider all relevant factors including
the social and economic effects on employees, customers, suppliers, and other
constituencies and on the communities in which the Company operates or is
located. This provision of the Company's Articles may allow the Company's Board
of Directors to use the factors stated as a basis for rejecting an offer that,
judged strictly on its financial terms, may be desirable by the Company's
shareholders.
The Company's Articles and By-Laws, as described above, generally contain
provisions that may have the effect of discouraging, delaying, deterring, or
preventing a change in control of the Company, through a business combination
transaction or otherwise. These provisions may also have the effect of making
the Company's incumbent management more difficult to remove and may discourage
accumulations of significant blocks of Common Stock. However, the Company's
intent in implementing the provisions described above, was not to discourage
proposals involving a change in control of the Company, but to encourage the
makers of such proposals to negotiate with the Company's management and Board of
Directors so that they can act in the best interest of shareholders.
PLAN OF DISTRIBUTION
The Company may offer and sell the Securities to or through underwriting
syndicates represented by managing underwriters, to or through underwriters
without a syndicate, or to investors directly or through dealers or agents. The
Prospectus Supplement with respect to the Securities will set forth the terms of
the offering, including the name or names of any underwriters, dealers or
agents, the purchase price and the net proceeds to the Company from such sale,
any underwriting discounts, agency fees and other items constituting
underwriters' or agents' compensation, any initial public offering price and any
discounts or concessions allowed, re-allowed or paid to dealers.
The Company may also issue Purchase Contracts under which the counterparty
may be required to purchase Debt Securities, Preferred Shares or Depositary
Shares. Such Purchase Contracts would be issued with Debt Securities, Preferred
Shares and/or Depositary Shares in amounts, at prices and on terms and
containing such conditions, covenants and other provisions, as will be set forth
in a Prospectus Supplement.
19
<PAGE> 26
If any underwriters are involved in the offer and sale of the Securities,
such Securities will be acquired by the underwriters and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the accompanying Prospectus Supplement, the
obligations of the underwriters to purchase the Securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the Securities described in such Prospectus Supplement if any are purchased.
Any initial public offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may be changed from time to time.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act of 1933.
Certain of the underwriters, dealers or agents may be engaged in
transactions with, and perform services for, the Company or one or more of its
affiliates in the ordinary course of business.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered will be set forth in the accompanying Prospectus
Supplement.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Company by Howard & Howard Attorneys, P.C., Kalamazoo, Michigan. J. Michael
Kemp, President and Chief Executive Officer of Howard & Howard, is a director of
the Company. As of July 1, 1994, Mr. Kemp owned 29,982 shares of Common Stock
jointly with his spouse, 1,211 shares individually, and 276 shares in a
retirement trust.
EXPERTS
The consolidated financial statements of First of America Bank Corporation
as of December 31, 1993 and 1992, and for each of the years in the three-year
period ended December 31, 1993, incorporated by reference herein and elsewhere
in the registration statement have been incorporated by reference herein and in
the registration statement in reliance upon the report of KPMG Peat Marwick,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
20
<PAGE> 27
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE
AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Description of the Notes................ S-2
Use of Proceeds......................... S-4
The Company............................. S-4
Recent Developments..................... S-4
Recent Financial Results................ S-5
Underwriting............................ S-6
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents By
Reference............................. 2
The Company............................. 3
Use of Proceeds......................... 4
Ratios of Earnings to Fixed Charges And
Combined Fixed Charges And Preferred
Stock Dividends....................... 4
Description of the Debt Securities...... 5
Description of Preferred Shares......... 10
Description of Depositary Shares........ 15
Description of Common Stock............. 18
Certain Provisions of the Company's
Restated Articles of Incorporation and
By-Laws............................... 18
Plan of Distribution.................... 19
Legal Opinions.......................... 20
Experts................................. 20
</TABLE>
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$200,000,000
[LOGO]
7 3/4% SUBORDINATED NOTES
DUE JULY 15, 2004
-----------------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------------
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
CHEMICAL SECURITIES INC.
KEEFE, BRUYETTE & WOODS, INC.
JULY 19, 1994
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