<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1997
REGISTRATION NO. 333-28897
333-28897-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
BROAD NATIONAL BANCORPORATION BNB CAPITAL TRUST
(EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS SPECIFIED
SPECIFIED IN ITS CHARTER) IN ITS TRUST AGREEMENT)
DELAWARE
(STATE OR OTHER JURISDICTION OF
NEW JERSEY INCORPORATION OR ORGANIZATION)
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) 6719
(PRIMARY STANDARD INDUSTRIAL
6021 CLASSIFICATION CODE NUMBER)
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) REQUESTED
(I.R.S. EMPLOYER IDENTIFICATION NO.)
22-2395057
(I.R.S. EMPLOYER IDENTIFICATION
NO.)
905 BROAD STREET
NEWARK, NEW JERSEY 07102
(201) 624-2300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
--------------
DONALD M. KARP
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BROAD NATIONAL BANCORPORATION
905 BROAD STREET, NEWARK, NEW JERSEY 07102
(201) 624-2300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
COPIES TO:
RONALD H. JANIS, ESQ. JAMES W. ALLEN, ESQ.
PITNEY, HARDIN, KIPP & SZUCH STINSON, MAG & FIZZELL, P.C.
P.O. BOX 1945 1201 WALNUT STREET,
MORRISTOWN, NEW JERSEY 07962-1945 KANSAS CITY, MISSOURI 64106
(201) 966-6300 (816) 842-8600
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this form, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
AMOUNT PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Cumulative Trust
Preferred Securities of
BNB Capital Trust........ 1,150,000 shares $10.00 $11,500,000 $3,484.85
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% Junior Subordinated
Debentures of Broad
National
Bancorporation(2)........
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Guarantee of Broad
National Bancorporation
of certain obligations
under the Cumulative
Trust Preferred
Securities(3)............
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Total...................
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
exclusive of accrued interest and dividends, if any.
(2) The Junior Subordinated Debentures will be purchased by BNB Capital Trust
with the proceeds of the sale of the Cumulative Trust Preferred
Securities. Such securities may later be distributed for no additional
consideration to the holders of the Cumulative Trust Preferred Securities
upon the dissolution of the Trust and the distribution of its assets.
(3) This Registration Statement is deemed to cover the Guarantee. Pursuant to
Rule 457(n) under the Securities Act, no separate registration fee is
payable for the Guarantee.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 24, 1997
PROSPECTUS
LOGO BNB
$10,000,000
BNB CAPITAL TRUST
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
BROAD NATIONAL BANCORPORATION
The % Cumulative Trust Preferred Securities offered hereby (the "Preferred
Securities") represent preferred undivided beneficial interests in the assets
of BNB Capital Trust, a statutory business trust created under the laws of the
State of Delaware (the "Issuer Trust"). Broad National Bancorporation (the
"Company") initially will be the holder of all of the beneficial interests
represented by common securities of the Issuer Trust (the "Common Securities"
and, together with the Preferred Securities offered hereby, the "Trust
Securities").
(Continued on next page)
-----------
Application will be made to include the Preferred Securities in Nasdaq's
National Market under the symbol "BNBCP." See "Risk Factors--Absence of
Market."
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES.
-----------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF
A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER INSURER OR 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.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) COMMISSION(2) ISSUER TRUST(3)(4)
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<S> <C> <C> <C>
Per Preferred Security............ $10.00 (4) $10.00
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Total(5).......................... $10,000,000 (4) $10,000,000
</TABLE>
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(1) Plus accrued Distributions, if any, from , 1997.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriter against certain liabilities under the Securities Act of 1933.
See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $265,000.
(4) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Company has agreed to pay to the Underwriter, as compensation for arranging
the investment therein of such proceeds, $.30 per Preferred Security (or
$300,000 in the aggregate) and an advisory fee equal to 1% of the gross
proceeds of the offering. See "Underwriting."
(5) The Company has granted the Underwriter an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional
$1,500,000 aggregate liquidation amount of the Preferred Securities on the
same terms as set forth above, solely to cover over-allotments, if any. If
such over-allotment option is exercised in full, the total Price to Public
and Proceeds to Issuer Trust will be $11,500,000 and $11,500,000,
respectively. See "Underwriting."
The Preferred Securities are offered by the Underwriter subject to receipt
and acceptance by them, prior sale and the Underwriter's right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Preferred Securities will be made
in book-entry form through the book-entry facilities of The Depository Trust
Company on or about , 1997 against payment therefor in immediately available
funds.
-----------
[LOGO OF RYAN, BECK & CO.]
-----------
The date of this Prospectus is June , 1997
<PAGE>
(cover page continued)
The Issuer Trust exists for the sole purpose of issuing the Trust Securities
and investing the proceeds thereof in % Junior Subordinated Debentures (the
"Junior Subordinated Debentures," and together with the Trust Securities, the
"Securities") to be issued by the Company. The Junior Subordinated Debentures
will mature on , 2027 (the "Stated Maturity"). The Preferred Securities
will have a preference under certain circumstances over the Common Securities
with respect to cash distributions and amounts payable on liquidation,
redemption or otherwise. See "Description of Preferred Securities--
Subordination of Common Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust
Company, as depositary ("DTC"). Beneficial interests in the global securities
will be shown on, and transfer thereof will be effected only through, records
maintained by DTC and its participants. Except as described under "Description
of Preferred Securities," Preferred Securities in definitive form will not be
issued and owners of beneficial interests in the global securities will not be
considered holders of the Preferred Securities. Settlement for the Preferred
Securities will be made in immediately available funds. The Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity for the Preferred Securities therefore will settle in
immediately available funds.
Holders of the Preferred Securities will be entitled to receive preferential
cumulative cash distributions accumulating from , 1997 and payable
quarterly in arrears on the last day of March, June, September and December of
each year commencing , 1997, at the annual rate of % of the Liquidation
Amount of $10 per Preferred Security ("Distributions"). The Company has the
right to defer payment of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding 20 consecutive
quarterly periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. No interest shall be due and
payable during any Extension Period, except at the end thereof. Upon the
termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Junior Subordinated
Debentures are so deferred, Distributions on the Preferred Securities also
will be deferred and the Company will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash distributions with
respect to the Company's capital stock or with respect to debt securities of
the Company that rank pari passu in all respects with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Preferred Securities are entitled will
accumulate) at the rate of % per annum, compounded quarterly, and holders of
Preferred Securities will be required to accrue interest income for United
States federal income tax purposes. See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount."
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture (each as defined
herein), taken together, fully, irrevocably and unconditionally guaranteed all
the Issuer Trust's obligations under the Preferred Securities as described
below. See "Relationship Among the Preferred Securities, the Junior
Subordinated Debentures and the Guarantee--Full and Unconditional Guarantee."
The Guarantee of the Company guarantees the payment of Distributions and
payments on liquidation or redemption of the Preferred Securities, but only in
each case to the extent of funds held by the Issuer Trust, as described herein
(the "Guarantee"). See "Description of Guarantee." If the Company does not
make payments on the Junior Subordinated Debentures held by the Issuer Trust,
the Issuer Trust may have insufficient funds to pay Distributions on the
Preferred Securities. The Guarantee does not cover payment of Distributions
when the Issuer Trust does not have sufficient funds to pay such
Distributions. In such event, a holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce payment of such
Distributions to such holder. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Preferred Securities."
The obligations of the Company under the Guarantee and
2
<PAGE>
the Preferred Securities are subordinate and junior in right of payment to all
Senior Indebtedness (as defined in "Description of Junior Subordinated
Debentures--Subordination") of the Company.
The Preferred Securities are subject to mandatory redemption (i) in whole,
but not in part, upon repayment of the Junior Subordinated Debentures at
Stated Maturity or, at the option of the Company, their earlier redemption in
whole upon the occurrence of a Tax Event, an Investment Company Event or a
Capital Treatment Event (each as defined herein) and (ii) in whole or in part
at any time on or after , 2002 contemporaneously with the optional
redemption by the Company of the Junior Subordinated Debentures in whole or in
part. The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after , 2002, in whole at any time or
in part from time to time, or (ii) in whole, but not in part, at any time
within 90 days following the occurrence and continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, in each case at a
redemption price set forth herein, which includes the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed
for redemption. The ability of the Company to exercise its rights to redeem
the Junior Subordinated Debentures or to cause the redemption of the Preferred
Securities prior to the Stated Maturity may be subject to prior regulatory
approval by the Board of Governors of the Federal Reserve System (the "Federal
Reserve"), if then required under applicable Federal Reserve capital
guidelines or policies. See "Description of Junior Subordinated Debentures--
Redemption" and "Description of Preferred Securities--Liquidation Distribution
Upon Dissolution."
The holders of the outstanding Common Securities have the right at any time
to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to cause the
Junior Subordinated Debentures to be distributed to the holders of the
Preferred Securities and Common Securities in liquidation of the Issuer Trust.
The ability of the Company, as holder of the Common Securities, to dissolve
the Issuer Trust may be subject to prior regulatory approval of the Federal
Reserve, if then required under applicable Federal Reserve capital guidelines
or policies. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
In the event of the dissolution of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law,
the holders of the Preferred Securities will be entitled to receive a
Liquidation Amount of $10 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, subject to certain exceptions,
which may be in the form of a distribution of such amount in Junior
Subordinated Debentures. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness of the Company. See "Description of Junior Subordinated
Debentures--Subordination."
Prospective purchasers must carefully consider the information set forth in
"Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS OF
THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
3
<PAGE>
[MAP]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS,
SYNDICATE SHORT COVERING TRANSACTIONS, PENALTY BIDS AND PASSIVE MARKET MAKING.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
4
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus on the reports being delivered with this
Prospectus. Unless otherwise indicated, all information in this Prospectus is
based on the assumption that the Underwriter (as defined herein) will not
exercise its over-allotment option.
BROAD NATIONAL BANCORPORATION
The Company is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended. As of March 31, 1997, the Company had total
consolidated assets of $531.6 million, total deposits of $481.9 million and
total shareholders' equity of $38.9 million. The Company was incorporated under
the laws of the State of New Jersey on April 7, 1981, and commenced business on
February 1, 1983 when it acquired all of the issued and outstanding capital
stock of Broad National Bank, a national banking association (the "Bank")
pursuant to a corporate reorganization involving an exchange of shares. The
Company's activities currently are limited to ownership of the outstanding
capital stock of the Bank and to performing certain services for the Bank. As a
bank holding company, the Company is subject to the supervision of the Federal
Reserve.
The Company's executive offices are located at 905 Broad Street, Newark, New
Jersey, 07102, and its telephone number is (201) 624-2300.
The Bank is a national banking association organized in 1925 under the laws
of the United States, with 14 full service branches and one electronic branch
facility serving the New Jersey counties of Essex, Union, Bergen, Hudson and
Middlesex. The Bank's deposits are insured by the Bank Insurance Fund, which is
administered by the Federal Deposit Insurance Corporation ("FDIC"), to the
maximum extent provided by law.
The Bank is a full service commercial bank which offers a broad range of
commercial and retail banking services, including demand, savings and time
accounts, commercial loans, commercial and residential mortgages and consumer
loans. The Bank also has an investment portfolio primarily consisting of
mortgage-backed securities and U.S. Treasury and Federal government agency
obligations.
The Bank focuses its lending activities on the commercial sector, with
commercial loans and commercial mortgages comprising the largest components of
the total loan portfolio. The Bank is seeking to increase its residential
mortgage and consumer loan portfolios, and in this regard it has expanded its
residential mortgage product line and is conducting promotional programs aimed
at increasing its consumer loan portfolio. Most recently, the Bank's deposit
growth has been generated from time deposits obtained primarily through new or
expanded relationships with governmental units in the markets it serves. The
Bank is focusing its efforts on attracting non-interest bearing demand accounts
and lower costing interest-bearing demand accounts which generally represent a
more stable source of funds than higher rate time accounts. To achieve this the
Bank is pursuing programs to bring a higher level of service to its customers
through greater automation and improved work processes, and is seeking to offer
more attractive deposit product options at competitive rates.
Operating characteristics of the Company in recent years include the
following:
. CAPITAL ADEQUACY. The Company and the Bank exceed all applicable minimum
regulatory capital requirements, and meet the regulatory requirements
for classification as well-capitalized institutions. At March 31, 1997,
the Company had Tier 1 risk-based, total risk-based and Tier 1 leverage
capital ratios of 11.41%, 12.68%, and 7.06%, respectively, as compared
to the minimum requirements of 4.0%, 8.0% and 4.0%, respectively, and
the well capitalized requirements of 6.0%, 10.0% and 5.0%, respectively.
At March 31, 1997, the Bank had Tier 1 risk-based, total risk-based and
Tier 1 leverage capital ratios of 11.23%, 12.50% and 6.95%,
respectively.
5
<PAGE>
. PROFITABILITY. The Company had net income of $1,661,000 and $1,037,000
for the three months ended March 31, 1997 and 1996, respectively. The
annualized returns on average assets were 1.24% and 0.89% for the three
months ended March 31, 1997 and 1996, respectively. The annualized
returns on average shareholders' equity were 17.17% and 11.91% for the
three months ended March 31, 1997 and 1996, respectively. Net income was
$5.3 million, $4.4 million, and $4.7 million for the years ended
December 31, 1996, 1995 and 1994, respectively. Return on average assets
was 1.05%, 0.97%, and 1.04%, for the years ended December 31, 1996,
1995, and 1994, respectively. The returns on average shareholders'
equity were 14.58%, 13.52% and 16.16% for the years ended December 31,
1996, 1995 and 1994, respectively.
. ASSET QUALITY. The Company seeks to maintain asset quality and manage
credit risk. The Company's non-performing assets decreased from $14.5
million or 2.72% of total assets at December 31, 1996 to $12.8 million
or 2.41% of total assets at March 31, 1997. These levels of non-
performing assets compare favorably to those reported at December 31,
1995 when non-performing assets totaled $16.1 million, or 3.34% of total
assets. The allowance for possible loan losses as a percentage of non-
performing loans increased to 111.06% at March 31, 1997 from 87.65% at
December 31, 1996. At December 31, 1995, the allowance for possible loan
losses as a percentage of non-performing loans was 72.47%.
. DEPOSIT COMPOSITION. Significant levels of transaction and savings
accounts provide the Company with a relatively stable, low-cost source
of funds. As of March 31, 1997, non-interest bearing demand, interest-
bearing demand and savings accounts in the aggregate accounted for 64.4%
of total deposits. Excluding the beneficial effect to the Company of
non-interest bearing demand deposits, the average rate paid on interest-
bearing deposits was 3.60% for the first three months of 1997.
. RE-ENGINEERING PROJECT. During 1996, the Bank launched a re-engineering
initiative designed to leverage technology, empower employees, improve
work processes and bring a higher level of service to customers. The
Company believes that this program has been instrumental in further
improving operating efficiency by increasing non-interest income and
controlling non-interest expenses. Non-interest income for 1996 improved
by 46% over the prior year period, while non-interest expenses increased
by 1.6%. The growth rate for non-interest income for 1996 is not
expected to be attained in 1997. The Company's efficiency ratio was
58.41% for the three months ended March 31, 1997, 66.28% for the year
ended December 31, 1996 and 70.48% for the year ended December 31, 1995.
. CAPITAL TRANSACTIONS. During 1996, the Company called for redemption all
outstanding shares of its 1985 and 1992 classes of convertible preferred
stock. A total of 99.3%, or 575,730 shares, of outstanding convertible
preferred stock were converted to common stock in lieu of the
redemption. As of December 31, 1996 the Company had no preferred stock
outstanding. Separately, the Company announced in November 1996 a
100,000 share common stock repurchase program. As of April 23, 1997, a
total of 92,500 shares have been repurchased at an aggregate cost of
$1.393 million. On June 24, 1997, the Company announced that the board
of directors had authorized management to use up to $4,000,000 for share
repurchases from time to time in the open market.
BNB CAPITAL TRUST
The Issuer Trust is a statutory business trust formed under Delaware law
pursuant to (i) a trust agreement, dated as of June 9, 1997, executed by the
Company, as Depositor, Bankers Trust Company, as Property Trustee, and Bankers
Trust (Delaware), as Delaware Trustee, and (ii) the filing of a Certificate of
Trust with the Delaware Secretary of State on June 9, 1997. Such initial trust
agreement will be amended and restated in its entirety (as so amended and
restated, the "Trust Agreement"), as of the date the Preferred Securities are
initially issued. Two individuals will be selected by the holder of the Common
Securities to act as administrators with respect to the Issuer Trust (the
"Administrators"). The Company, while holder of the Common Securities, intends
to select two individuals who are employees or officers of or affiliated with
the Company to serve as Administrators. The Issuer Trust's business and affairs
are conducted by its Property Trustee, Delaware Trustee, and two
6
<PAGE>
Administrators. The Issuer Trust exists for the exclusive purposes of (i)
issuing and selling the Preferred Securities and Common Securities, (ii) using
the proceeds from the sale of Preferred Securities and Common Securities to
acquire the Junior Subordinated Debentures issued by the Company and (iii)
engaging in only those other activities necessary, advisable or incidental
thereto (such as registering the transfer of the Preferred Securities).
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Issuer Trust and payments under the Junior Subordinated Debentures will be the
sole revenue of the Issuer Trust. All of the Common Securities will be owned by
the Company. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities, except that upon the
occurrence and during the continuance of an Event of Default under the Trust
Agreement resulting from an Event of Default under the Indenture, the rights of
the Company as holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Preferred Securities. The
Company will acquire Common Securities representing an aggregate liquidation
amount equal to 3% of the total capital of the Issuer Trust. The Issuer Trust
has a term of 31 years, but may terminate earlier as provided in the Trust
Agreement. The principal executive office of the Issuer Trust is 905 Broad
Street, Newark, New Jersey 07102 and its telephone number is (201) 624-2300.
THE OFFERING
Securities Offered.............. The % Cumulative Trust Preferred
Securities represent preferred undivided
beneficial interests in the Issuer Trust's
assets, which will consist solely of the
Junior Subordinated Debentures. The Issuer
Trust has granted the Underwriter an option,
exercisable within 30 days after the date of
this Prospectus, to purchase up to an
additional 150,000 Preferred Securities at
the offering price, solely to cover over-
allotments, if any. See "Underwriting."
Offering Price.................. $10 per Preferred Security (Liquidation
Amount $10), plus accumulated Distributions,
if any, from , 1997.
Distributions...................
The distributions payable on each Preferred
Security will be fixed at a rate per annum of
% of the stated liquidation amount per
Preferred Security, will be cumulative, will
accrue from , 1997, the date of
issuance of the Preferred Securities, and
will be payable quarterly in arrears on the
last day of March, June, September and
December of each year, commencing ,
1997. See "Description of Preferred
Securities--Distributions."
Junior Subordinated The Issuer Trust will invest the proceeds
Debentures..................... from the issuance of the Preferred Securities
and Common Securities in an equivalent amount
of % Junior Subordinated Debentures of the
Company. The Junior Subordinated Debentures
will mature on , 2027. The Junior
Subordinated Debentures will rank subordinate
and junior in right of payment to all Senior
Indebtedness of the Company. In addition, the
Company's obligations under the Junior
Subordinated Debentures will be structurally
subordinated to all existing and future
liabilities and obligations of its
subsidiaries.
7
<PAGE>
Guarantee....................... Under the terms of the Guarantee, the Company
has guaranteed the payment of Distributions
and payments on liquidation or redemption of
the Preferred Securities, but only in each
case to the extent of funds held by the
Issuer Trust described herein. The Company
and the Issuer Trust believe that the
obligations of the Company under the
Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior
Subordinated Indenture taken together, fully,
irrevocably and unconditionally guarantee all
of the Issuer Trust's obligations relating to
the Preferred Securities. The obligations of
the Company under the Guarantee and the
Preferred Securities are subordinated and
junior in right of payment to all Senior
Indebtedness. See "Description of Guarantee."
Right to Defer Interest The Company has the right, at any time, to
Payments....................... defer payments of interest on the Junior
Subordinated Debentures for a period not
exceeding 20 consecutive quarters; provided
that no Extension Period may extend beyond
the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of
the Company's extension of the interest
payment period, quarterly Distributions on
the Preferred Securities will be deferred
(though such Distribution would continue to
accrue with interest thereon compounded
quarterly, since interest will continue to
accrue and compound on the Junior
Subordinated Debentures during any such
Extension Period). During an Extension
Period, the Company will be prohibited,
subject to certain exceptions described
herein, from declaring or paying any cash
distributions with respect to its capital
stock or debt securities that rank pari passu
with or junior to the Junior Subordinated
Debentures. Upon the termination of any
Extension Period and the payment of all
amounts then due, the Company may commence a
new Extension Period, subject to the
foregoing requirements. See "Description of
Junior Subordinated Debentures--Option to
Extend Interest Payment Period."
Should an Extension Period occur, Preferred
Security holders will continue to include
interest income (and de minimis original
issue discount, if any) for United States
income tax purposes. See "Certain Federal
Income Tax Consequences--Interest Income and
Original Issue Discount."
Redemption...................... The Preferred Securities are subject to
mandatory redemption (i) in whole, but not in
part, at the Stated Maturity upon repayment
of the Junior Subordinated Debentures, (ii)
in whole, but not in part, contemporaneously
with the optional redemption at any time by
the Company of the Junior Subordinated
Debentures upon the occurrence and
continuation of a Tax Event, Investment
Company Event or
8
<PAGE>
Capital Treatment Event and (iii) in whole or
in part at any time on or after , 2002,
contemporaneously with the optional
redemption by the Company of the Junior
Subordinated Debentures in whole or in part,
in each case at the applicable Redemption
Price. See "Description of Preferred
Securities--Redemption."
Liquidation of the Issuer The Company, as holder of the Common
Trust.......................... Securities, has the right at any time to
dissolve the Issuer Trust and cause the
Junior Subordinated Debentures to be
distributed to holders of Preferred
Securities in liquidation of the Issuer
Trust, subject to the Company having received
prior approval of the Federal Reserve to do
so, if then required under applicable capital
guidelines or policies of the Federal
Reserve. See "Description of Preferred
Securities--Liquidation Distribution Upon
Dissolution."
Voting Rights................... Generally, the holders of the Preferred
Securities will not have any voting rights.
See "Description of Preferred Securities--
Voting Rights" and "Risk Factors--Limited
Voting Rights."
Use of Proceeds................. The net proceeds from the sale of the
Preferred Securities offered hereby will be
used by the Issuer Trust to purchase the
Junior Subordinated Debentures issued by the
Company. The net proceeds to the Company from
the sale of the Junior Subordinated
Debentures are estimated to be approximately
$ million ($ million if the
Underwriter's over-allotment option is
exercised in full). A portion of the net
proceeds to be received by the Company from
the sale of the Junior Subordinated
Debentures may be used to make capital
contributions through investments in or
advances to the Bank. The remainder of the
proceeds will be retained by the Company and
may be used to repurchase the Company's
common stock and for other general corporate
purposes as well as to meet debt service
obligations of the Company pursuant to the
Junior Subordinated Debentures. Pending such
use, the net proceeds may be temporarily
invested in short-term obligations. The
precise amounts and timing of the application
of proceeds will depend upon the funding
requirements of the Company and its
subsidiaries and the availability of other
funds. See "Use of Proceeds."
Capital Treatment............... The Trust Securities will qualify as Tier 1
capital of the Company, subject to the 25%
Capital Limitation (as defined herein), under
the risk-based capital guidelines of the
Federal Reserve. See "Use of Proceeds."
ERISA Considerations............ Prospective purchasers should consider the
information set forth under "Certain ERISA
Considerations."
Nasdaq National Market Symbol...
Application has been made to have the
Preferred Securities approved for quotation
on the Nasdaq National Market under the
symbol "BNBCP."
9
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the matters set forth under
"Risk Factors," beginning on page 12.
SELECTED CONSOLIDATED FINANCIAL DATA
The table below sets forth the selected historical financial information for
the Company at or for each of the years in the five-year period ended December
31, 1996 and the three-month periods ended March 31, 1997 and 1996. Such
information has been derived from, and should be read in conjunction with, the
consolidated financial statements of the Company, including the respective
notes thereto, and management's discussion and analysis of financial condition
and results of operations contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, which are incorporated by reference in this
Prospectus. See "Incorporation of Certain Documents by Reference." The selected
historical financial information for the three-month periods ended March 31,
1997 and 1996 reflect, in the opinion of the management of the Company, all
adjustments (comprising only normal recurring accruals) necessary for a fair
presentation of the consolidated operating results and financial position of
the Company for such interim periods. Results for the three-month period ended
March 31, 1997 are not necessarily indicative of the results to be expected for
the full year or any other period.
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED AT OR FOR THE YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- --------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED
STATEMENTS OF
CONDITION INFORMATION
Total assets............ $ 531,634 $ 471,405 $533,615 $481,185 $428,630 $438,532 $405,634
Loans, gross............ 291,664 273,598 287,364 267,419 267,422 265,920 256,293
Investment securities... 167,389 135,744 159,214 116,212 110,933 102,165 99,654
Total deposits.......... 481,885 427,386 485,073 429,681 391,466 406,066 378,699
Short-term borrowings
and long-term debt..... 1,000 1,272 1,000 782 177 342 3,660
Shareholders' equity.... 38,894 34,802 38,358 34,529 30,266 27,421 18,975
CONSOLIDATED STATEMENTS
OF INCOME INFORMATION
Interest Income......... $ 9,682 $ 8,104 $ 35,162 $ 33,398 $ 29,795 $ 28,313 $ 30,441
Interest Expense........ 3,521 2,613 11,818 10,082 7,464 8,082 11,817
Net interest income..... 6,161 5,491 23,344 23,316 22,331 20,231 18,624
Provision for possible
loan losses............ 450 225 1,350 720 450 900 2,435
Net interest income
after provision for
possible loan losses... 5,711 5,266 21,994 22,596 21,881 19,331 16,189
Non-interest income..... 1,893 1,072 6,556 4,491 3,649 4,023 4,405
Non-interest expense.... 4,690 4,700 19,849 19,536 20,073 19,813 17,590
Income before income
taxes and
cumulative effect of a
change in
accounting principle... 2,914 1,638 8,701 7,551 5,457 3,541 3,004
Provision for income
taxes.................. 1,253 601 3,428 3,131 768 1,491 1,311
Net income before
cumulative effect of a
change in accounting
principle.............. 1,661 1,037 5,273 4,420 4,689 2,050 1,693
Cumulative effect of a
change in
accounting principle... -- -- -- -- -- 1,086 --
Net income.............. 1,661 1,037 5,273 4,420 4,689 3,136 1,693
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED AT OR FOR THE YEARS ENDED
MARCH 31, DECEMBER 31,
--------------------- ----------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- --------- ------ ----- ----- ----- -----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income per common
share
Primary
Before cumulative
effect of a change in
accounting principle.. $ 0.35 $ 0.24 $ 1.13 $1.16 $1.29 $0.45 $0.52
Cumulative effect of a
change in accounting
principle............. -- -- -- -- -- 0.35 --
---------- --------- ------ ----- ----- ----- -----
Primary earnings per
common share........... $ 0.35 $ 0.24 $ 1.13 $1.16 $1.29 $0.80 $0.52
---------- --------- ------ ----- ----- ----- -----
Fully diluted
Before cumulative
effect of a change in
accounting principle.. $ 0.34 $ 0.22 $ 1.10 $0.93 $1.00 $0.46 $0.52
Cumulative effect of a
change in accounting
principle............. -- -- -- -- -- 0.24 --
---------- --------- ------ ----- ----- ----- -----
Fully diluted earnings
per common share....... $ 0.34 $ 0.22 $ 1.10 $0.93 $1.00 $0.70 $0.52
---------- --------- ------ ----- ----- ----- -----
Cash dividends per
common share........... 0.10 0.07 0.28 0.17 0.16 -- --
Book value per common
share.................. 8.37 7.45 8.21 7.40 7.15 6.26 5.89
Dividend payout ratio... 28.00% 32.02% 24.54% 26.58% 24.05% 31.17% --%
Weighted average number
of common shares
outstanding
(in thousands):
Primary................ 4,813 4,326 4,650 3,302 3,168 3,121 3,093
Assuming full
dilution.............. 4,851 4,758 4,791 4,735 4,676 4,553 3,216
FINANCIAL RATIOS
Return on average
assets(1).............. 1.24% 0.89% 1.05% 0.97% 1.04% 0.48% 0.39%
Return on average
shareholders'
equity(1).............. 17.17 11.91 14.58 13.52 16.16 7.83 9.27
Average equity to
average assets......... 7.23 7.48 7.20 7.14 6.44 6.12 4.24
Net interest margin(1).. 4.95 5.14 5.05 5.59 5.41 5.12 4.68
Net interest spread(1).. 4.18 4.41 4.33 4.88 4.92 4.55 4.05
ASSET QUALITY RATIOS
Non-performing loans as
a % of gross loans(2).. 2.75% 4.78% 3.39% 3.82% 3.63% 7.72% 7.57%
Non-performing loans as
a % of total
assets(2).............. 1.51 2.77 1.82 2.12 2.26 4.68 4.79
Allowance for possible
loan losses as a % of
gross loans............ 3.05 2.72 2.97 2.77 2.84 4.23 4.94
Allowance for possible
loan losses as a % of
non-
performing loans(2).... 111.06 57.05 87.65 72.47 78.32 54.81 65.21
Net chargeoffs as a % of
average gross
loans(1)............... 0.10 0.28 0.08 0.35 1.56 0.90 0.67
Non-performing assets as
a % of loans and
OREO(3)................ 4.38 6.58 5.03 6.00 5.81 10.03 10.98
CAPITAL RATIOS
Leverage capital........ 7.06% 7.33% 6.92% 7.17% 7.00% 6.23% 4.34%
Tier 1 capital to total
risk-weighted assets... 11.41 10.79 11.17 10.58 9.96 9.16 6.55
Total capital to total
risk-weighted assets... 12.68 12.05 12.44 11.85 11.22 10.45 7.84
RATIO OF EARNINGS TO
FIXED CHARGES(4)
Including interest on
deposits............... 1.83 1.63 1.74 1.71 1.68 1.30 1.25
Excluding interest on
deposits............... 243.83 92.00 151.02 11.08 9.76 1.90 4.62
</TABLE>
- -------
(1) Interim ratios for the three-month periods ended March 31, 1997 and 1996
have been annualized for purposes of comparability with full year periods.
(2) Non-performing loans include nonaccrual loans and loans past due 90 days
and still accruing.
(3) Non-performing assets include non-performing loans, restructured loans and
other real estate owned (OREO).
(4) The ratio of earnings to fixed charges is computed by dividing the sum of
income before taxes, fixed charges and preferred stock dividends by the sum
of fixed charges and preferred stock dividends. Fixed charges represent
interest expense (inclusive or exclusive of interest on deposits as
indicated).
11
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Preferred Securities offered by this Prospectus. An investment in the
Preferred Securities involves a high degree of risk. Certain statements in
this Prospectus and documents incorporated herein by reference are forward-
looking and are identified by the use of forward-looking words or phrases such
as "intended," "will be positioned," "expects," is or are "expected,"
"anticipates," and "anticipated." These forward-looking statements are based
on the Company's current expectations. To the extent any of the statements
contained in this Prospectus constitutes a "forward-looking statement" as
defined in Section 27A(i)(1) of the Securities Act of 1933, the risk factors
set forth below are cautionary statements identifying important factors that
could cause actual results to differ materially from those in the forward-
looking statement.
RISK FACTORS RELATING TO THE OFFERING
PREFERRED SECURITIES RANK JUNIOR TO UNLIMITED SENIOR INDEBTEDNESS
The obligations of the Company under the Guarantee issued by the Company for
the benefit of the holders of Preferred Securities and under the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Senior Indebtedness. None of the Junior Subordinated Indenture, the Guarantee
or the Trust Agreement places any limitation on the amount of secured or
unsecured debt, including Senior Indebtedness, that may be incurred by the
Company. See "Description of Guarantee--Status of the Guarantee" and
"Description of Junior Subordinated Debentures--Subordination."
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the
Junior Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default (as defined in the Junior Subordinated
Indenture) has occurred and is continuing with respect to the Junior
Subordinated Debentures (a "Debenture Event of Default"), the Company has the
right under the Junior Subordinated Indenture to defer the payment of interest
on the Junior Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures--Debenture Events of Default." As a consequence
of any such deferral, quarterly Distributions on the Preferred Securities by
the Issuer Trust will be deferred during any such Extension Period.
Distributions to which holders of the Preferred Securities are entitled will
accumulate additional Distributions thereon during any Extension Period at the
rate of % per annum, compounded quarterly from the relevant payment date
for such Distributions, computed on the basis of a 360-day year of twelve 30-
day months and the actual days elapsed in a partial month in such period.
Additional Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four. The term "Distribution" as
used herein shall include any such additional Distributions. During any such
Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment
of principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu in all respects
with or junior in interest to the Junior Subordinated Debentures (other than
(a) repurchases, redemptions or other acquisitions of shares of capital stock
of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or shareholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of
the Company's indebtedness for any
12
<PAGE>
class or series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, (d) any declaration of a dividend in connection with any
shareholders' rights plan, or the issuance of rights, stock or other property
under any shareholders' rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise
of such warrants, options or other rights is the same stock as that on which
the dividend is being paid or ranks pari passu with or junior to such stock).
Prior to the termination of any such Extension Period, the Company may further
defer the payment of interest, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any Extension Period
and the payment of all interest then accrued and unpaid (together with
interest thereon at the annual rate of %, compounded quarterly, to the
extent permitted by applicable law), the Company may elect to begin a new
Extension Period subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election to begin an Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Property Trustee
will give notice of the Company's election to begin a new Extension Period to
the holders of the Preferred Securities. Subject to the foregoing, there is no
limitation on the number of times that the Company may elect to begin an
Extension Period. See "Description of Preferred Securities--Distributions" and
"Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Period."
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount ("OID")) for
United States federal income tax purposes in respect of its pro rata share of
the Junior Subordinated Debentures held by the Issuer Trust, which will
include a holder's pro rata share of both the stated interest and de minimis
OID, if any, on the Junior Subordinated Debentures. As a result, a holder of
Preferred Securities will include such OID in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Preferred Securities prior to the record date for the payment
of Distributions. See "Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount" and "--Sales of Preferred Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of his, her or its Preferred Securities
during an Extension Period, therefore, might not receive the same return on
his, her or its investment as a holder that continues to hold its Preferred
Securities. In addition, as a result of the existence of the Company's right
to defer interest payments, the market price of the Preferred Securities
(which represent preferred undivided beneficial interests in the assets of the
Issuer Trust) may be more volatile than the market prices of other securities
on which original issue discount or interest accrues that are not subject to
such deferrals.
TAX EVENT, INVESTMENT COMPANY EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event, the Company has the right to redeem
the Junior Subordinated Debentures in whole, but not in part, at any time
within 90 days following the occurrence of such Tax Event, Investment Company
Event or Capital Treatment Event and thereby cause a mandatory redemption of
the Preferred Securities. Any such redemption shall be at a price equal to the
liquidation amount of the Preferred Securities, together with accumulated
Distributions to but excluding the date fixed for redemption. The ability of
the Company to exercise its rights to redeem the Junior Subordinated
Debentures prior to the Stated Maturity may be subject to prior regulatory
approval by the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines
13
<PAGE>
or policies. See "Description of Junior Subordinated Debentures--Redemption"
and "Description of Preferred Securities--Liquidation Distribution Upon
Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or which pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Issuer Trust is, or will be within 90 days of
the delivery of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures is
not, or within 90 days of the delivery of such opinion will not be, deductible
by the Company, in whole or in part, for United States federal income tax
purposes or (iii) the Issuer Trust is, or will be within 90 days of the
delivery of the opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
See "--Possible Tax Law Changes Affecting the Preferred Securities" for a
discussion of certain legislative proposals that, if adopted, could give rise
to a Tax Event, which may permit the Company to cause a redemption of the
Preferred Securities prior to , 2002.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change
or prospective change becomes effective or would become effective, as the case
may be, on or after the date of the issuance of the Preferred Securities.
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement, action or decision is announced on or after the date of
issuance of the Preferred Securities, there is more than an insubstantial risk
that the Company will not be entitled to treat an amount equal to the
Liquidation Amount of the Preferred Securities as "Tier 1 Capital" (or the
then equivalent thereof) except as otherwise restricted under the 25% Capital
Limitation (as defined herein), for purposes of the risk-based capital
adequacy guidelines of the Federal Reserve, as then in effect and applicable
to the Company.
EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The holders of all the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust. The
ability of the Company, as holder of the Common Securities, to dissolve the
Issuer Trust may be subject to prior regulatory approval of the Federal
Reserve, if then required under applicable Federal Reserve capital guidelines
or policies. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of the
Preferred Securities. However, if a
14
<PAGE>
Tax Event were to occur that would cause the Issuer Trust to be subject to
United States federal income tax with respect to income received or accrued on
the Junior Subordinated Debentures, a distribution of the Junior Subordinated
Debentures by the Issuer Trust would be a taxable event to the Issuer Trust
and the holders of the Preferred Securities. See "Certain Federal Income Tax
Consequences--Distribution of Junior Subordinated Debentures to
Securityholders."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities the
following payments, to the extent not paid by or on behalf of the Issuer
Trust: (i) any accumulated and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that the Issuer Trust has funds on hand
available therefor at the payment date, (ii) the Redemption Price with respect
to any Preferred Securities called for redemption, to the extent that the
Issuer Trust has funds on hand available therefor at such time, and (iii) upon
a voluntary or involuntary dissolution, winding up or liquidation of the
Issuer Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Preferred Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Issuer Trust has funds on hand available
therefor at such time, and (b) the amount of assets of the Issuer Trust
remaining available for distribution to holders of the Preferred Securities on
liquidation of the Issuer Trust. The Guarantee is subordinated as described
under "--Preferred Securities Rank Junior to Unlimited Senior Indebtedness"
and "Description of Guarantee--Status of the Guarantee." The holders of not
less than a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of the
Preferred Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Issuer Trust, the Guarantee Trustee or any other
person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, if a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
any amounts payable in respect of the Junior Subordinated Debentures on the
payment date on which such payment is due and payable, then a holder of
Preferred Securities may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of any amounts payable in
respect of such Junior Subordinated Debentures having a principal amount equal
to the aggregate Liquidation Amount of the Preferred Securities of such holder
(a "Direct Action"). In connection with such Direct Action, the Company will
have a right of set-off under the Junior Subordinated Indenture to the extent
of any payment made by the Company to such holder of Preferred Securities in
the Direct Action. Except as described herein, holders of Preferred Securities
will not be able to exercise directly any other remedy available to the
holders of the Junior Subordinated Debentures or assert directly any other
rights in respect of the Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures--Enforcement of Certain Rights by Holders of
Preferred Securities," "--Debenture Events of Default" and "Description of
Guarantee." The Trust Agreement provides that each holder of Preferred
Securities by acceptance thereof agrees to the provisions of the Guarantee and
the Junior Subordinated Indenture.
POSSIBLE TAX LAW CHANGES AFFECTING THE PREFERRED SECURITIES
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. One of the revenue provisions of those proposals would
generally deny interest deductions for interest on an instrument issued by a
corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. If enacted
as proposed by the President, this provision
15
<PAGE>
would be effective for instruments issued on or after the date of first action
by a Congressional committee with respect to the proposal. It is not clear
from the President's proposals what constitutes Congressional "committee
action" with respect to this proposal. Nonetheless, it is presently
anticipated that the House Ways and Means Committee will consider the proposal
during June 1997 and this may constitute such action. If the provision were to
apply to the Junior Subordinated Debentures, the Company would be unable to
deduct interest on the Junior Subordinated Debentures. There can be no
assurance, however, that future legislative proposals or final legislation
will not affect the ability of the Company to deduct interest on the Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which
may permit the Company to cause a redemption of the Preferred Securities
before , 2002. The Preferred Securities may be issued after first
committee action and if such proposed legislation is enacted as proposed, such
enactment would give rise to a Tax Event. See "Description of Junior
Subordinated Debentures--Redemption" and "Description of Preferred
Securities--Redemption." See also "Certain Federal Income Tax Consequences--
Possible Tax Law Changes." Under current law, the Company will be able to
deduct interest on the Junior Subordinated Debentures.
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have no voting rights except in limited
circumstances relating generally to the modification of the Preferred
Securities and the Guarantee and the exercise of the Issuer Trust's rights as
holder of Junior Subordinated Debentures. Holders of Preferred Securities will
not be entitled to appoint, remove or replace the Property Trustee or the
Delaware Trustee except upon the occurrence of certain events specified in the
Trust Agreement. The Property Trustee and the holders of all the Common
Securities may, subject to certain conditions, amend the Trust Agreement
without the consent of holders of Preferred Securities to cure any ambiguity
or make other provisions not inconsistent with the Trust Agreement or to
ensure that the Issuer Trust (i) will not be taxable as a corporation for
United States federal income tax purposes, or (ii) will not be required to
register as an "investment company" under the Investment Company Act. See
"Description of Preferred Securities--Voting Rights; Amendment of Trust
Agreement" and "--Removal of Issuer Trustees; Appointment of Successors."
ABSENCE OF MARKET
The Preferred Securities are a new issue of securities with no established
trading market. Application has been made to list the Preferred Securities in
the Nasdaq National Market, but one of the requirements for listing and
continued listing is the presence of two market makers for the Preferred
Securities. The Company and the Issuer Trust have been advised by Ryan, Beck &
Co. ("Ryan, Beck") that it intends to make a market in the Preferred
Securities. However, Ryan, Beck is not obligated to do so and such market
making may be interrupted or discontinued at any time without notice at the
sole discretion of Ryan, Beck. Moreover, there can be no assurance of a second
market maker for the Preferred Securities. Accordingly, no assurance can be
given as to the development or liquidity of any market for the Preferred
Securities.
MARKET PRICES
There can be no assurance as to the market prices for Preferred Securities,
or the market prices for Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a liquidation of the
Issuer Trust occurs. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures that a holder of Preferred Securities may receive on
liquidation of the Issuer Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby and holders
may experience difficulty reselling them or may be unable to sell them at all.
Because holders of Preferred Securities may receive Junior Subordinated
Debentures on termination of the Issuer Trust, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See
"Description of Junior Subordinated Debentures."
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<PAGE>
RISK FACTORS RELATING TO THE COMPANY
LOAN PORTFOLIO CONSIDERATIONS
Geographic Concentration. The Company's loan portfolio is varied, with no
undue concentration in any single industry, although most of the loans in the
Company's portfolio have been made to borrowers in New Jersey. Additionally, a
substantial portion of the Company's loans are secured by real estate in New
Jersey. Accordingly, the ultimate collectibility of a substantial portion of
the Company's loan portfolio is susceptible to changes in New Jersey's market
conditions. Declines in the New Jersey real estate market could negatively
impact the value of the collateral securing the Company's loans and its
results of operations.
Asset Quality. A significant portion of the Company's loan portfolio
consists of commercial mortgages and commercial loans. These lending
categories are generally considered to involve a higher degree of risk than
that for other lending categories, because, among other factors, such loans
tend to involve larger loan balances to a single borrower or groups of related
borrowers. The Company's loan officers are actively encouraged to identify
deteriorating loans. Loans are also monitored and categorized through an
analysis of their payment status. The Company's failure to timely and
accurately monitor the quality of its loans and other assets could have a
materially adverse effect on the operations and financial condition of the
Company. At March 31, 1997, the Company's non-performing assets, which consist
of (i) non-performing loans, which include non-accrual loans, and loans past
due 90 days or more as to interest or principal payments but not placed on
non-accrual status; (ii) loans that have been renegotiated due to a weakening
in the financial position of the borrower (restructured loans) and (iii) other
real estate owned (OREO), totaled $12.8 million. There can be no assurance
that the level of the Company's non-performing assets will not increase. High
levels of non-performing assets and the expenses associated with the
collection, maintenance and other operating costs of non-performing assets
could have a materially adverse effect on the operations and financial
condition of the Company.
PROVISIONS FOR POSSIBLE LOAN LOSSES
The Company makes a provision for possible loan losses based upon
management's analysis of potential losses in the loan portfolio and
consideration of prevailing economic conditions. The Company may need to
increase the provision for possible loan losses through additional provisions
in the future if the financial condition of any of its borrowers deteriorates
or if real estate values decline. See "Asset Quality." Furthermore, various
regulatory agencies, as an integral part of their examination process,
periodically review the Company's loan portfolio, provision for possible loan
losses and real estate acquired by foreclosure. Such agencies may require, and
in the past have required, the Company to recognize additions to the provision
for possible loan losses based on their judgments of information available to
them at the time of the examination. Any additional provisions for possible
loan losses, whether required as a result of regulatory review or initiated by
the Company itself, may materially alter the financial outlook of the Bank and
the Company.
POTENTIAL IMPACT OF CHANGES IN INTEREST RATES
The Company's profitability is dependent to a large extent on its net
interest income, which is the difference between its interest income on
interest-earning assets and its interest expense on interest-bearing
liabilities. The Company, like most financial institutions, is affected by
changes in general interest rate levels and by other economic factors beyond
its control. Interest rate risk arises from mismatches (i.e., the interest
sensitivity gap) between the dollar amount of repricing or maturing assets and
liabilities, and is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. More assets repricing or maturing than
liabilities over a given time period is considered asset-sensitive and is
reflected as a positive gap, and more liabilities repricing or maturing than
assets over a given time period is considered liability-sensitive and is
reflected as negative gap. An asset-sensitive position (i.e., a positive gap)
will generally enhance earnings in a rising interest rate environment and will
negatively impact earnings in a falling interest rate environment, while a
liability-sensitive position (i.e., a negative gap) will generally enhance
earnings in a falling interest rate environment and negatively impact earnings
in a rising interest rate environment. Fluctuations in interest rates
17
<PAGE>
are not predictable or controllable. At March 31, 1997 and December 31, 1996,
the Company had a one year cumulative negative gap of 23.6% and 34.2%,
respectively. This negative one year gap position may, as noted above, have a
negative impact on earnings in a rising interest rate environment.
The calculation of these interest sensitivity gap positions involve certain
assumptions as to the repricing period of interest earning assets and interest
bearing liabilities. These gap positions are significantly impacted by
assumptions made as to the repricing of, among other items, NOW accounts,
savings accounts and money market accounts. Consequently, the actual impact of
changes in interest rates may differ from that indicated above.
The Company also uses simulation modeling techniques which apply alternative
interest rate scenarios to forecasts of future business activity. The results
of such simulation modeling techniques may differ from the implications
derived from the interest sensitivity gap analysis.
A significant increase in the level of interest rates may also have an
adverse effect on the ability of certain of the Bank's borrowers to repay
their loans.
FLUCTUATIONS IN SHAREHOLDERS' EQUITY
In addition to affecting interest income and expense, changes in interest
rates also can affect the value of the Company's investment securities and the
ability to realize gains from the sale of such assets which are included as
available-for-sale. Generally, the value of fixed rate instruments fluctuate
inversely with changes in interest rates. Increases in interest rates
generally result in decreases in the carrying value of interest-earning assets
which are classified as available-for-sale, which could adversely affect the
Company's results of operations if sold by the Company or the Company's
shareholders' equity if retained by the Company.
The Company held investment securities for available-for-sale with a market
value of $76.3 million and an amortized cost of $76.7 million at March 31,
1997. Unrealized gains and losses, net of income tax effect, are recorded as a
separate component of shareholders' equity and are excluded from income. As a
result, if market rates should increase in the future, then the market value
of the Company's securities available-for-sale is likely to decrease, which
will have an adverse effect upon the Company's shareholders' equity, and
conversely, a decrease in interest rates will likely cause an increase in the
Company's shareholders' equity.
COMPETITION
Vigorous competition exists in all major areas where the Company and the
Bank presently engage in business. The Bank faces intense competition in local
and national markets from other major banking institutions. The Bank is in
direct competition with some larger institutions that have substantially
greater resources, better name recognition, stronger market presence, and the
ability to offer a wider range of services. Competition from larger
institutions is especially prevalent due to the accelerated pace of bank
mergers in the New Jersey area. The long-term impact of such mergers and
consolidations on the New Jersey market area is uncertain. The Bank may face
even more intense competition because of the proliferation of bank mergers. An
increase in the intensity of competition from other banks in the New Jersey
market could have a materially adverse impact on the operations and financial
condition of the Bank and the Company.
In addition to the competition from rival banking companies, the Bank faces
competition from non-bank institutions including: finance companies; mortgage
lenders; small loan companies; credit unions; insurance companies; and a
variety of other financial service and advisory companies. The stock market,
mutual funds, and other non-federally insured investments also compete with
the Bank for customer deposits. The Bank may face more intense competition
from these and other non-banking industries and investments in the future. A
failure of the Bank to be competitive could have a materially adverse effect
on the Bank and the Company.
REGULATION
Banks and bank holding companies such as the Company are subject to
regulation by both federal and state bank regulatory agencies. The
regulations, which are designed to protect borrowers and promote certain
social
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<PAGE>
policies, include limitations on the operations of banks and bank holding
companies, such as minimum capital requirements and restrictions on dividend
payments. These regulations are not necessarily designed to maximize the
profitability of banking institutions. Future changes in the banking laws and
regulations could have a materially adverse effect on the operations and
financial condition of the Bank and the Company.
SOURCE OF FUNDS
The Company is a legal entity separate and distinct from the Bank, although
the principal source of the Company's funds to satisfy its obligations is
dividends from the Bank. The ability of the Company to pay the interest on,
and principal of, the Junior Subordinated Debentures will be significantly
dependent on the ability of the Bank to pay dividends to the Company in
amounts sufficient to service the Company's debt obligations. Payment of
dividends by the Bank is restricted by various legal and regulatory
limitations based upon the Bank's regulatory capital levels and net income.
Changes in regulatory requirements or the Bank's financial condition could
adversely impact the Bank's ability to pay dividends to the Company. In such
event, the Company may not have sufficient cash to pay interest on, and
principal of, the Junior Subordinated Debentures.
The right of the Company to participate in the assets of any subsidiary upon
the latter's liquidation, reorganization or otherwise (and thus the ability of
the holders of Preferred Securities to benefit indirectly from any such
distribution) will be subject to the claims of the subsidiaries' creditors,
which will take priority except to the extent that the Company may itself be a
creditor with a recognized claim. As of March 31, 1997, the Company's
subsidiaries had indebtedness and other liabilities of approximately $492.1
million (including deposits).
ADDITIONAL FACTORS
The Company is subject to additional risks and uncertainties that may affect
the future results of operations, financial condition or business of the Bank
and the Company, including, but not limited to, those discussed under the
caption "Factors That May Affect Future Results of Operations, Financial
Condition or Business," in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein by reference.
BNB CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary
of State on June 9, 1997. The Issuer Trust will be governed by an Amended and
Restated Trust Agreement among the Company, as Depositor, Bankers Trust
(Delaware), as Delaware Trustee, and Bankers Trust Company, as Property
Trustee (together with the Delaware Trustee, the "Issuer Trustees"). Two
individuals will be selected by the holder of the Common Securities to act as
administrators with respect to the Issuer Trust (the "Administrators"). The
Company, while holder of the Common Securities, intends to select two
individuals who are employees or officers of or affiliated with the Company to
serve as the Administrators. See "Description of Preferred Securities--
Miscellaneous." The Issuer Trust exists for the exclusive purposes of (i)
issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures and
(iii) engaging in only those other activities necessary, convenient or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Issuer Trust, and payments under the Junior Subordinated Debentures will be
the sole source of revenue of the Issuer Trust.
All the Common Securities initially will be owned by the Company. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Preferred Securities, except that upon the occurrence and during the
continuation of a Debenture Event of Default arising as a result of any
failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the rights of the holder of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption or
19
<PAGE>
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. See "Description of Preferred Securities--Subordination of Common
Securities." The Company will acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer Trust. The
Issuer Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. The address of the Delaware Trustee is Bankers Trust
(Delaware), 1001 Jefferson Street, Wilmington, Delaware 19801, telephone
number (302) 576-3301. The address of the Property Trustee, the Guarantee
Trustee and the Debenture Trustee is Bankers Trust company, Four Albany
Street, 4th Floor, New York, New York 10006, telephone number (212) 250-2500.
USE OF PROCEEDS
All the proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The net proceeds to the Company from the sale of the Junior
Subordinated Debentures are estimated to be approximately $ million ($
million if the Underwriter's over-allotment option is exercised in full). A
portion of the net proceeds to be received by the Company from the sale of the
Junior Subordinated Debentures may be used to make capital contributions
through investments in or advances to the Bank. The remainder of the proceeds
will be retained by the Company and may be used to repurchase stock and for
other general corporate purposes as well as to meet debt service obligations
of the Company pursuant to the Junior Subordinated Debentures. Pending such
use, the net proceeds may be temporarily invested in short-term obligations.
The precise amounts and timing of the application of proceeds will depend upon
the funding requirements of the Company and its subsidiaries and the
availability of other funds.
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<PAGE>
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of the
Company at March 31, 1997, (ii) the consolidated capitalization of the Company
giving effect to the issuance of the Preferred Securities hereby offered by
BNB Capital Trust and application by the Company of the net proceeds from the
corresponding sale of the Junior Subordinated Debentures to BNB Capital Trust
as if the sale of the Preferred Securities had been consummated on March 31,
1997, and assuming the Underwriter's over-allotment was not exercised, and
(iii) the actual and pro forma capital ratios of the Company.
<TABLE>
<CAPTION>
AS ADJUSTED FOR
SALE OF
ACTUAL PREFERRED SECURITIES
------- --------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
INDEBTEDNESS:
Guaranteed preferred beneficial interests in the
Company's junior subordinated debentures(1).... $ -- $10,000
SHAREHOLDERS' EQUITY:
Common Stock $1.00 par value--5,500,000 shares
authorized;
4,677,188 shares issued........................ 4,677 4,677
Capital Surplus................................. 26,589 26,589
Retained Earnings............................... 8,200 8,200
Common Stock in treasury, at cost: 22,500
shares......................................... (291) (291)
Unrealized loss on securities available-for-
sale, net of income taxes...................... (281) (281)
------- -------
Total shareholders' equity.................. 38,894 38,894
------- -------
Total Capitalization............................ $38,894 $48,894
======= =======
COMPANY CAPITAL RATIOS(2):
Equity to total assets.......................... 7.32% 7.19%
Tier 1 risk-based capital ratio(3).............. 11.41 14.30
Total risk-based capital ratio.................. 12.68 15.56
Leverage ratio(4)............................... 7.06 8.90
</TABLE>
- --------
(1) Preferred Securities representing beneficial interests in an aggregate
principal amount of $10,000,000 of the % Junior Subordinated Debentures
of the Company. The Junior Subordinated Debentures will mature on ,
2027.
(2) The capital ratios, as adjusted, are computed including the total
estimated net proceeds from the sale of the Preferred Securities, in a
manner consistent with Federal Reserve guidelines.
(3) Federal Reserve guidelines for calculation of Tier 1 capital limit the
amount of cumulative preferred stock which can be included in Tier 1
capital to 25% of total Tier 1 capital.
(4)The leverage ratio is Tier 1 capital divided by the average total assets
less intangible assets.
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<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated statement of
financial condition of the Company and appropriate disclosures about the
Preferred Securities, the Guarantee and the Junior Subordinated Debentures
will be included in the notes to the consolidated financial statements of the
Company. For financial reporting purposes, Distributions on the Preferred
Securities will be recorded in the consolidated statements of income of the
Company.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Issuer Trust and
the holders thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption or liquidation
over the Common Securities, as well as other benefits as described in the
Trust Agreement. This summary of certain provisions of the Preferred
Securities and the Trust Agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms.
Wherever particular defined terms of the Trust Agreement are referred to
herein, such defined terms are incorporated herein by reference. A copy of the
form of the Trust Agreement is available upon request from the Issuer
Trustees.
GENERAL
The Preferred Securities will be limited to $10,000,000 aggregate
Liquidation Amount outstanding (which amount may be increased by up to
$1,500,000 aggregate liquidation amount of Preferred Securities for exercise
of the Underwriter's over-allotment option). See "Underwriting." The Preferred
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Common Securities except as described under "--Subordination of
Common Securities." The Junior Subordinated Debentures will be registered in
the name of the Issuer Trust and held by the Property Trustee in trust for the
benefit of the holders of the Preferred Securities and Common Securities. The
Guarantee will be a guarantee on a subordinated basis with respect to the
Preferred Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of such Preferred Securities when
the Issuer Trust does not have funds on hand available to make such payments.
See "Description of Guarantee."
DISTRIBUTIONS
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and Distributions on each Preferred
Security will be payable at the annual rate of % of the stated Liquidation
Amount of $10, payable quarterly in arrears on the last day of March, June,
September and December of each year (each a "Distribution Date"), to the
holders of the Preferred Securities at the close of business on the 15th day
of March, June, September and December (whether or not a Business Day (as
defined below)) next preceding the relevant Distribution Date. Distributions
on the Preferred Securities will be cumulative. Distributions will accumulate
from , 1997. The first Distribution Date for the Preferred Securities
will be , 1997. The amount of Distributions payable for any period less
than a full Distribution period will be computed on the basis of a 360-day
year of twelve 30-day months and the actual days elapsed in a partial month in
such period. Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four. If any date on which
Distributions are payable on the Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the
next succeeding day that is a Business Day (without any additional
Distributions or other payment in respect of any such delay), with the same
force and effect as if made on the date such payment was originally payable.
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<PAGE>
So long as no Debenture Event of Default has occurred and is continuing, the
Company has the right under the Junior Subordinated Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. Distributions to which holders of the Preferred Securities are
entitled will accumulate additional Distributions thereon at the rate of %
per annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company's capital stock or (ii) make any payment of principal
of or interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
shareholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of an exchange or
conversion of any class or series of the Company's capital stock (or any
capital stock of a subsidiary of the Company) for any class or series of the
Company's capital stock or of any class or series of the Company's
indebtedness for any class or series of the Company's capital stock, (c) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (d) any declaration of a dividend in
connection with any shareholder's rights plan, or the issuance of rights,
stock or other property under any shareholder's rights plan, or the redemption
or repurchase of rights pursuant thereto, or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no
Extension Period may exceed 20 consecutive quarterly periods or extend beyond
the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. No interest shall
be due and payable during an Extension Period, except at the end thereof. The
Company must give the Issuer Trustees notice of its election of such Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Property Trustee
will give notice of the Company's election to begin a new Extension Period to
the holders of the Preferred Securities. Subject to the foregoing, there is no
limitation on the number of times that the Company may elect to begin an
Extension Period. See "Description of Junior Subordinated Debentures--Option
To Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of the
Preferred Securities will be limited to payments under the Junior Subordinated
Debentures in which the Issuer Trust will invest the proceeds from the
issuance and sale of the Preferred Securities. See "Description of Junior
Subordinated Debentures." If the Company does not make payments on the Junior
Subordinated Debentures, the Issuer Trust may not have
23
<PAGE>
funds available to pay Distributions or other amounts payable on the Preferred
Securities. The payment of Distributions and other amounts payable on the
Preferred Securities (if and to the extent the Issuer Trust has funds legally
available for and cash sufficient to make such payments) is guaranteed by the
Company on a limited basis as set forth herein under "Description of
Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Preferred Securities, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Redemption
Price") equal to the aggregate Liquidation Amount of such Preferred Securities
plus accumulated but unpaid Distributions thereon to the date of redemption
(the "Redemption Date") and the related amount of the premium, if any, paid by
the Company upon the concurrent redemption of such Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures--Redemption."
If less than all the Junior Subordinated Debentures are to be repaid or
redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the Preferred
Securities and the Common Securities. The amount of premium, if any, paid by
the Company upon the redemption of all or any part of the Junior Subordinated
Debentures to be repaid or redeemed on a Redemption Date shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures (i)
on or after , 2002, in whole at any time or in part from time to time,
or (ii) in whole, but not in part, at any time within 90 days following the
occurrence and during the continuation of a Tax Event, Investment Company
Event or Capital Treatment Event (each as defined below), in each case subject
to possible regulatory approval. See "--Liquidation Distribution Upon
Dissolution." A redemption of the Junior Subordinated Debentures would cause a
mandatory redemption of a Like Amount of the Preferred Securities and Common
Securities at the Redemption Price.
"25% Capital Limitation" means the limitation imposed by the Federal Reserve
that the proceeds of certain qualifying securities like the Trust Securities
will qualify as Tier 1 capital of the issuer up to an amount not to exceed 25%
of the Issuer's Tier 1 capital, or any subsequent limitation adopted by the
Federal Reserve.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on
which banking institutions in the State of New Jersey or the City of New York
are authorized or required by law or executive order to remain closed, or (c)
a day on which the Property Trustee's Corporate Trust Office or the Corporate
Trust Office of the Debenture Trustee is closed for business.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Common Securities and to the Preferred Securities
based upon the relative Liquidation Amounts of such classes and (ii) with
respect to a distribution of Junior Subordinated Debentures to holders of
Trust Securities in connection with a dissolution or liquidation of the Issuer
Trust, Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $10 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or
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judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities, there
is more than an insubstantial risk that (i) the Issuer Trust is, or will be
within 90 days of the delivery of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Junior
Subordinated Debentures, (ii) interest payable by the Company on the Junior
Subordinated Debentures is not, or within 90 days of the delivery of such
opinion, will not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes or (iii) the Issuer Trust is, or
will be within 90 days of the delivery of such opinion, subject to more than a
de minimis amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or
decision is announced on or after the date of issuance of the Preferred
Securities, there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation, for purposes
of the risk-based capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Company.
If a Tax Event described in clause (i) or (iii) of the definition of Tax
Event above has occurred and is continuing and the Issuer Trust is the holder
of all the Junior Subordinated Debentures, the Company will pay Additional
Sums (as defined below), if any, on the Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on
the outstanding Preferred Securities and Common Securities of the Issuer Trust
will not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result
of a Tax Event.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also "--Subordination
of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are available, in the case of Preferred Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC the
funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. With respect to Preferred Securities not
held in book- entry form, the Property Trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will
give such paying agent irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of
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their certificates evidencing the Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
the Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit all rights of the
holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Preferred Securities will cease to be outstanding. If any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not
paid either by the Issuer Trust or by the Company pursuant to the Guarantee as
described under "Description of Guarantee," Distributions on such Preferred
Securities will continue to accumulate at the then applicable rate, from the
Redemption Date originally established by the Issuer Trust for such Preferred
Securities to the date such Redemption Price is actually paid, in which case
the actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its affiliates may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated
pro rata to the Preferred Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis not more than
60 days prior to the Redemption Date by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, or if
the Preferred Securities are then held in the form of a Global Preferred
Security (as defined below), in accordance with DTC's customary procedures.
The Property Trustee shall promptly notify the securities registrar for the
Trust Securities in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
the Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case
of any Preferred Securities redeemed or to be redeemed only in part, to the
portion of the aggregate Liquidation Amount of Preferred Securities which has
been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Preferred Securities is withheld or refused and not paid either
by the Issuer Trust or the Company pursuant to the Guarantee, Distributions
will cease to accumulate on the Preferred Securities or portions thereof)
called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution in
respect of, any of the Common Securities, and no other payment on account of
the redemption, liquidation or other acquisition of such Common Securities,
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shall be made unless payment in full in cash of all accumulated and unpaid
Distributions on all the outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all the
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Preferred Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be
deemed to have waived any right to act with respect to any such Event of
Default under the Trust Agreement until the effects of all such Events of
Default with respect to such Preferred Securities have been cured, waived or
otherwise eliminated. See "--Events of Default; Notice" and "Description of
Junior Subordinated Debentures--Debenture Events of Default." Until all such
Events of Default under the Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee will act solely on behalf of the holders of the Preferred Securities
and not on behalf of the holders of the Common Securities, and only the
holders of the Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $10 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
The Federal Reserve's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption
should consult with the Federal Reserve before redeeming any equity or capital
instrument prior to maturity if such redemption could have a material effect
on the level or composition of the organization's capital base (unless the
equity or capital instrument were redeemed with the proceeds of, or replaced
by, a like amount of a similar or higher quality capital instrument and the
Federal Reserve considers the organization's capital position to be fully
adequate after the redemption).
In the event the Company, while a holder of Common Securities, dissolves the
Issuer Trust prior to the stated maturity of the Preferred Securities and the
dissolution of the Issuer Trust is deemed to constitute the redemption of
capital instruments by the Federal Reserve under its risk-based capital
guidelines or policies, the dissolution of the Issuer Trust by the Company may
be subject to the prior approval of the Federal Reserve. Moreover, any changes
in applicable law or changes in the Federal Reserve's risk-based capital
guidelines or policies could impose a requirement on the Company that it
obtain the prior approval of the Federal Reserve to dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the
first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) the
distribution of a Like Amount of the Junior Subordinated Debentures to the
holders of the Trust Securities, if the holders of Common Securities have
given written direction to the Property Trustee to dissolve the Issuer Trust
(which direction, subject to the foregoing restrictions, is optional and
wholly within the discretion of the holders of Common Securities), (iii) the
repayment of all the Preferred Securities in connection with the redemption of
all the Trust Securities as described under "--Redemption" and (iv) the entry
of an order for the dissolution of the Issuer Trust by a court of competent
jurisdiction.
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If dissolution of the Issuer Trust occurs as described in clause (i), (ii)
or (iv) above, the Issuer Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Issuer
Trust as provided by applicable law, to the holders of such Trust Securities a
Like Amount of the Junior Subordinated Debentures, unless such distribution is
not practical, in which event such holders will be entitled to receive out of
the assets of the Issuer Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the Liquidation Amount plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Issuer Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Issuer Trust on its Preferred Securities shall be paid on a pro rata
basis. The holders of the Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of the
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, the Preferred
Securities shall have a priority over the Common Securities. See "--
Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior Subordinated
Debentures (i) the Preferred Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by DTC or its nominee
and (iii) any certificates representing the Preferred Securities not held by
DTC or its nominee will be deemed to represent the Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
the Preferred Securities and bearing accrued and unpaid interest in an amount
equal to the accumulated and unpaid Distributions on the Preferred Securities
until such certificates are presented to the security registrar for the Trust
Securities for transfer or reissuance.
If the Company does not redeem the Junior Subordinated Debentures prior to
maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Preferred Securities, the
Preferred Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution
to the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the
Issuer Trust were to occur. Accordingly, the Preferred Securities that an
investor may purchase, or the Junior Subordinated Debentures that the investor
may receive on dissolution and liquidation of the Issuer Trust, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Preferred
Securities (whatever the reason for such Event of Default and whether it is
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures--Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period
of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable, or
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(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Company by the holders of at least 25% in aggregate Liquidation Amount
of the outstanding Preferred Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor, and the Administrators are required to file annually
with the Property Trustee a certificate as to whether or not they are in
compliance with all the conditions and covenants applicable to them under the
Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities will have a
preference over the Common Securities with respect to payments of any amounts
in respect of the Preferred Securities as described above. See "--
Subordination of Common Securities," "--Liquidation Distribution Upon
Dissolution" and "Description of Junior Subordinated Debentures--Debenture
Events of Default."
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities may remove an Issuer Trustee for cause or, if
a Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at
least 25% in Liquidation Amount of Preferred Securities. If an Issuer Trustee
resigns, such Trustee will appoint its successor. If an Issuer Trustee fails
to appoint a successor, the holders of at least 25% in Liquidation Amount of
the outstanding Preferred Securities may appoint a successor. If a successor
has not been appointed by the holders, any holder of Preferred Securities or
Common Securities or the other Issuer Trustee may petition a court in the
State of Delaware to appoint a successor. Any Delaware Trustee must meet the
applicable requirements of Delaware law. Any Property Trustee must be a
national or state-chartered bank, and at the time of appointment have
securities rated in one of the three highest rating categories by a nationally
recognized statistical rating organization and have capital and surplus of at
least $50,000,000. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the
request of the holders of the Common Securities and with the consent of the
holders of at least a majority in aggregate Liquidation Amount of the
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outstanding Preferred Securities, merge with or into, consolidate, amalgamate,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of
any State, so long as (i) such successor entity either (a) expressly assumes
all the obligations of the Issuer Trust with respect to the Preferred
Securities or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities have the same
priority as the Preferred Securities with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) a trustee of such
successor entity, possessing the same powers and duties as the Property
Trustee, is appointed to hold the Junior Subordinated Debentures, (iii) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, if then rated, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect, (v) such
successor entity has a purpose substantially identical to that of the Issuer
Trust, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Issuer Trust has received an opinion from
independent counsel experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor Securities) in
any material respect and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Issuer
Trust nor such successor entity will be required to register as an investment
company under the Investment Company Act, and (vii) the Company or any
permitted successor or assignee owns all the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Issuer Trust may not, except with the
consent of holders of 100% in aggregate Liquidation Amount of the Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Issuer Trust or the successor entity to be taxable as a corporation for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided above and under "--Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Property Trustee, without the
consent of the holders of the Preferred Securities, (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, provided
that any such amendment does not adversely affect in any material respect the
interests of any holder of Trust Securities, or (ii) to modify, eliminate or
add to any provisions of the Trust Agreement to such extent as may be
necessary to ensure that the Issuer Trust will not be taxable as a corporation
for United States federal income tax purposes at any time that any Trust
Securities are outstanding or to ensure that the Issuer Trust will not be
required to register as an "investment company" under the Investment Company
Act, and any amendments of the Trust Agreement will become effective when
notice of such amendment is given to the holders of Trust Securities. The
Trust Agreement may be amended by the holders of a majority of the Common
Securities and the Property Trustee with (i) the consent of holders
representing not less than a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities and (ii) receipt by the Issuer Trustees of an
opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will
not affect the Issuer Trust's not being taxable as a corporation for United
States federal income tax purposes or the Issuer Trust's exemption from status
as an "investment company" under the Investment Company Act, except that,
without the consent of each holder of Trust
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Securities affected thereby, the Trust Agreement may not be amended to (i)
change the amount or timing of any Distribution on the Trust Securities or
otherwise adversely affect the amount of any Distribution required to be made
in respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer Trust,
the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee,
or execute any trust or power conferred on the Property Trustee with respect
to the Junior Subordinated Debentures, (ii) waive any past default that is
waivable under Section 5.13 of the Junior Subordinated Indenture, (iii)
exercise any right to rescind or annul a declaration that the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Junior Subordinated Indenture or
the Junior Subordinated Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of at least
a majority in aggregate Liquidation Amount of the outstanding Preferred
Securities, except that, if a consent under the Junior Subordinated Indenture
would require the consent of each holder of Junior Subordinated Debentures
affected thereby, no such consent will be given by the Property Trustee
without the prior consent of each holder of the Preferred Securities. The
Property Trustee may not revoke any action previously authorized or approved
by a vote of the holders of the Preferred Securities except by subsequent vote
of the holders of the Preferred Securities. The Property Trustee will notify
each holder of Preferred Securities of any notice of default with respect to
the Junior Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, before taking any of the
foregoing actions, the Property Trustee will obtain an opinion of counsel
experienced in such matters to the effect that the Issuer Trust will not be
taxable as a corporation for United States federal income tax purposes on
account of such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be given to each registered holder of Preferred Securities in the
manner set forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Issuer Trustees or any affiliate
of the Company or any Issuer Trustees, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Preferred Securities) and
all costs and expenses of the Issuer Trust (including costs and expenses
relating to the organization of the Issuer Trust, the fees and expenses of the
Issuer Trustees and the costs and expenses relating to the operation of the
Issuer Trust) and to pay any and all taxes and all costs and expenses with
respect thereto (other than United States withholding taxes) to which the
Issuer Trust might become subject. The foregoing obligations of the Company
under the Indenture are for the benefit of, and shall be enforceable by, any
person to whom any such debts, obligations, costs, expenses and taxes are owed
(a "Creditor") whether or not such Creditor has received notice thereof. Any
such Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against the Issuer Trust or any other
person before proceeding against the Company. The Company has also agreed in
the Indenture to execute such additional agreements as may be necessary or
desirable to give full effect to the foregoing.
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BOOK ENTRY, DELIVERY AND FORM
The Preferred Securities will be issued in the form of one or more fully
registered global securities which will be deposited with, or on behalf of,
DTC and registered in the name of DTC's nominee. Unless and until it is
exchangeable in whole or in part for the Preferred Securities in definitive
form, a global security may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by
DTC or any such nominee to a successor of such Depository or a nominee of such
successor.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with DTC or its nominee ("Participants") or persons
that may hold interests through Participants. The Company expects that, upon
the issuance of a global security, DTC will credit, on its book-entry
registration and transfer system, the Participants' accounts with their
respective principal amounts of the Preferred Securities represented by such
global security. Ownership of beneficial interests in such global security
will be shown on, and the transfer of such ownership interests will be
effected only through, records maintained by DTC (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
Persons held through Participants). Beneficial owners will not receive written
confirmation from DTC of their purchase, but are expected to receive written
confirmations from the Participants through which the beneficial owner entered
into the transaction. Transfers of ownership interests will be accomplished by
entries on the books of Participants acting on behalf of the beneficial
owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global
security for all purposes under the Junior Subordinated Indenture. Except as
provided below, owners of beneficial interests in a global security will not
be entitled to receive physical delivery of the Preferred Securities in
definitive form and will not be considered the owners or holders thereof under
the Junior Subordinated Indenture. Accordingly, each person owning a
beneficial interest in such a global security must rely on the procedures of
DTC 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 of Preferred Securities under the Junior Subordinated
Indenture. The Company understands that, under DTC's existing practices, in
the event that the Company requests any action of holders, or an owner of a
beneficial interest in such a global security desires to take any action which
a holder is entitled to take under the Junior Subordinated Indenture, DTC
would authorize the Participants holding the relevant beneficial interests to
take such action, and such Participants would authorize beneficial owners
owning through such Participants to take such action or would otherwise act
upon the instructions of beneficial owners owning through them. Redemption
notices will also be sent to DTC. If less than all of the Preferred Securities
are being redeemed, the Company understands that it is DTC's existing practice
to determine by lot the amount of the interest of each Participant to be
redeemed.
Distributions on the Preferred Securities registered in the name of DTC or
its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such Preferred
Securities. None of the Company, the Issuer Trustees, the Administrators, any
Paying Agent or any other agent of the Company or the Issuer Trustees will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the global
security for such Preferred Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Disbursements of Distributions to Participants shall be the responsibility of
DTC. DTC's practice is to credit Participants' accounts on a payable date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on the payable date.
Payments by Participants to beneficial owners will be governed by standing
instructions and customary practices, as is 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 Participant and not of DTC, the Company,
the Issuer Trustees, the Paying Agent or any other agent of the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
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DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Company or the Issuer Trustees. If DTC notifies the Company that it is
unwilling to continue as such, or if it is unable to continue or ceases to be
a clearing agency registered under the Exchange Act and a successor depository
is not appointed by the Company within ninety days after receiving such notice
or becoming aware that DTC is no longer so registered, the Company will issue
the Preferred Securities in definitive form upon registration of transfer of,
or in exchange for, such global security. In addition, the Company may at any
time and in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust as follows: DTC is a
limited purpose trust company organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book entry changes to accounts of its Participants, thereby eliminating the
need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Certain of such Participants (or their
representatives), together with other entities, own DTC. Indirect access to
the DTC system is 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.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Preferred Securities will be made by the Underwriter in
immediately available funds.
Secondary trading in Preferred Securities of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as
to the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Preferred Securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto as such
address appears on the securities register for the Trust Securities. The
paying agent (the "Paying Agent") will initially be the Property Trustee and
any co-paying agent chosen by the Property Trustee and acceptable to the
Administrators. The Paying Agent will be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the Administrators.
If the Property Trustee is no longer the Paying Agent, the Property Trustee
will appoint a successor (which must be a bank or trust company reasonably
acceptable to the Administrators) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Issuer Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Issuer Trust will not be required to register or cause to be
registered the transfer of the Preferred Securities after the Preferred
Securities have been called for redemption.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the Property Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Agreement at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
For information concerning the relationships between Bankers Trust Company,
the Property Trustee, and the Company, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrators and the Property Trustee are authorized and directed to
conduct the affairs of and to operate the Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Issuer Trust
or the Trust Agreement, that the Property Trustee and the holders of Common
Securities determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money, issue debt or mortgage or pledge any
of its assets.
GOVERNING LAW
The Trust Agreement will be governed by and construed in accordance with the
laws of the State of Delaware.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Bankers Trust Company is acting as
Debenture Trustee. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Junior Subordinated Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Junior Subordinated Indenture,
including the definitions therein of certain terms. Whenever particular
defined terms of the Junior Subordinated Indenture (as amended or supplemented
from time to time) are referred to herein, such defined terms are incorporated
herein by reference. A copy of the form of Junior Subordinated Indenture is
available from the Debenture Trustee upon request.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Issuer Trust
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from , 1997, at the annual rate of % of the principal amount
thereof, payable quarterly in arrears on the last day of March, June,
September and December of each year (each, an "Interest Payment Date"),
commencing , 1997, to the person in whose name each Junior Subordinated
Debenture is registered at the close of business on the 15th day of March,
June, September or December (whether or not a Business Day) next preceding
such Interest Payment Date. It is anticipated that, until the liquidation, if
any, of the Issuer Trust, each Junior Subordinated Debenture will be
registered in the name of the Issuer Trust and held by the Property Trustee in
trust for the benefit of the holders of the Trust Securities. The amount of
interest payable for any period less than a full interest period will be
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. The amount of interest payable
for any full interest period will be computed by dividing the rate per annum
by four. If any date on which interest is payable on the Junior Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (without
any interest or other payment in respect of any such delay), with the same
force and effect as if made on the date such payment was originally payable.
Accrued interest that is not paid on the applicable Interest Payment Date will
bear additional interest on the amount thereof (to the extent permitted by
law) at the rate per annum of %, compounded quarterly and computed on the
basis of a 360-day year of twelve 30-day months and the actual days elapsed in
a partial month in such period. The amount of additional interest payable for
any full interest period will be computed by dividing the rate per annum by
four. The term "interest" as used herein includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on , 2027.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Company. The Junior Subordinated Debentures will not be subject to a sinking
fund. The Junior Subordinated Indenture does not limit the incurrence or
issuance of other secured or unsecured debt by the Company, including Senior
Indebtedness, whether under the Junior Subordinated Indenture or any existing
or other indenture that the Company may enter into in the future or otherwise.
See "--Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing, the
Company has the right at any time during the term of the Junior Subordinated
Debentures to defer the payment of interest at any time or from time to time
for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. During any such
Extension Period the Company shall have the right to make partial payments of
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interest on any interest payment date. At the end of such Extension Period,
the Company must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of %, compounded quarterly and computed
on the basis of a 360-day year of twelve 30-day months and the actual days
elapsed in a partial month in such period, to the extent permitted by
applicable law). The amount of additional interest payable for any full
interest period will be computed by dividing the rate per annum by four.
During an Extension Period, interest will continue to accrue and holders of
Junior Subordinated Debentures (or holders of Preferred Securities while
outstanding) will be required to accrue interest income for United States
federal income tax purposes. See "Certain Federal Income Tax Consequences--
Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or shareholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or
series of the Company's indebtedness for any class or series of the Company's
capital stock, (c) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any shareholder's rights plan, or
the issuance of rights, stock or other property under any shareholders rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options
or other rights is the same stock as that on which the dividend is being paid
or ranks pari passu with or junior to such stock). Prior to the termination of
any such Extension Period, the Company may further defer the payment of
interest, provided that no Extension Period may exceed 20 consecutive
quarterly periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election of such Extension Period
at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Property Trustee
will give notice of the Company's election to begin a new Extension Period to
the holders of the Preferred Securities. There is no limitation on the number
of times that the Company may elect to begin an Extension Period.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after , 2002, in whole at any time or in
part from time to time, or (ii) in whole, but not in part, at any time within
90 days following the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event (each as defined under
"Description of Preferred Securities--Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Preferred Securities.
The Federal Reserve's risk-based capital guidelines, which are subject to
change, currently provide that redemptions of permanent equity or other
capital instruments before stated maturity could have a significant impact on
a bank holding company's overall capital structure and that any organization
considering such a
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redemption should consult with the Federal Reserve before redeeming any equity
or capital instrument prior to maturity if such redemption could have a
material effect on the level or composition of the organization's capital base
(unless the equity or capital instrument were redeemed with the proceeds of,
or replaced by, a like amount of a similar or higher quality capital
instrument and the Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
The redemption of the Junior Subordinated Debentures by the Company prior to
their Stated Maturity would constitute the redemption of capital instruments
under the Federal Reserve's current risk-based capital guidelines and may be
subject to the prior approval of the Federal Reserve. The redemption of the
Junior Subordinated Debentures also could be subject to the additional prior
approval of the Federal Reserve under its current risk-based capital
guidelines.
The redemption price for Junior Subordinated Debentures is the outstanding
principal amount of the Junior Subordinated Debentures plus accrued interest
(including any Additional Interest or any Additional Sums) thereon to but
excluding the date fixed for redemption.
ADDITIONAL SUMS
The Company has covenanted in the Junior Subordinated Indenture that, if and
for so long as (i) the Issuer Trust is the holder of all Junior Subordinated
Debentures and (ii) the Issuer Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Company
will pay as additional sums on the Junior Subordinated Debentures such amounts
as may be required so that the Distributions payable by the Issuer Trust will
not be reduced as a result of any such additional taxes, duties or other
governmental charges. See "Description of Preferred Securities--Redemption."
REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the name
of the Issuer Trust. If the Junior Subordinated Debentures are distributed to
holders of Preferred Securities, it is anticipated that the depositary
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities--Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed
by the Company within 90 days of receipt of notice from DTC to such effect,
the Company will cause the Junior Subordinated Debentures to be issued in
definitive form.
Payments on Junior Subordinated Debentures represented by a global security
will be made to Cede & Co., the nominee for DTC, as the registered holder of
the Junior Subordinated Debentures, as described under "Description of
Preferred Securities--Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be
registrable, and Junior Subordinated Debentures will be exchangeable for
Junior Subordinated Debentures of other authorized denominations of a like
aggregate principal amount, at the corporate trust office of the Debenture
Trustee in New York, New York or at the offices of any Paying Agent or
transfer agent appointed by the Company, provided that payment of interest may
be made at the option of the Company by check mailed to the address of the
persons entitled thereto. However, a holder of $1 million or more in aggregate
principal amount of Junior Subordinated Debentures may receive payments of
interest (other than interest payable at the Stated Maturity) by wire transfer
of immediately available funds upon written request to the Debenture Trustee
not later than 15 calendar days prior to the date on which the interest is
payable.
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations, and of
a like aggregate principal amount.
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Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Junior Subordinated Debenture or at the office of any transfer agent
designated by the Company for such purpose without service charge and upon
payment of any taxes and other governmental charges as described in the Junior
Subordinated Indenture. The Company will appoint the Debenture Trustee as
securities registrar under the Junior Subordinated Indenture. The Company may
at any time designate additional transfer agents with respect to the Junior
Subordinated Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption,
except, in the case of any Junior Subordinated Debentures being redeemed in
part, any portion thereof not to be redeemed.
Any monies deposited with the Debenture Trustee or any paying agent, or then
held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the Company,
be repaid to the Company and the holder of such Junior Subordinated Debenture
shall thereafter look, as a general unsecured creditor, only to the Company
for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted that it will not (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Company's capital stock or (ii) make any
payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
in all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or shareholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period
or other event referred to below, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of
a subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, (d) any declaration of a dividend in connection with any
shareholder's rights plan, or the issuance of rights, stock or other property
under any shareholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise
of such warrants, options or other rights is the same stock as that on which
the dividend is being paid or ranks pari passu with or junior to such stock),
if at such time (i) there has occurred any event (a) of which the Company has
actual knowledge that with the giving of notice or the lapse of time, or both,
would constitute a Debenture Event of Default and (b) that the Company has not
taken reasonable steps to cure, (ii) if the Junior Subordinated Debentures are
held by the Issuer Trust, the Company is in default with respect to its
payment of any obligations under the Guarantee or (iii) the Company has given
notice of its election of an Extension Period as provided in the Junior
Subordinated Indenture and has not rescinded such notice, or such Extension
Period, or any extension thereof, is continuing.
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The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms
and provisions of the Trust Agreement, to cause the Issuer Trust to continue
not to be taxable as a corporation for United States federal income tax
purposes.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time, the Company and the Debenture Trustee may, without the
consent of any of the holders of the outstanding Junior Subordinated
Debentures, amend, waive or supplement the provisions of the Junior
Subordinated Indenture to: (1) evidence succession of another corporation or
association to the Company and the assumption by such person of the
obligations of the Company under the Junior Subordinated Debentures, (2) add
further covenants, restrictions or conditions for the protection of holders of
the Junior Subordinated Debentures, (3) cure ambiguities or correct the Junior
Subordinated Debentures in the case of defects or inconsistencies in the
provisions thereof, so long as any such cure or correction does not adversely
affect the interest of the holders of the Junior Subordinated Debentures in
any material respect, (4) change the terms of the Junior Subordinated
Debentures to facilitate the issuance of the Junior Subordinated Debentures in
certificated or other definitive form, (5) evidence or provide for the
appointment of a successor Debenture Trustee, or (6) qualify, or maintain the
qualification of, the Junior Subordinated Indentures under the Trust Indenture
Act. The Junior Subordinated Indenture contains provisions permitting the
Company and the Debenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the Junior Subordinated Debentures, to
modify the Junior Subordinated Indenture in a manner affecting the rights of
the holders of the Junior Subordinated Debentures, except that no such
modification may, without the consent of the holder of each outstanding Junior
Subordinated Debenture so affected, (i) change the Stated Maturity of the
Junior Subordinated Debentures, or reduce the principal amount thereof, the
rate of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the currency in which, any such
amount is payable or impair the right to institute suit for the enforcement of
any Junior Subordinated Debenture or (ii) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification of the Junior Subordinated Indenture.
Furthermore, so long as any of the Preferred Securities remain outstanding, no
such modification may be made that adversely affects the holders of such
Preferred Securities in any material respect, and no termination of the Junior
Subordinated Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Junior Subordinated
Indenture may be effective, without the prior consent of the holders of at
least a majority of the aggregate Liquidation Amount of the outstanding
Preferred Securities unless and until the principal of (and premium, if any,
on) the Junior Subordinated Debentures and all accrued and unpaid interest
thereon have been paid in full and certain other conditions are satisfied.
DEBENTURE EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior Subordinated Debentures
when due (subject to the deferral of any due date in the case of an
Extension Period); or
(ii) failure to pay any principal of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Junior Subordinated Indenture for 90 days after
written notice to the Company from the Debenture Trustee
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or the holders of at least 25% in aggregate outstanding principal amount of
the outstanding Junior Subordinated Debentures; or
(iv) the Company consents to the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding with
respect to the Company or all or substantially all its property.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the Junior Subordinated Debenture is referred to as a "Debenture
Event of Default." As described in "Description of Preferred Securities--
Events of Default; Notice," the occurrence of a Debenture Event of Default
will also constitute an Event of Default in respect of the Trust Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25%
in aggregate principal amount of outstanding Junior Subordinated Debentures
may declare the principal due and payable immediately upon a Debenture Event
of Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred Securities
shall have such right. The holders of a majority in aggregate principal amount
of outstanding Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of Junior Subordinated Debentures which has become due solely by such
acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Junior Subordinated Indenture cannot be
modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture affected thereby. See "--Modification of Junior
Subordinated Indenture." The Company is required to file annually with the
Debenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on
the Junior Subordinated Debentures, and any other amounts payable under the
Junior Subordinated Indenture, to be forthwith due and payable and to enforce
its other rights as a creditor with respect to the Junior Subordinated
Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Preferred Securities may institute a
Direct Action against the Company for enforcement of payment to such holder of
an amount equal to the amount payable in respect of Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities held by such holder. The Company may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all the Preferred
Securities. The Company will have the right under the Junior Subordinated
Indenture to set-off any payment made to such holder of Preferred Securities
by the Company in connection with a Direct Action.
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The holders of the Preferred Securities are not able to exercise directly
any remedies available to the holders of the Junior Subordinated Debentures
except under the circumstances described in the preceding paragraph. See
"Description of Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, and no
Person may consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless (i) if the Company consolidates with or merges into another Person or
conveys or transfers its properties and assets substantially as an entirety to
any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes the Company's obligations in respect of the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time
or both, would constitute a Debenture Event of Default, has occurred and is
continuing; and (iii) certain other conditions as prescribed in the Junior
Subordinated Indenture are satisfied.
The provisions of the Junior Subordinated Indenture do not afford holders of
the Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other things,
all Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable, (ii) will become due
and payable at the Stated Maturity within one year, and the Company deposits
or causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if
any) and interest to the date of the deposit or to the Stated Maturity, as the
case may be, then the Junior Subordinated Indenture will cease to be of
further effect (except as to the Company's obligations to pay all other sums
due pursuant to the Junior Subordinated Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will
be deemed to have satisfied and discharged the Junior Subordinated Indenture.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate and junior in right
of payment, to the extent set forth in the Junior Subordinated Indenture, to
all Senior Indebtedness (as defined below) of the Company. If the Company
defaults in the payment of any principal, premium, if any, or interest, if
any, or any other amount payable on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for redemption
or by declaration of acceleration or otherwise, then, unless and until such
default has been cured or waived or has ceased to exist or all Senior
Indebtedness has been paid, no direct or indirect payment (in cash, property,
securities, by setoff or otherwise) may be made or agreed to be made on the
Junior Subordinated Debentures, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Junior Subordinated
Debentures.
As used herein, "Senior Indebtedness" means, whether recourse is to all or a
portion of the assets of the Company and whether or not contingent, (i) every
obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of the Company; (iv) every obligation of the Company
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising
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in the ordinary course of business); (v) every capital lease obligation of the
Company; (vi) every obligation of the Company for claims (as defined in
Section 101(4) of the United States Bankruptcy Code of 1978, as amended) in
respect of derivative products such as interest and foreign exchange rate
contracts, commodity contracts and similar arrangements; and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another
person and all dividends of another person the payment of which, in either
case, the Company has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise; provided that "Senior Indebtedness" shall
not include (i) any obligations which, by their terms, are expressly stated to
rank pari passu in right of payment with, or to not be superior in right of
payment to, the Junior Subordinated Debentures, (ii) any Senior Indebtedness
of the Company which when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was
without recourse to the Company, (iii) any indebtedness of the Company to any
of its subsidiaries, (iv) indebtedness to any executive officer or director of
the Company, or (v) any indebtedness in respect of debt securities issued to
any trust, or a trustee of such trust, partnership or other entity affiliated
with the Company that is a financing entity of the Company in connection with
the issuance by such financing entity of securities that are similar to the
Preferred Securities.
In the event of (i) certain events of bankruptcy, dissolution or liquidation
of the Company or the holder of the Common Securities, (ii) any proceeding for
the liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshaling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will
be paid or delivered directly to the holders of Senior Indebtedness in
accordance with the priorities then existing among such holders until all
Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company
ranking on a parity with the Junior Subordinated Debentures, will be entitled
to be paid from the remaining assets of the Company the amounts at the time
due and owing on the Junior Subordinated Debentures and such other obligations
before any payment or other distribution, whether in cash, property or
otherwise, will be made on account of any capital stock or obligations of the
Company ranking junior to the Junior Subordinated Debentures and such other
obligations. If any payment or distribution on account of the Junior
Subordinated Debentures of any character or any security, whether in cash,
securities or other property is received by any holder of any Junior
Subordinated Debentures in contravention of any of the terms hereof and before
all the Senior Indebtedness has been paid in full, such payment or
distribution or security will be received in trust for the benefit of, and
must be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. By reason of such subordination, in the event of the
insolvency of the Company, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures 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 Junior
Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The
Company expects from time to time to incur additional indebtedness
constituting Senior Indebtedness.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee, other than during the occurrence and continuance of a
default by the Company in performance of its obligations under the Junior
Subordinated Debenture, is under no obligation to exercise any
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of the powers vested in it by the Junior Subordinated Indenture at the request
of any holder of Junior Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities that
might be incurred thereby. The Debenture Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, may serve from time to time as
trustee under other indentures or trust agreements with the Company or its
subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships
with Bankers Trust Company and its affiliates.
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance of Preferred Securities by the Issuer Trust for the benefit
of the holders from time to time of the Preferred Securities. Bankers Trust
Company will act as Guarantee Trustee under the Guarantee. This summary of
certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of the Guarantee, including the definitions therein of certain terms. A copy
of the form of Guarantee is available upon request from the Guarantee Trustee.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders
of the Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth in the Guarantee and described herein, the Guarantee
Payments (as defined below) to the holders of the Preferred Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that the
Issuer Trust may have or assert other than the defense of payment. The
following payments with respect to the Preferred Securities, to the extent not
paid by or on behalf of the Issuer Trust (the "Guarantee Payments"), will be
subject to the Guarantee: (i) any accumulated and unpaid Distributions
required to be paid on such Preferred Securities, to the extent that the
Issuer Trust has funds on hand available therefor at such time, (ii) the
Redemption Price with respect to any Preferred Securities called for
redemption, to the extent that the Issuer Trust has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary dissolution,
of the Issuer Trust (unless the Junior Subordinated Debentures are distributed
to holders of the Preferred Securities), the lesser of (a) the aggregate of
the Liquidation Amount and all accumulated and unpaid Distributions to the
date of payment, to the extent that the Issuer Trust has funds on hand
available therefor at such time, and (b) the amount of assets of the Issuer
Trust remaining available for distribution to holders of the Preferred
Securities on liquidation of the Issuer Trust. The Company's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of the Preferred Securities or by
causing the Issuer Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer Trust's obligations under the Preferred Securities, but will apply
only to the extent that the Issuer Trust has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Company does not make payments on the Junior Subordinated Debentures
held by the Issuer Trust, the Issuer Trust will not be able to pay any amounts
payable in respect of the Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all
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Senior Indebtedness of the Company. See "--Status of the Guarantee." The
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, including Senior Indebtedness, whether under
the Junior Subordinated Indenture, any other indenture that the Company may
enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all the Issuer Trust's
obligations under the Preferred Securities on a subordinated basis. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company in the same manner as the Junior Subordinated
Debentures.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Preferred Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will
be required), the Guarantee may not be amended without the prior approval of
the holders of not less than a majority of the aggregate Liquidation Amount of
the outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Preferred Securities--
Voting Rights; Amendment of Trust Agreement." All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct
the exercise of any trust or power conferred upon the Guarantee Trustee under
the Guarantee.
Any registered holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer
Trust, the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with
all the conditions and covenants applicable to it under the Guarantee.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after the
occurrence of an event of default with respect to the Guarantee, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the
Guarantee Trustee is under no obligation to exercise any of the powers vested
in it by the Guarantee at the request of any holder of the Preferred
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust Company,
as Guarantee Trustee, and the Company, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Preferred Securities, upon full payment
of the amounts payable with respect to the Preferred Securities upon
liquidation of the Issuer Trust or upon distribution of Junior Subordinated
Debentures to the holders of the Preferred Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Preferred Securities must restore payment of any sums
paid under the Preferred Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer Trust has funds available for such payment) are
irrevocably guaranteed, on a subordinated basis, by the Company as and to the
extent set forth under "Description of Guarantee." Taken together, the
Company's obligations under the Junior Subordinated Debentures, the Junior
Subordinated Indenture, the Trust Agreement and the Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. If and to the extent that the Company does not make
payments on the Junior Subordinated Debentures, the Issuer Trust will not have
sufficient funds to pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of amounts payable with
respect to the Preferred Securities when the Issuer Trust does not have
sufficient funds to pay such amounts. In such event, the remedy of a holder of
the Preferred Securities is to institute a legal proceeding directly against
the Company for enforcement of payment of the Company's obligations under
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities held by such holder.
The obligations of the Company under the Junior Subordinated Debentures and
the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated Debentures,
such payments will be sufficient to cover Distributions and other payments
distributable on the Preferred Securities, primarily because
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(i) the aggregate principal amount of the Junior Subordinated Debentures will
be equal to the sum of the aggregate stated Liquidation Amount of the
Preferred Securities and Common Securities; (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate, Distribution Dates and other payment dates for
the Preferred Securities; (iii) the Company will pay for any and all costs,
expenses and liabilities of the Issuer Trust except the Issuer Trust's
obligations to holders of the Trust Securities; and (iv) the Trust Agreement
further provides that the Issuer Trust will not engage in any activity that is
not consistent with the limited purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the Company
would not constitute a default or Event of Default in respect of the Preferred
Securities. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness of the Company, the subordination provisions of the
Junior Subordinated Indenture provide that no payments may be made in respect
of the Junior Subordinated Debentures until such Senior Indebtedness has been
paid in full or any payment default thereunder has been cured or waived. See
"Description of Junior Subordinated Debentures--Subordination."
LIMITED PURPOSE OF ISSUER TRUST
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and the Issuer Trust exists for the sole
purpose of issuing its Preferred Securities and Common Securities and
investing the proceeds thereof in Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security and a holder
of a Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture is entitled to receive from the Company payments on Junior
Subordinated Debentures held, while a holder of Preferred Securities is
entitled to receive Distributions or other amounts distributable with respect
to the Preferred Securities from the Issuer Trust (or from the Company under
the Guarantee) only if and to the extent the Issuer Trust has funds available
for the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Issuer Trust, other
than any such dissolution involving the distribution of the Junior
Subordinated Debentures, after satisfaction of liabilities to creditors of the
Issuer Trust as required by applicable law, the holders of the Preferred
Securities will be entitled to receive, out of assets held by the Issuer
Trust, the Liquidation Distribution in cash. See "Description of Preferred
Securities--Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Issuer Trust, as
registered holder of the Junior Subordinated Debentures, would be a
subordinated creditor of the Company, subordinated and junior in right of
payment to all Senior Indebtedness as set forth in the Junior Subordinated
Indenture, but entitled to receive payment in full of all amounts payable with
respect to the Junior Subordinated Debentures before any shareholders of the
Company receive payments or distributions. Since the Company is the guarantor
under the Guarantee and has agreed under the Junior Subordinated Indenture to
pay for all costs, expenses and liabilities of the Issuer Trust (other than
the Issuer Trust's obligations to the holders of the Trust Securities), the
positions of a holder of the Preferred Securities and a holder of such Junior
Subordinated Debentures relative to other creditors and to shareholders of the
Company in the event of liquidation or bankruptcy of the Company are expected
to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of Preferred
Securities. This summary only addresses the tax consequences to a person that
acquires Preferred Securities on their original issue at their original
offering price and that is, except as noted below, (i) an individual citizen
or resident of the United States, (ii) a corporation, partnership, or other
entity organized under the laws of the United States or any state thereof or
the District of Columbia, (iii) an estate the income of which is subject to
United States federal income tax regardless of source, or (iv) a trust if (a)
a United States court of law is able to exercise primary supervision over the
trust's administration and (b) one or more United States fiduciaries have the
authority to control all of the trust's substantial decisions (a "United
States Person"). This summary merely addresses some of the federal income tax
consequences applicable to a United States Person that is a beneficial owner
of Preferred Securities and does not purport to be a complete analysis or
listing of all potential tax consequences or risks and does not address the
tax consequences to special classes of taxpayers, including, without
limitation, (i) persons that are not United States Persons, (ii) persons that
may be subject to special treatment under United States federal income tax
law, such as banks, insurance companies, thrift institutions, regulated
investment companies, real estate investment trusts, tax-exempt investors and
dealers in securities or currencies, (iii) persons that will hold Preferred
Securities as part of a position in a "straddle" or as part of a "hedging,"
"conversion" or other integrated investment transaction for United States
federal income tax purposes, (iv) persons whose functional currency is not the
United States dollar or (v) persons that do not hold Preferred Securities as
capital assets. In addition, this summary does not include any description of
alternative minimum tax consequences or the tax laws of any state, local,
foreign or other government that may be applicable to a holder of Preferred
Securities.
The statements of law or legal conclusions set forth in this summary
constitute the opinion of Stinson, Mag & Fizzell, P.C., in its capacity as
counsel to the Company and the Issuer Trust ("Tax Counsel"). This summary is
based upon the Internal Revenue Code of 1986, as amended to date (the "Code"),
the regulations promulgated thereunder (the "Regulations"), Internal Revenue
Service ("IRS") rulings and pronouncements and judicial decisions now in
effect, all of which are subject to change at any time. Such changes may be
applied retroactively in a manner that could cause the tax consequences to
vary substantially from the consequences described below, possibly adversely
affecting a beneficial owner of Preferred Securities. In particular,
legislation has been proposed that could adversely affect the Company's
ability to deduct interest on the Junior Subordinated Debentures, which may in
turn permit the Company to cause a redemption of the Preferred Securities. See
"--Possible Tax Law Changes." The authorities on which this summary is based
are subject to various interpretations, and it is therefore possible that the
United States federal income tax treatment of the purchase, ownership and
disposition of Preferred Securities may differ from the treatment described
below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF PREFERRED
SECURITIES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX
LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES AND THE ISSUER TRUST
Under current law and assuming compliance with the terms of the Trust
Agreement, the Issuer Trust will not be taxable as a corporation but will
instead be classified as a grantor trust for United States federal income tax
purposes. As a result, each beneficial owner of Preferred Securities (a
"Securityholder") will be treated for federal income tax purposes as a holder
of its pro rata share of the Junior Subordinated Debentures held by the Issuer
Trust. Accordingly, each Securityholder will be required to include in its
gross income its pro rata share of the interest income, including OID, paid or
accrued with respect to the Junior Subordinated Debentures whether or not cash
is actually distributed to the Securityholders. See "--Interest Income and
Original Issue Discount." The Junior Subordinated Debentures will be
classified as indebtedness of the Company for United States federal income tax
purposes.
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<PAGE>
The Company, the Issuer Trust and holders of the Preferred Securities (by
the acceptance of a beneficial interest in a Preferred Security) will agree to
treat the Junior Subordinated Debentures as indebtedness for United States
federal income tax purposes. In connection with the issuance of the Junior
Subordinated Debentures, Tax Counsel is of the opinion that, under current
law, and based on the representations, facts and assumptions set forth herein,
the Junior Subordinated Debentures will be classified as indebtedness for
United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
The Junior Subordinated Debentures generally provide for quarterly payments
of interest, subject to the Company's ability to defer payment of interest
with respect to an Extension Period. The timing of the Securityholders'
recognition of the interest income on the Junior Subordinated Debentures is
dependant upon whether the Junior Subordinated Debentures are treated as
original issue discount ("OID") obligations under the Code. An obligation has
OID if the stated redemption price of the obligation exceeds the issue price
by more than a de minimis amount. The stated redemption price generally is the
sum of all payments to be made on the obligation other than payments of
qualified stated interest. Qualified stated interest is interest which is
unconditionally payable in cash or property (other than debt instruments of
the issuer) at least annually at a single fixed rate. Under applicable
Regulations, if the terms and conditions of a debt instrument make the
likelihood that stated interest will not be timely paid a "remote"
contingency, such contingency will be ignored in determining whether a debt
instrument is issued with OID.
Although the Company believes that the likelihood of its exercising its
option to defer payments of interest is remote, an issue exists as to whether
such likelihood is remote under the terms and conditions of the debt
instrument. If the likelihood is not remote under the terms and conditions of
the debt instrument, the quarterly interest payments will not be treated as
qualified stated interest and the Junior Subordinated Debentures will be OID
obligations. Otherwise, the quarterly interest payments are treated as
qualified stated interest and the Junior Subordinated Debentures are not OID
obligations.
Qualified stated interest is includible in income by a Securityholder in
accordance with such Securityholder's method of tax accounting. OID is
includible in income by a Securityholder based upon an accrual method of
income, irrespective of whether the holder uses the cash or accrual method of
tax accounting.
The Company intends to take the position that the Junior Subordinated
Debentures will not be considered to be issued with OID at the time of their
original issuance and, accordingly, a Securityholder should include in gross
income such Securityholder's allocable share of interest as qualified stated
interest on the Junior Subordinated Debentures in accordance with such
Securityholder's method of tax accounting. If the Junior Subordinated
Debentures are considered to be issued with OID, the Securityholders will have
to report the interest income under an accrual method of tax accounting.
Under the Regulations, if the Company exercises its option to defer any
payment of interest, the Junior Subordinated Debentures will at that time be
treated as issued with OID, and all stated interest (and de minimis OID, if
any) on the Junior Subordinated Debentures would thereafter be treated as OID
as long as the Junior Subordinated Debentures remained outstanding. In such
event, all of a Securityholder's taxable interest income with respect to the
Junior Subordinated Debentures would be accounted for as OID on an economic
accrual basis regardless of such Securityholder's method of tax accounting,
and actual distributions of stated interest would not be reported as taxable
income. Consequently, a Securityholder would be required to include in gross
income OID even though the Company would not make any actual cash payments
during an Extension Period.
The IRS has not provided significant guidance with respect to the
Regulations through published rulings or other published interpretations and,
therefore, the IRS could take a position contrary to the interpretation
herein.
Because income on the Preferred Securities will constitute interest or OID,
corporate Securityholders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Preferred
Securities.
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Subsequent uses of the term "interest" in this summary include income in the
form of OID.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO SECURITYHOLDERS
Under current law, a distribution by the Issuer Trust of the Junior
Subordinated Debentures as described under the caption "Description of
Preferred Securities--Liquidation Distribution Upon Dissolution" will be non-
taxable and will result in the Securityholder receiving directly its pro rata
share of the Junior Subordinated Debentures previously held indirectly through
the Issuer Trust, with a holding period and aggregate tax basis equal to the
holding period and aggregate tax basis such Securityholder had in its
Preferred Securities before such distribution. If, however, the liquidation of
the Issuer Trust were to occur because the Issuer Trust is subject to United
States federal income tax with respect to income accrued or received on the
Junior Subordinated Debentures, the distribution of Junior Subordinated
Debentures to Securityholders by the Issuer Trust would be a taxable event to
the Issuer Trust and each Securityholder, and the Securityholder would
recognize gain or loss as if the Securityholder had exchanged its Preferred
Securities for the Junior Subordinated Debentures it received upon the
liquidation of the Issuer Trust. A Securityholder will recognize interest in
respect of Junior Subordinated Debentures received from the Issuer Trust in
the manner described above under "--Interest Income and Original Issue
Discount."
Under certain circumstances described herein (see "Description of Junior
Subordinated Debentures--Redemption"), the Junior Subordinated Debentures may
be redeemed by the Company for cash and the proceeds of such redemption
distributed by the Issuer Trust to holders in redemption of their Preferred
Securities. Under current law, such a redemption would, for United States
federal income tax purposes, constitute a taxable disposition of the redeemed
Preferred Securities, and a holder would recognize gain or loss as if it sold
such redeemed Preferred Securities for cash. See "--Sales of Preferred
Securities."
SALES OF PREFERRED SECURITIES
A Securityholder that sells Preferred Securities will recognize gain or loss
equal to the difference between its adjusted tax basis in the Preferred
Securities and the amount realized on the sale of such Preferred Securities.
Assuming that the Company does not exercise its option to defer payment of
interest on the Junior Subordinated Debentures, and the Preferred Securities
are not considered issued with OID, a Securityholder's adjusted tax basis in
the Preferred Securities generally will be its initial purchase price. If the
Junior Subordinated Debentures are deemed to be issued with OID, a
Securityholder's tax basis in the Preferred Securities generally will be its
initial purchase price, increased by OID previously includible in such
Securityholder's gross income to the date of disposition and decreased by
distributions or other payments received on the Preferred Securities other
than payments of qualified stated interest. Such gain or loss generally will
be a capital gain or loss (except to the extent of any accrued interest with
respect to such Securityholder's pro rata share of the Junior Subordinated
Debentures required to be included in income) and generally will be a long-
term capital gain or loss if the Preferred Securities have been held for more
than one year.
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debentures, the Preferred Securities may trade at a
price that does not accurately reflect the value of accrued but unpaid
interest with respect to the underlying Junior Subordinated Debentures. In the
event of such a deferral, a Securityholder that disposes of its Preferred
Securities between record dates for payments of distributions thereon will be
required to include in income as ordinary income its share of accrued but
unpaid interest on the Junior Subordinated Debentures to the date of
disposition as OID, but may not receive the cash related thereto. However,
such Securityholder will add such amount to its adjusted tax basis in the
Preferred Securities. To the extent the selling price is less than the
Securityholder's adjusted tax basis, such Securityholder will recognize a
capital loss. Subject to certain limited exceptions, capital losses generally
cannot be applied to offset ordinary income for United States federal income
tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid or accrued on the Preferred Securities
held of record by United States Persons (other than corporations and certain
other exempt Securityholders) will be reported to the IRS.
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<PAGE>
"Backup" withholding at a rate of 31%, or other rate as may be required by the
Code or the Regulations, will apply to payments of interest to non-exempt
United States Persons unless the Securityholder furnishes its taxpayer
identification number in the manner prescribed in the applicable Regulations,
certifies that such number is correct, certifies as to no loss of exemption
from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Preferred Securities to or
through the United States office of a broker is subject to information
reporting and backup withholding unless the Securityholder establishes an
exemption from the information reporting and backup withholding requirements.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the IRS.
It is anticipated that income on the Preferred Securities required to be
reported to the IRS will be reported to Securityholders on Form 1099 and
mailed to Securityholders by January 31 following each calendar year.
These backup withholding tax and information reporting rules currently are
under review by the United States Treasury Department and proposed Treasury
regulations issued on April 22, 1996 would modify certain of such rules.
Accordingly, the application of such rules to the Preferred Securities could
be changed.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. One of the revenue provisions of those proposals would
generally deny interest deductions for interest on an instrument issued by a
corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. If enacted
as proposed by the President, this provision would be effective for
instruments issued on or after the date of first action by a Congressional
committee with respect to the proposal. It is not clear from the President's
proposals what constitutes Congressional "committee action" with respect to
this proposal. If the proposed provision were to apply to the Junior
Subordinated Debentures, the Company would be unable to deduct interest on the
Junior Subordinated Debentures. Under current law, the Company will be able to
deduct interest on the Junior Subordinated Debentures; however, the Company
and the Issuer Trust have been advised by Tax Counsel that, if enacted as
proposed, the recently proposed legislation would change the deductibility of
the interest paid by the Company on the Junior Subordinated Debentures for
federal income tax purposes if the Junior Subordinated Debentures are issued
after "committee action," and that Congress could pass such legislation giving
it retroactive effect to the date of the first committee action or some other
date prior to its enactment into law. There can be no assurance that future
legislative proposals or final legislation will not affect the ability of the
Company to deduct interest on the Junior Subordinated Debentures.
The House Ways and Means Committee presently is anticipated to consider the
President's proposal in June, 1997. If the Preferred Securities are issued
after the first committee action and if the proposed legislation is enacted as
proposed, such enactment would give rise to a Tax Event, which may permit the
redemption of the Preferred Securities, as described more fully in this
Prospectus under "Description of Preferred Securities--Redemption."
CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be considered a
"party in interest" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a "disqualified person" within
the meaning of Section 4975 of the Code with respect to many employee benefit
50
<PAGE>
plans ("Plans") that are subject to ERISA. The purchase of the Preferred
Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section
4975(e)(1) of the Code) and with respect to which the Company, or any
affiliate of the Company is a service provider (or otherwise is a party in
interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless the Preferred
Securities are acquired pursuant to and in accordance with an applicable
exemption. Any pension or other employee benefit plan proposing to acquire any
Preferred Securities should consult with its counsel.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement") dated June , 1997, among the Company, the Issuer
Trust and Ryan, Beck & Co. (the "Underwriter"), the Issuer Trust has agreed to
sell to the Underwriter, and the Underwriter has agreed to purchase from the
Issuer Trust $10,000,000 aggregate Liquidation Amount of Preferred Securities
at the public offering price subject to the underwriting commissions set forth
on the cover page of this Prospectus.
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to certain conditions precedent and that the Underwriter will
purchase all of the Preferred Securities offered hereby if any of such
Preferred Securities are purchased.
The Company has been advised by the Underwriter that the Underwriter
proposes to offer the Preferred Securities to the public and other dealers at
the public offering price set forth on the cover page of this Prospectus and
will share with certain dealers from its commission a concession not in excess
of $ per Preferred Security. The Underwriter may allow, and such dealers
may reallow, a concession not in excess of $ per Preferred Security to
certain other dealers. After the public offering, the offering price and other
selling terms may be changed by the Underwriter.
The Company has granted to the Underwriter an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an
additional $1,500,000 aggregate Liquidation Amount of the Preferred Securities
at the public offering price plus accrued Distributions, if any, from ,
1997. To the extent that the Underwriter exercises such option, the Company
will be obligated, pursuant to the option, to sell such Preferred Securities
to the Underwriter. The Underwriter may exercise such option only to cover
over-allotments made in connection with the sale of the Preferred Securities
offered hereby. If purchased, the Underwriter will offer such additional
Preferred Securities on the same terms as those on which the $10,000,000
aggregate Liquidation Amount of the Preferred Securities are being offered.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued
by the Company, the Underwriting Agreement provides that the Company will pay
as compensation for the Underwriter's arranging the investment therein of such
proceeds an amount of $.30 per Preferred Security (or $300,000 ($345,000 if
the over-allotment option is exercised in full) in the aggregate) and an
advisory fee equal to 1% of the gross proceeds of the Offering to the account
of the Underwriter (an additional $100,000 or $115,000 if the over-allotment
is exercised). The Company has also agreed to reimburse the Underwriter for
its reasonable out-of-pocket expenses, including legal fees and expenses
related to the Offering of the Preferred Securities.
In connection with the offering of the Preferred Securities, the Underwriter
and any selling group members and their respective affiliates may engage in
transactions effected in accordance with Rule 104 of the Securities and
Exchange Commission's Regulation M that are intended to stabilize, maintain or
otherwise affect the market price of the Preferred Securities. Such
transactions may include over-allotment transactions in which the Underwriter
creates a short position for its own account by selling more Preferred
Securities than it is committed to purchase from the Trust Issuer. In such a
case, to cover all or part of the short position, the Underwriter may exercise
the over-allotment option described above or may purchase Preferred Securities
in the open market
51
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following completion of the initial offering of the Preferred Securities. The
Underwriter also may engage in stabilizing transactions in which it bids for,
and purchases, shares of the Preferred Securities at a level above that which
might otherwise prevail in the open market for the purpose of preventing or
retarding a decline in the market price of the Preferred Securities. The
Underwriter also may reclaim any selling concessions allowed to an Underwriter
or dealer if the Underwriter repurchases shares distributed by the Underwriter
or dealer. Any of the foregoing transactions may result in the maintenance of
a price for the Preferred Securities at a level above that which might
otherwise prevail in the open market. Neither the Company nor the Underwriter
makes any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the
Preferred Securities. The Underwriter is not required to engage in any of the
foregoing transactions and, if commenced, such transactions may be
discontinued at any time without notice.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made
in compliance with the applicable provisions of Rule 2810 of the NASD's
Conduct Rules.
The Preferred Securities are a new issue of securities with no established
trading market. The Company and the Issuer Trust have been advised by the
Underwriter that it intends to make a market in the Preferred Securities.
However, the Underwriter is not obligated to do so and such market making may
be interrupted or discontinued at any time without notice at the sole
discretion of the Underwriter. Application has been made by the Company to
list the Preferred Securities in the Nasdaq National Market, but one of the
requirements for listing and continuing listing is the presence of two market
makers for the Preferred Securities, and the presence of a second market maker
cannot be assured. Accordingly, no assurance can be given as to the
development or liquidity of any market for the Preferred Securities.
The Company and the Issuer Trust have agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act.
The Underwriter may in the future perform various services for the Company,
including investment banking services, for which it may receive customary fees
for such services.
VALIDITY OF SECURITIES
The validity of the Guarantee and the Junior Subordinated Debentures and
certain tax matters will be passed upon for the Company by Stinson, Mag &
Fizzell, P.C., Kansas City, Missouri, counsel to the Company. Stinson, Mag &
Fizzell, P.C. will rely as to certain matters of New Jersey law on the opinion
of Thacher Proffitt & Wood, Jersey City, New Jersey. Certain legal matters
will be passed upon and for the Underwriter by Pitney, Hardin, Kipp & Szuch,
Morristown, New Jersey. Certain matters of Delaware law relating to the
validity of the Preferred Securities, the enforceability of the Trust
Agreement and the creation of the Issuer Trust will be passed upon by
Richards, Layton & Finger, special Delaware counsel to the Company and the
Issuer Trust. Stinson, Mag & Fizzell, P.C. and Pitney, Hardin, Kipp & Szuch,
will rely as to certain matters of Delaware law on the opinion of Richards,
Layton & Finger.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1996
and 1995, and for each of the years in the three-year period ended December
31, 1996, appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, have been incorporated by reference in the Prospectus
and in the Registration Statement of which this Prospectus forms a part, in
reliance upon the report of KPMG Peat Marwick LLP, independent public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick
LLP refers to the adoption of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investment in Debt and Equity Securities" in 1994.
52
<PAGE>
With respect to the unaudited interim financial information for the periods
ended March 31, 1997 and 1996, incorporated by reference herein, the
independent public accountants have reported that they applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, and
incorporated by reference herein, states that they did not audit and they do
not express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of section 11 of the Securities
Act of 1933 for their report on the unaudited interim financial information
because that report is not a "report" or a "part" of the registration
statement prepared or certified by the accountants within the meaning of
sections 7 and 11 of the Act.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission located at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
also can be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company's Common Stock is included for quotation on the NASDAQ National
Market System, and such reports, proxy statements and other information should
be available for inspection and copying at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. Materials also may be accessed electronically by means of the
Commission's home page on the Internet (http://www.sec.gov), which contains
reports, proxy and information statements and other information regarding
companies that file electronically with the Commission. This Prospectus does
not contain all the information set forth in the Registration Statement and
exhibits thereto, which the Company has filed with the Commission under the
Securities Act and to which reference is hereby made.
No separate financial statements of the Issuer Trust have been included or
incorporated by reference herein. The Company and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Preferred Securities because the Issuer Trust is a newly formed special
purpose entity, has no operating history or independent operations and is not
engaged in and does not propose to engage in any activity other than holding
as trust assets the Junior Subordinated Debentures and issuing the Trust
Securities. See "BNB Capital Trust," "Description of Preferred Securities,"
"Description of Junior Subordinated Debentures" and "Description of
Guarantee." In addition, the Company does not expect that the Issuer Trust
will be filing reports under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
and the Company's current report on Form 8-K dated June 24, 1997, previously
filed by the Company with the Commission pursuant to Section 13 of the
Exchange Act. Copies of the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 are being delivered with this Prospectus.
Any statement contained herein, or in any document all or a portion of which
is incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or this Prospectus.
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The Company will 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 foregoing documents
incorporated herein by reference (other than certain exhibits to such
documents). Written requests should be directed to the Office of the
Secretary, Broad National Bancorporation, 905 Broad Street, Newark, New Jersey
07102. Telephone requests may be directed to (201) 624-2300.
54
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NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEI-
THER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................. 5
Selected Consolidated Financial Data..................................... 10
Risk Factors............................................................. 12
BNB Capital Trust........................................................ 19
Use of Proceeds.......................................................... 20
Capitalization........................................................... 21
Accounting Treatment..................................................... 22
Description of Preferred Securities...................................... 22
Description of Junior Subordinated Debentures............................ 35
Description of Guarantee................................................. 43
Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee............................................ 45
Certain Federal Income Tax Consequences.................................. 47
Certain ERISA Considerations............................................. 50
Underwriting............................................................. 51
Validity of Securities................................................... 52
Experts.................................................................. 52
Available Information.................................................... 53
Incorporation of Certain Documents By Reference.......................... 53
</TABLE>
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LOGO BNB
$10,000,000
BNB CAPITAL TRUST
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER
PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
BROAD NATIONAL BANCORPORATION
-------------
PROSPECTUS
-------------
[LOGO OF RYAN, BECK & CO.]
June , 1997
- -------------------------------------------------------------------------------
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<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fees................................................ $ 3,485
Legal Services (including Underwriter's counsel)................. 150,000
Printing and Engraving........................................... 35,000
Nasdaq Listing Fees.............................................. 10,600
Accounting Fees.................................................. 35,000
Trustee Fees and Expenses........................................ 20,000
Blue Sky Fees and Expenses....................................... 5,000
Miscellaneous.................................................... 5,915
--------
TOTAL............................................................ $265,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14A:2-7 of the New Jersey Business Corporation Act (the "NJBCA")
permits a corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of
directors or officers of the corporation to the corporation or its
shareholders for damages for breach of any duty owed to the corporation or its
shareholders, except for a breach of duty based on an act or omission (a) in
breach of such person's duty of loyalty to the corporation or its
shareholders, (b) not in good faith or involving a knowing violation of law or
(c) resulting in receipt by such person of an improper personal benefit.
Article NINTH of the Certificate of Incorporation of the Registrant contains
a provision eliminating the liability of directors and officers of the
Registrant to the fullest extent permitted or authorized by the laws of the
State of New Jersey.
In addition to the foregoing, Section 14A:3-5 of the NJBCA governs the
indemnification of directors, officers and employees of the Registrant. The
following is the text of that Section as presently enacted:
(1) As used in this section,
(a) "Corporate agent" means any person who is or was a director,
officer, employee or agent of the indemnifying corporation or of any
constituent corporation absorbed by the indemnifying corporation in a
consolidation or merger and any person who is or was a director,
officer, trustee, employee or agent of any other enterprise, serving as
such at the request of the indemnifying corporation, or of any such
constituent corporation, or the legal representative of any such
director, officer, trustee, employee or agent;
(b) "Other enterprise" means any domestic or foreign corporation,
other than the indemnifying corporation, and any partnership, joint
venture, sole proprietorship, trust, or other enterprise, whether or
not for profit, served by a corporate agent;
(c) "Expenses" means reasonable costs, disbursements and counsel
fees;
(d) "Liabilities" means amounts paid or incurred in satisfaction of
settlements, judgments, fines and penalties;
(e) "Proceeding" means any pending, threatened or completed civil,
criminal, administrative or arbitrative action, suit or proceeding, and
any appeal therein and any inquiry or investigation which could lead to
such action, suit or proceeding; and
(f) References to "other enterprises" include employee benefit plans;
references to "fines" include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to "serving at
the request of the indemnifying corporation" include any service as a
corporate agent which imposes duties on, or involves services by, the
corporate agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith
and in a manner the
II-1
<PAGE>
person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(2) Any corporation organized for any purpose under any general or
special law of this State shall have the power to indemnify a corporate
agent against his expenses and liabilities in connection with any
proceeding involving the corporate agent by reason of his being or having
been such a corporate agent, other than a proceeding by or in the right of
the corporation, if
(a) Such corporate agent acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the corporation; and
(b) With respect to any criminal proceeding, such corporate agent had
no reasonable cause to believe his conduct was unlawful. The
termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall
not of itself create a presumption that such corporate agent did not
meet the applicable standards of conduct set forth in paragraphs 14A:3-
5(2)(a) and 14A:3-5(2)(b).
(3) Any corporation organized for any purpose under any general or
special law of this State shall have the power to indemnify a corporate
agent against his expenses in connection with any proceeding by or in the
right of the corporation to procure a judgment in its favor which involves
the corporate agent by reason for his being or having been such corporate
agent, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation. However, in
such proceeding no indemnification shall be provided in respect of any
claim, issue or matter as to which such corporate agent shall have been
adjudged to be liable to the corporation, unless and only to the extent
that the Superior Court or the court in which such proceeding was brought
shall determine upon application that despite the adjudication of
liability, but in view of all circumstances of the case, such corporate
agent is fairly and reasonably entitled to indemnity for such expenses as
the Superior Court or such other court shall deem proper.
(4) Any corporation organized for any purpose under any general or
special law of this State shall indemnify a corporate agent against
expenses to the extent that such corporate agent has been successful on the
merits or otherwise in any proceeding referred to in subsections 14A:3-5(2)
and 14A:3-5(3) or in defense of any claim, issue or matter therein.
(5) Any indemnification under subsection 14A:3-5(2) and, unless ordered
by a court, under subsection 14A:3-5(3) may be made by the corporation only
as authorized in a specific case upon a determination that indemnification
is proper in the circumstances because the corporate agent met the
applicable standard of conduct set forth in subsection 14A:3-5(2) or
subsection 14A:3-5(3). Unless otherwise provided in the certificate of
incorporation or bylaws, such determination shall be made
(a) By the board of directors or a committee thereof, acting by a
majority vote of a quorum consisting of directors who were not parties
to or otherwise involved in the proceeding; or
(b) If such a quorum is not obtainable, or, even if obtainable and
such quorum of the board of directors or committee by a majority vote
of the disinterested directors so directs, by independent legal
counsel, in a written opinion, such counsel to be designated by the
board of directors; or
(c) By the shareholders if the certificate of incorporation or bylaws
or a resolution of the board of directors or of the shareholders so
directs.
(6) Expenses incurred by a corporate agent in connection with a
proceeding may be paid by the corporation in advance of the final
disposition of the proceeding as authorized by the board of directors upon
receipt of an undertaking by or on behalf of the corporate agent to repay
such amount if it shall ultimately be determined that he is not entitled to
be indemnified as provided in this section.
(7)(a) If a corporation upon application of a corporate agent has failed
or refused to provide indemnification as required under subsection 14A:3-
5(4) or permitted under subsections 14A:3-5(2), 14A:3-5(3) and 14A:3-5(6),
a corporate agent may apply to a court for an award of indemnification by
the corporation, and such court
II-2
<PAGE>
(i) may award indemnification to the extent authorized under
subsections 14A:3-5(2) and 14A:3-5(3) and shall award indemnification
to the extent required under subsection 14A:3-5(4), notwithstanding any
contrary determination which may have been made under subsection 14A:3-
5(5); and
(ii) may allow reasonable expenses to the extent authorized by, and
subject to the provisions of, subsection 14A:3-5(6), if the court shall
find that the corporate agent has by his pleadings or during the course
of the proceeding raised genuine issues of fact or law.
(b) Application for such indemnification may be made
(i) in the civil action in which the expenses were or are to be
incurred or other amounts were or are to be paid; or
(ii) to the Superior Court in a separate proceeding. If the
application is for indemnification arising out of a civil action, it
shall set forth reasonable cause for the failure to make application
for such relief in the action or proceeding in which the expenses were
or are to be incurred or other amounts were or are to be paid.
The application shall set forth the disposition of any previous
application for indemnification and shall be made in such manner and
form as may be required by the applicable rules of court or, in the
absence thereof, by direction of the court to which it is made. Such
application shall be upon notice to the corporation. The court may also
direct that notice shall be given at the expense of the corporation to
the shareholders and such other persons as it may designate in such
manner as it may require.
(8) The indemnification and advancement of expenses provided by or
granted pursuant to the other subsections of this section shall not exclude
any other rights, including the right to be indemnified against liabilities
and expenses incurred in proceedings by or in the right of the corporation,
to which a corporate agent may be entitled under a certificate of
incorporation, bylaw, agreement, vote of shareholders, or otherwise;
provided that no indemnification shall be made to or on behalf of a
corporate agent if a judgment or other final adjudication adverse to the
corporate agent establishes that his acts or omissions (a) were in breach
of his duty of loyalty to the corporation or its shareholders, as defined
in subsection (3) of N.J.S. 14A:2-7, (b) were not in good faith or involved
a knowing violation of law or (c) resulted in receipt by the corporate
agent of an improper personal benefit.
(9) Any corporation organized for any purpose under any general or
special law of this State shall have the power to purchase and maintain
insurance on behalf of any corporate agent against any expenses incurred in
any proceeding and any liabilities asserted against him by reason of his
being or having been a corporate agent, whether or not the corporation
would have the power to indemnify him against such expenses and liabilities
under the provisions of this section. The corporation may purchase such
insurance from, or such insurance may be reinsured in whole or in part by,
an insurer owned by or otherwise affiliated with the corporation, whether
or not such insurer does business with other insureds.
(10) The powers granted by this section may be exercised by the
corporation, notwithstanding the absence of any provision in its
certificate of incorporation or bylaws authorizing the exercise of such
powers.
(11) Except as required by subsection 14A:3-5(4), no indemnification
shall be made or expenses advanced by a corporation under this section, and
none shall be ordered by a court, if such action would be inconsistent with
a provision of the certificate of incorporation, a bylaw, a resolution of
the board of directors or of the shareholders, an agreement or other proper
corporate action, in effect at the time of the accrual of the alleged cause
of action asserted in the proceeding, which prohibits, limits or otherwise
conditions the exercise of indemnification powers by the corporation or the
rights of indemnification to which a corporate agent may be entitled.
(12) This section does not limit a corporation's power to pay or
reimburse expenses incurred by a corporate agent in connection with the
corporate agent's appearance as a witness in a proceeding at a time when
the corporate agent has not been made a party to the proceeding.
II-3
<PAGE>
Article NINTH of the Certificate of Incorporation of the Registrant provides
that the Registrant shall indemnify directors and officers of the Registrant
to the full extent permitted or authorized by the laws of the State of New
Jersey. The Certificate of Incorporation also permits the Registrant to
purchase and maintain insurance against any liability asserted against any
director or officer of the Registrant arising out of his capacity as such.
Each of the officers and directors of the Registrant is insured against
certain liabilities which he might incur in his capacity as an officer or
director pursuant to directors' and officers' liability insurance policies.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 16. EXHIBITS:
The exhibits filed as part of this Registration Statement are as follows:
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
4.1 Form of Junior Subordinated Indenture.**
4.2 Form of Junior Subordinated Debenture Certificate.**
4.3 Trust Agreement.**
4.4 Form of Amended and Restated Trust Agreement.**
4.5 Form of Preferred Security.**
4.6 Form of Guarantee.**
4.7 Certificate of Trust of BNB Capital Trust.*
5.1 Opinion of Richards, Layton & Finger.*
5.2 Opinion of Stinson, Mag & Fizzell, P.C.*
5.3 Opinion of Thacher, Proffitt & Wood.*
8.1 Tax Opinion of Stinson, Mag & Fizzell, P.C.*
10.1 Lease between The Prudential Insurance Company of America and Broad
National Bank dated as of December 15, 1988 (filed as Exhibit 3(e) to
the Form 10-K Report of Broad National Bancorporation for the year
ended December 31, 1989 and incorporated herein by reference).
10.1.1 Amendment of Lease between The Prudential Insurance Company of America
and Broad National Bank dated as of February 7, 1996 (filed as Exhibit
10.1.1 to the Form 10-K Report of Broad National Bancorporation for
the fiscal year ended December 31, 1995 and incorporated herein by
reference).
10.2 Lease between Third Newark Gateway Urban Renewal Association and Broad
National Bank, dated September 7, 1984 (filed as Exhibit 10(b) to
Registration Statement No. 33-01560 and incorporated herein by
reference).
10.3 Lease between O. Navigador Bar, Inc. and Broad National Bank (filed as
Exhibit 10(c) to Amendment No. 1 to Registration Statement No. 2-78220
and incorporated herein by reference).
10.4 Lease between Millburn Common Associates and Broad National Bank dated
June 16, 1976, and Amendment to such Lease, dated September 10, 1985
(filed as Exhibit 10(d) to Registration Statement No. 33-01560 and
incorporated herein by reference).
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.5 Lease between Cada Holding Corp. and Broad National Bank dated October
8, 1976 (filed as Exhibit 10(e) to Amendment No. 1 to Registration
Statement No. 2-78220 and incorporated herein by reference).
10.6 Lease between Euro Associates and Broad National Bank acknowledged by
the parties on December 12, 1985 and December 10, 1985 (filed with
Amendment No. 2 to Registration Statement No. 33-53658 as Exhibit
10.6 and incorporated herein by reference).
10.7 Workletter Agreement between Euro Associates and Broad National Bank
(filed with Amendment No. 2 to Registration Statement No. 33-53658 as
Exhibit 10.7 and incorporated herein by reference).
10.8 Lease between 1000 South Elmora Associates and Broad National Bank
dated May 18, 1986 (filed with Amendment No. 2 to Registration
Statement No. 33-53658 as Exhibit 10.8 and incorporated herein by
reference).
10.9 Lease between Convery Associates and Broad National Bank dated July 1,
1987, and Rider to Lease Agreement, dated September 1, 1992 (filed
with Amendment No. 2 to Registration Statement No. 33-53658 as
Exhibit 10.10 and incorporated herein by reference).
10.10 Lease Agreement and Amendment between 466 Bloomfield Avenue
Associates, Inc. and Broad National Bank dated February 9, 1988
(filed as Exhibit 10(1) to the Form 10-K Report of Broad National
Bancorporation for the year ended December 31, 1989 and incorporated
herein by reference).
10.11 Lease Agreement between George Zeik and Broad National Bank dated
September 1, 1989 (filed as Exhibit 10(m) to the Form 10-K Report for
the year ended December 31, 1989 and incorporated herein by
reference).
10.12 Lease between Broad National Realty Corporation and Broad National
Bank dated May 1, 1990 (filed as Exhibit 10(n) to the Form 10-K
Report of Broad National Bancorporation for the year ended December
31, 1990 and incorporated by reference herein).
10.12.1 Rider to Lease Agreement between Broad National Realty and Broad
National Bank dated December 21, 1993 (filed as Exhibit 10.13.1 to
the Form 10-K Report of Broad National Bancorporation for the year
ended December 31, 1993 and incorporated herein by reference).
10.13 Broad National Bank Employees' Retirement Plan (filed as Exhibit 10(g)
to Registration Statement No. 2-78220 and as Exhibit 10(f) to
Amendment No. 1 to Registration Statement No. 2-78220 and
incorporated herein by reference).
10.14 Form of Amendment to Sections 2.1 and 3.1(c) of the Broad National
Bank Employees' Retirement Plan (filed as Exhibit 10(p) to the Form
10-K Report of Broad National Bancorporation for the year ended
December 31, 1990 and incorporated by reference herein).
10.15 Description of Bonus Plan for Designated Officers and Employees
(appears on page 10 of the definitive proxy statement of Broad
National Bancorporation for its 1991 Annual Meeting of Shareholders
and is incorporated herein by reference).
10.16 Incentive Stock Option Plan for certain employees adopted on March 26,
1987, and amended April 27, 1989 (filed as Exhibit 10.18 to the Form
10-K Report of Broad National Bancorporation for the year ended
December 31, 1992 and incorporated by reference herein).
10.17 Non-Statutory Stock Option Plan for directors adopted on March 26,
1987 (filed with Amendment No. 2 to Registration Statement No. 33-
53658 as Exhibit 10.19 and incorporated herein by reference).
10.18 Employment Agreement between Donald M. Karp and Broad National
Bancorporation dated December 31, 1996 (filed as Exhibit 10.18 to the
Form 10-K Report of Broad National Bancorporation for the year ended
December 31, 1996 and incorporated herein by reference).
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S>
10.19 Employment Agreement by and between John A. Dorman, Broad National Bank
and Broad National Bancorporation, dated December 31, 1996 (filed as
Exhibit 10.19 to the Form 10-K Report of Broad National Bancorporation
for the year ended December 31, 1996 and incorporated herein by
reference).
10.20 Consultant Agreement between Stanley J. Lesnik and Broad National
Bancorporation dated November 16, 1995 (filed as Exhibit 10.20 to the
Form 10-K Report of Broad National Bancorporation for the year ended
December 31, 1995 and incorporated herein by reference).
10.21 Lease between Broad National Bank, landlord, and Newtrend, L.P., tenant,
dated August 10, 1993 (filed as Exhibit 10.22 to the Form 10-K Report
of Broad National Bancorporation for the year ended December 31, 1993
and incorporated herein by reference).
10.22 Newtrend Service Bureau Agreement between Newtrend, Inc. and Broad
National Bank dated August 10, 1993 (filed as Exhibit 10.23 to the Form
10-K Report of Broad National Bancorporation for the year ended
December 31, 1993 and incorporated herein by reference).
10.23 Newtrend Item Processing Addendum between Newtrend, Inc. and Broad
National Bank dated August 10, 1993 (filed as Exhibit 10.24 to the Form
10-K Report of Broad National Bancorporation for the year ended
December 31, 1993 and incorporated herein by reference).
10.24 1993 Broad National Incentive Stock Option Plan for certain employees
adopted on September 19, 1994 (filed as Exhibit 10.24 to the Form 10-K
Report of Broad National Bancorporation for the year ended December 31,
1994 and incorporated herein by reference).
10.25 1993 Broad National Directors Non-Statutory Stock Option Plan for
directors adopted on September 19, 1994 (filed as Exhibit 10.25 to the
Form 10-K Report of Broad National Bancorporation for the year ended
December 31, 1994 and incorporated herein by reference).
10.26 Lease between Lucky Realty LLC and Broad National Bank (filed as Exhibit
10.26 to the Form 10-K Report of Broad National Bancorporation for the
year ended December 31, 1995 and incorporated herein by reference).
10.27 Lease between A.J. Seabra Supermarkets V, Inc. and Broad National Bank
dated as of April 20, 1995 (filed as Exhibit 10.27 to the Form 10-K
Report of Broad National Bancorporation for the year ended December 31,
1995 and incorporated herein by reference).
10.28 1996 Broad National Bancorporation Incentive Stock Option Plan for
certain employees adopted on December 19, 1996 and subsequently amended
on January 16, 1997 (filed as Exhibit 10.28 to the Form 10-K Report of
Broad National Bancorporation for the year ended December 31, 1996 and
incorporated herein by reference).
10.29 1996 Broad National Bancorporation Directors Non-Statutory Stock Option
Plan for directors adopted on December 19, 1996 (filed as Exhibit 10.29
to the Form 10-K Report of Broad National Bancorporation for the year
ended December 31, 1996 and incorporated herein by reference).
10.30 Broad National Bank Long-Term Capital Accumulation Plan for certain
employees adopted on October 19, 1995 (filed as Exhibit 10.30 to the
Form 10-K Report of Broad National Bancorporation for the year ended
December 31, 1996 and incorporated herein by reference).
10.31 Broad National Bank Deferred Compensation Plan for certain employees and
directors adopted on October 19, 1995 (filed as Exhibit 10.31 to the
Form 10-K Report of Broad National Bancorporation for the year ended
December 31, 1996 and incorporated herein by reference).
10.32 Broad National Bank Management Incentive Plan for certain employees
adopted on October 19, 1995 (filed as Exhibit 10.32 to the Form 10-K
Report of Broad National Bancorporation for the year ended December 31,
1996 and incorporated herein by reference).
11.1 Statement re Computation of Net Income Per Share.*
12.1 Statement re Computation of Earnings to Fixed Charges.*
15.1 Letter of KPMG Peat Marwick LLP re Unaudited Interim Financial
Information.
</TABLE>
II-6
<PAGE>
<TABLE>
<C> <S>
23.1 Consent of KPMG Peat Marwick LLP**
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.1).*
23.3 Consent of Stinson, Mag & Fizzell, P.C. (included in Exhibit 5.2).*
23.4 Consent of Thacher Proffitt & Wood (included in Exhibit 5.3).*
24.1 Power of Attorney (included on signature page of original filing).**
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bankers Trust Company, as trustee under the Junior
Subordinated Indenture, the Amended and Restated Trust Agreement and
the Guarantee Agreement relating to BNB Capital Trust.*
</TABLE>
- --------
* Filed herewith.
** Filed with original filing of this Registration Statement on June 10, 1987.
ITEM 17. UNDERTAKINGS
Each of the undersigned Registrants hereby undertake:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, as amended, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrants
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this registration statement as of the time it was
declared effective.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrants pursuant to the foregoing provisions, or
otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act, and is therefore, unenforceable.
In the event that a claim for indemnification against liabilities (other
than the payment by the registrants of expenses incurred or paid by a
director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-2 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN NEWARK, NEW JERSEY, AS OF JUNE 24, 1997.
Broad National Bancorporation
/s/ John A. Dorman
By: _________________________________
JOHN A. DORMAN
PRESIDENT AND CHIEF OPERATING
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
Chairman of the
* Board, Chief June 24, 1997
- ------------------------------------- Executive Officer
DONALD M. KARP and Director
(Principal
Executive Officer)
/s/ James Boyle Treasurer and
- ------------------------------------- Comptroller June 24, 1997
JAMES BOYLE (Principal
Financial and
Accounting Officer)
/s/ John A. Dorman Director
- ------------------------------------- June 24, 1997
JOHN A. DORMAN
Director
* June 24, 1997
- -------------------------------------
LICINIO CRUZ
Director
* June 24, 1997
- -------------------------------------
ARTHUR FISCHMAN
Director
* June 24, 1997
- -------------------------------------
JOHN J. IANNUZZI
II-8
<PAGE>
SIGNATURE TITLE DATE
Director
* June 24, 1997
- -------------------------------------
JAMES J. LAZARUS
Director
* June 24, 1997
- -------------------------------------
EDWARD J. LENIHAN
Director
* June 24, 1997
- -------------------------------------
STANLEY J. LESNIK
Director
* June 24, 1997
- -------------------------------------
CATHERINE MCFARLAND
Director
* June 24, 1997
- -------------------------------------
LOUIS J. OWEN
Director
* June 24, 1997
- -------------------------------------
A. HAROLD SCHWARTZ
Director
* June 24, 1997
- -------------------------------------
HUBERT WILLIAMS
*By: ___________________________
JAMES BOYLE, ATTORNEY-IN-FACT
II-9
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
ISSUER TRUST CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-2 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN NEWARK, NEW JERSEY, AS OF JUNE 24, 1997.
BNB Capital Trust
Broad National Bancorporation
By: _________________________________
AS DEPOSITOR
/s/ John A. Dorman
By: _________________________________
JOHN A. DORMAN
PRESIDENT AND CHIEF OPERATING
OFFICER
II-10
<PAGE>
EXHIBIT 1.1
BNB CAPITAL TRUST
(a Delaware business trust)
_________ Preferred Securities
____% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
June , 1997
Ryan, Beck & Co., Inc.
80 Main Street
West Orange, New Jersey 07052
Ladies and Gentlemen:
BNB Capital Trust (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C. Section 3801 et
seq.), and Broad National Bancorporation, a New Jersey corporation (the
"Company"), as depositor of the Trust and as guarantor (hereafter the Trust and
the Company are referred to collectively as the "Offerors"), hereby confirm
their agreement (the "Agreement") with Ryan Beck & Co., Inc. (the
"Underwriter"), with respect to the issue and sale by the Trust and the purchase
by the Underwriter of 1,000,000 (the "Initial Securities") of the Trust's ____%
Cumulative Trust Preferred Securities (the "Preferred Securities"). The Trust
and the Company also propose to issue and sell to the Underwriter, at the
Underwriter's option, up to an additional 150,000 Preferred Securities (the
"Option Securities") as set forth herein. The term "Preferred Securities" as
used herein, unless indicated otherwise, shall mean the Initial Securities and
the Option Securities.
The Preferred Securities and the Common Securities (as defined herein)
are to be issued pursuant to the terms of an Amended and Restated Trust
Agreement dated as of June __, 1997 (the "Trust Agreement"), among the Offerors,
Bankers Trust Company ("Trust Company"), a New York banking corporation, as
property trustee ("Property Trustee"), and Bankers Trust (Delaware), as Delaware
trustee ("Delaware Trustee"), and Donald M. Karp and James Boyle (the
<PAGE>
"Administrators" and, together with the Property Trustee and the Delaware
Trustee, the "Trustees") and the holders from time to time of undivided
interests in the assets of the Trust. The Preferred Securities will be
guaranteed by the Company, on a subordinated basis and subject to certain
limitations, with respect to distributions and payments upon liquidation,
redemption or otherwise (the "Guarantee") pursuant to the Guarantee Agreement
dated as of June __, 1997 (the "Guarantee Agreement"), between the Company and
the Trust Company, as guarantee trustee (the "Guarantee Trustee"). The assets
of the Trust will consist of ____% junior subordinated debentures due _____ __,
2027 (the "Junior Subordinated Debentures") of the Company which will be issued
under the Indenture dated as of June __, 1997 (the "Indenture"), between the
Company and the Trust Company, as trustee (the "Indenture Trustee"). Under
certain circumstances, the Junior Subordinated Debentures will be distributable
to the holders of undivided beneficial interests in the assets of the Trust.
The entire proceeds from the sale of the Preferred Securities will be combined
with the entire proceeds from the sale by the Trust to the Company of the
Trust's common securities (the "Common Securities"), and will be used by the
Trust to purchase an equivalent amount of the Junior Subordinated Debentures.
The initial public offering price for the Preferred Securities, the
purchase price to be paid by the Underwriter for the Preferred Securities, the
commission per Preferred Security to be paid by the Company to the Underwriters
and the rate of interest to be paid on the Preferred Securities shall be agreed
upon by the Company and the Underwriter, and such agreement shall be set forth
in a separate written instrument substantially in the form of Exhibit A hereto
(the "Price Determination Agreement"). The Price Determination Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Company and the Underwriter and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Preferred
Securities will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of the execution and delivery
of the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and all references herein to "this Agreement" shall be deemed to
include, the Price Determination Agreement.
The Offerors have prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-2 (File Nos.
333-28897 and 333-28897-01) for the registration of the Preferred Securities,
the Guarantee and the Junior Subordinated Debentures under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, and, if such registration statement has not become effective,
the Company will prepare and file, prior to the effective date of such
registration statement, an amendment to such registration statement, including a
final prospectus. Each prospectus used before the time such registration
statement becomes effective is herein called a "preliminary prospectus". Such
registration statement, including the exhibits thereto and the documents
incorporated by reference therein pursuant to Item 12 of Form S-2 under the 1933
Act, at the time it becomes effective, is herein called the "Registration
Statement", and the prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-2 under the 1933 Act, included
in the Registration Statement at the time it becomes effective is herein called
the "Prospectus" except that, if any revised prospectus provided to the
Underwriter by the Company for use in connection with the offering of the
Preferred Securities differs from the
2
<PAGE>
prospectus included in the Registration Statement at the time it becomes
effective (whether or not such prospectus is required to be filed pursuant to
Rule 424(b)), the term "Prospectus" shall refer to such revised prospectus from
and after the time it is first furnished to the Underwriter for such use.
The Company understands that the Underwriter proposes to make a public
offering of the Preferred Securities (the "Offering") as soon as possible after
the Registration Statement becomes effective. The Underwriter may assemble and
manage a selling group of broker-dealers that are members of the National
Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation of purchase orders for the Preferred Securities under the form of a
master selected dealer agreement or similar form of dealer agreement, which the
Underwriter has entered into with such broker dealers.
Section 1. Representations and Warranties.
---------------------------------
(a) The Offerors jointly and severally represent and warrant to and
agree with the Underwriter that:
(i) The Company meets the requirements for use of Form S-2 under the
1933 Act and when the Registration Statement on such form shall become
effective and at the Closing Time referred to below and, with respect to
Option Securities, on the Date of Delivery referred to below, (A) the
Registration Statement and any amendments and supplements thereto will
comply in all material respects with the requirements of the 1933 Act and
the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations"); (B) neither the Registration Statement nor any amendment
or supplement thereto will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; and (C) neither the Prospectus nor any
amendment or supplement thereto will include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, except that none of the representations and
warranties in this Section 1(a)(i)(B) & (C) shall apply to statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Offerors by the Underwriter expressly for use
in the Registration Statement or the Prospectus, or any information
contained in any Form T-1 which is an exhibit to the Registration
Statement. The statements contained under the caption "Underwriting" in the
Registration Statement or the Prospectus constitute the only information
furnished to the Offerors in writing by the Underwriter expressly for use
in the Registration Statement or the Prospectus.
(ii) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-2 under the 1933 Act, at the time they were
filed with the Commission, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of the Commission thereunder (the
"1934 Act Regulations") and, when read together and with the other
information in the
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Prospectus, at the time the Registration Statement becomes effective and at
the Closing Time, will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, in each case after
excluding any statement that does not constitute a part of the Registration
Statement or the Prospectus pursuant to Rule 412 of the 1933 Act
Regulations.
(iii) KPMG Peat Marwick LLP, who are reporting upon the audited
financial statements included or incorporated by reference in the
Registration Statement, are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(iv) This Agreement has been duly authorized, executed and delivered
by the Offerors and, when duly executed by the Underwriter, will constitute
the valid and binding agreement of the Offerors enforceable against the
Offerors in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, or reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles. The Guarantee Agreement, the Junior
Subordinated Debentures, the Trust Agreement and the Indenture have each
been duly authorized by the Company and when validly executed and delivered
by the Company and, in the case of the Guarantee, by the Guarantee Trustee,
in the case of the Trust Agreement, by the Trustees, and in the case of the
Indenture, by the Indenture Trustee, will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, or reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or general equitable
principles; the Junior Subordinated Debentures are entitled to the benefits
of the Indenture; and the Guarantee Agreement, the Junior Subordinated
Debentures, the Trust Agreement and the Indenture conform, in all material
respects, to the descriptions thereof in the Prospectus. The Trust
Agreement, the Guarantee Agreement, and the Indenture have been duly
qualified under the Trust Indenture Act.
(v) The consolidated financial statements, audited and unaudited
(including the Notes thereto), included or incorporated by reference in the
Registration Statement present fairly the consolidated financial position
of the Company and its subsidiaries as of the dates indicated therein and
the consolidated results of operations and cash flows of the Company and
its subsidiaries for the periods specified therein. Such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as otherwise stated therein. The financial statement
schedules, if any, included in the Registration Statement present fairly
the information required to be stated therein. The selected financial, pro
forma and statistical data included in the Prospectus are accurate in all
material respects and present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited consolidated
financial statements included or incorporated by reference in the
Registration Statement.
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(vi) The Company is a corporation duly organized, validly existing and
in good standing under the laws of New Jersey with corporate power and
authority under such laws to own, lease and operate its properties and
conduct its business as described in all material respects in the
Prospectus. The Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts business of a
type, that would make such qualification necessary, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Company and
its subsidiaries, considered as one enterprise.
(vii) The Company is duly registered under the Bank Holding Company
Act of 1956, as amended; each subsidiary of the Company that conducts
business as a bank is duly authorized to conduct such business in each
jurisdiction in which such business is currently conducted, except to the
extent that the failure to be so authorized would not have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise; and the deposit accounts of Broad National Bank (the "Bank")
are insured by the Bank Insurance Fund of the Federal Deposit Insurance
Corporation ("FDIC") up to the maximum allowable limits thereof. The
Offerors have all such power, authority, authorization, approvals and
orders as may be required to enter into this Agreement, to carry out the
provisions and conditions hereof and to issue and sell the Preferred
Securities.
(viii) The Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United States
with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business; the Bank is duly qualified
to transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise. All of the outstanding shares
of capital stock of the Bank have been duly authorized and validly issued
and are fully paid and non-assessable and are owned by the Company
directly, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind.
(ix) Except for the Bank and BNB Investment Corp., the Company does
not have any "significant subsidiaries" as defined in Rule 1-02 of
Regulation S-X under the 1933 Act.
(x) The Company had at the date indicated a duly authorized and
outstanding capitalization as set forth in the Prospectus under the caption
"Capitalization"; the capital stock of the Company and the Preferred
Securities conform in all material respects to the description thereof
contained or incorporated by reference in the Prospectus and such
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<PAGE>
description conforms in all material respects to the rights set forth in
the instruments defining the same.
(xi) The Preferred Securities have been duly and validly authorized by
the Trust for issuance and sale to the Underwriter pursuant to this
Agreement and, when executed and authenticated in accordance with the terms
of the Trust Agreement and delivered by the Trust to the Underwriter
pursuant to this Agreement against payment of the consideration set forth
herein, will be validly issued and fully paid and non-assessable. The
Trust Agreement has been duly authorized by the Trust and, when executed by
the Property Trustee and the Administrators of the Trust and delivered by
the Trust, will have been duly executed and delivered by the Trust and will
constitute the valid and legally binding instrument of the Trust,
enforceable in accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting enforcement of creditors' rights generally or
by general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law). The Preferred Securities
conform, in all material respects, to the statements relating thereto
contained in the Prospectus and such description conforms, in all material
respects, to the rights set forth in the instruments defining the same; the
holders of the Preferred Securities (the "Security holders") will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware; and the issuance of the Preferred
Securities is not subject to the preemptive or other similar rights of any
security holder of the Company.
(xii) The Common Securities have been duly and validly authorized by
the Trust and upon delivery by the Trust to the Company against payment
therefor as described in the Prospectus, will be duly and validly issued
and fully paid undivided beneficial interests in the assets of the Trust
and will conform, in all material respects, to the description thereof
contained in the Prospectus; the issuance of the Common Securities is not
subject to preemptive or other similar rights; and at the Closing Time, all
of the issued and outstanding Common Securities of the Trust will be
directly owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(xiii) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Delaware Act with the
power and authority to own, lease and operate its properties and conduct
its business in all material respects as described in the Prospectus, and
the Trust has conducted no business to date, and it will conduct no
business in the future that would be inconsistent with the description of
the Trust set forth in the Prospectus; the Trust is not a party to or bound
by any agreement or instrument other than this Agreement, the Trust
Agreement and the agreements and instruments contemplated by the Trust
Agreement or described in the Prospectus; the Trust has no liabilities or
obligations other than those arising out of the transactions contemplated
by this Agreement and the Trust Agreement and described in the Prospectus;
and the Trust is not a party to or subject to any action, suit or
proceeding of any nature.
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(xiv) The issuance and sale of the Preferred Securities and the
Common Securities by the Trust, the compliance by the Trust with all of the
provisions of this Agreement, the purchase of the Junior Subordinated
Debentures by the Trust, and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, loan
agreement, mortgage, deed of trust or other agreement or instrument to
which the Trust is a party or by which the Trust is bound or to which any
of the property or assets of the Trust is subject, nor will such action
result in any violation by the Trust of the provisions of the Trust
Agreement or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Trust or any of
its properties, except in any case for such conflicts, breaches, defaults
or violations that would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as one
enterprise; and no consent, approval, authorization, order, license,
certificate, permit, registration or qualification of or with any such
court or other governmental agency or body is required to be obtained by
the Trust for the issue and sale of the Preferred Securities and the Common
Securities by the Trust, the purchase of the Junior Subordinated Debentures
by the Trust or the consummation by the Trust of the transactions
contemplated by this Agreement and the Trust Agreement, except for such
consents, approvals, authorizations, licenses, certificates, permits,
registrations or qualifications as have already been obtained, or as may be
required under the 1933 Act or the 1933 Act Regulations, 1934 Act or 1934
Act Regulations, state securities laws or under the Trust Indenture Act of
1939, as amended ("TIA").
The issuance by the Company of the Guarantee and the Junior
Subordinated Debentures, the compliance by the Company with all of the
provisions of this Agreement, the execution, delivery and performance by
the Company of the Trust Agreement, the Junior Subordinated Debentures, the
Guarantee Agreement and the Indenture, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any material indenture, loan agreement,
mortgage, deed of trust, or other material agreement or instrument to which
the Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject, nor will such action
result in any violation by the Company of the provisions of the Articles of
Incorporation or by-laws of the Company or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties, except in any case
for such conflicts, breaches, defaults or violations that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Company and
its subsidiaries, considered as one enterprise; and no consent, approval,
authorization, order, license, certificate, permit, registration or
qualification of or with any such court or other governmental agency or
body is required to be obtained by the Company for the issue of the
Guarantee and the Junior Subordinated Debentures or the consummation by the
Company of the other transactions contemplated by this Agreement, except
for such consents, approvals, authorizations, licenses, certificates,
permits, registrations or qualifications as
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<PAGE>
have already been obtained, or as may be required under the 1933 Act or the
1933 Act Regulations, 1934 Act or 1934 Act Regulations, state securities
laws or under the TIA.
(xv) The Trust is not, and after giving effect to the offering and
sale of the Preferred Securities will not be, an "investment company," or
an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(xvi) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and non-
assessable, and none of the outstanding shares of capital stock was issued
in violation of the preemptive rights of any stockholder of the Company.
(xvii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (B)
any transaction entered into by the Company or any subsidiary, other than
in the ordinary course of business, that is material to the Company and its
subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock, excluding the regular quarterly dividend paid on its common
stock. Neither the Company nor the Bank has any material liability of any
nature, contingent or otherwise, except as set forth in the Prospectus.
(xviii) Neither the Company nor the Bank is in violation of any
provision of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which it is a party or by which it may be bound
or to which any of its properties may be subject, except for such defaults
that would not have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs, assets or business prospects of
the Company and its subsidiaries, considered as one enterprise.
(xix) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against the Company or the Bank that is required to be
disclosed in the Prospectus or that could reasonably be expected to result
in any material adverse change in the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Company and
its subsidiaries, considered as one enterprise, or that could reasonably be
expected to materially and adversely affect the properties or assets of the
Company and its subsidiaries, considered as one enterprise, or that could
reasonably be expected to materially and adversely affect the consummation
of the transactions contemplated in this Agreement; all pending legal or
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<PAGE>
governmental proceedings to which the Company or the Bank is a party that
are not described in the Prospectus, including ordinary routine litigation
incidental to its business, if decided in a manner adverse to the Company,
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company
and its subsidiaries, considered as one enterprise.
(xx) There are no material contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that are not
described and filed as required.
(xxi) The Company and the Bank each has good and marketable title to
all properties and assets described in the Prospectus as owned by it, free
and clear of all liens, charges, encumbrances or restrictions, except such
as (A) are described in the Prospectus or (B) are neither material in
amount nor materially significant in relation to the business of the
Company and its subsidiaries, considered as one enterprise; all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or
the Bank holds properties described in the Prospectus, are in full force
and effect, and neither the Company nor the Bank has any notice of any
material claim that has been asserted by anyone adverse to the rights of
the Company or the Bank under any of the leases or subleases mentioned
above, or affecting or questioning the rights of such corporation to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xxii) Each of the Company and the Bank owns, possesses or has
obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own or
lease, as the case may be, and to operate its properties and to carry on
its business as presently conducted, and neither the Company nor the Bank
has received any notice of any restriction upon, or any notice of
proceedings relating to revocation or modification of, any such licenses,
permits, certificates, consents, orders, approvals or authorizations.
(xxiii) Except as disclosed in the Prospectus, no labor problem
exists with the employees of the Company or with employees of the Bank or,
to the best knowledge of the Company, is imminent that, in any such event,
could reasonably be expected to materially adversely affect the Company and
its subsidiaries, considered as one enterprise, and the Company is not
aware of any existing or imminent labor disturbance by the employees of any
of its or the Bank's principal suppliers, contractors or customers that
could reasonably be expected to materially adversely affect the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise.
(xxiv) There are no persons with registration or other similar rights
to have any securities of the Company registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
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<PAGE>
(xxv) Except as disclosed in the Prospectus, the Company and the Bank
own or possess all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets or other unpatented and/or
unpatentable proprietary or confidential information systems or
procedures), trademarks, servicemarks and tradenames (collectively, "patent
and proprietary rights") currently employed by them in connection with the
business now operated by them except where the failure to so own, possess
or acquire such patent and proprietary rights would not reasonably be
expected to have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs, assets or business prospects
of the Company and its subsidiaries considered as one enterprise, and
neither the Company nor the Bank has received any notice nor is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any patent or proprietary rights, and which infringement or
conflict (if the subject of any unfavorable decision, rule and refinement,
singly or in the aggregate) could reasonably be expected to result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, assets or business prospects of the Company and
its subsidiaries considered as one enterprise.
(xxvi) The Company and each subsidiary of the Company have filed when
due all Federal, state and local income, franchise or other tax returns
required to be filed and have made timely payments of all taxes indicated
by such returns and no material deficiency has been asserted with respect
thereto by any taxing authority.
(xxvii) The Company has filed with NASD all documents and notices
required by NASD of companies that have issued securities that are traded
in the over-the-counter market and quotations for which are reported by the
Nasdaq National Market of the Nasdaq Stock Market, Inc. ("Nasdaq Stock
Market").
(xxviii) Neither the Trust nor the Company or any Subsidiary has
taken or will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation, under the Exchange Act or
otherwise, of the price of the Preferred Securities.
(xxix) Neither the Company nor the Bank is or has been (by virtue of
any action, omission to act, contract to which it is a party or by which it
is bound, or any occurrence or state of facts whatsoever) in violation of
any applicable Federal, state, municipal, or local statutes, laws,
ordinances, rules, regulations and/or orders issued pursuant to foreign,
federal, state, municipal, or local statutes, laws, ordinances, rules, or
regulations (including those relating to any aspect of banking, bank
holding companies, environmental protection, occupational safety and
health, and equal employment practices) heretofore or currently in effect,
except such violation that has been fully cured or satisfied without
recourse or that is not reasonably likely to have a material adverse effect
on the Company and its subsidiaries considered as one enterprise.
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(xxx) The Company and the Bank have no agreement or understanding
with any entity concerning the future acquisition by the Company or the
Bank of a controlling interest in any entity that is required by the 1933
Act or the 1933 Act Regulations to be disclosed by the Company that is not
disclosed in the Prospectus; the Company and the Bank have no agreement or
understanding with any entity concerning the future acquisition of a
controlling interest in the Company or the Bank by any entity that is
required by the 1933 Act or the 1933 Act Regulations to be disclosed by the
Company that is not disclosed in the Prospectus.
(b) Any certificate signed by any authorized officer of the Company or
the Bank and delivered to the Underwriter or to counsel for the Underwriter
pursuant to this Agreement shall be deemed a representation and warranty by the
Company to the Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery to the Underwriter; Closing.
----------------------------------------------
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Trust
agrees to sell to the Underwriter, and the Underwriter agrees to purchase from
the Trust 1,000,000 Initial Securities at the purchase price and terms set forth
herein and in the Price Determination Agreement.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
hereby grants an option to the Underwriter to purchase up to 150,000 Option
Securities in accordance with the terms set forth herein and in the Price
Determination Agreement. The option hereby granted will expire at 5:00 p.m. on
the 30th day after the date the Registration Statement is declared effective by
the Commission (or at 5:00 p.m. on the next business day if such 30th day is not
a business day) and may be exercised, on one occasion only, solely for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Securities upon notice by the
Underwriter to the Company setting forth the number of Option Securities as to
which the Underwriter is exercising the option and the time, date and place of
payment and delivery for the Option Securities. Such time and date of delivery
(the "Option Closing Date") shall be determined by the Underwriter but shall not
be later than five full business days after the date on which the notice of the
exercise of the option shall have been given, nor in any event prior to Closing
Time, as hereinafter defined, nor earlier than the second business day after the
date on which the notice of the exercise of the option shall have been given.
(b) Payment of the purchase price for, and delivery of certificates
for, the Initial Securities shall be made at the offices of Pitney, Hardin, Kipp
& Szuch, or at such other place as shall be agreed upon by the Company and the
Underwriter, at 9:30 a.m. on the third full business day after the effective
date of the Registration Statement, or at such other time not more than seven
full business days thereafter as you and the Company shall determine (such date
and time of payment and delivery being herein called the "Closing Time"). In
addition, in the event that any or all of the Option Securities are purchased by
the Underwriter, payment of the purchase price for,
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and delivery of certificates for, such Option Securities shall be made at the
above-mentioned office of Pitney, Hardin, Kipp & Szuch, or at such other place
as shall be agreed upon by the Company and the Underwriter, on the Option
Closing Date as specified in the notice from the Underwriter to the Company.
Payment for the Initial Securities and the Option Securities, if any, shall be
made to the Company by wire transfer of immediately available funds, against
delivery to the Underwriter for the account of the Underwriter of Preferred
Securities to be purchased by it.
(c) The Initial Securities shall be issued in the form of one or more
fully registered global securities (the "Global Securities") in book-entry form
in such denominations and registered in the name of the nominee of The
Depository Trust Company (the "DTC") or in such names as the Underwriter may
request in writing at least two business days before the Closing Date or the
Option Closing Date, as the case may be. The Global Securities representing the
Initial Securities or the Option Securities to be purchased will be made
available in New York City for examination by the Underwriter and counsel to the
Underwriter not later than 10:00 A.M. on the business day prior to the Closing
Time or the Option Closing Date, as the case may be.
Section 3. Certain Covenants of the Offerors. Each of the Offerors
--------------------------------------------------------
covenants jointly and severally with the Underwriter as follows:
- ----------------------------------------------------------------
(a) The Offerors will use their best efforts to cause the Registration
Statement to become effective and will notify the Underwriter immediately, and
confirm the notice in writing, (i) when the Registration Statement, or any post-
effective amendment to the Registration Statement, shall have become effective,
or any supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission (iii) of any
request of the Commission to amend the Registration Statement or amend or
supplement the Prospectus or for additional information and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Preferred Securities or capital stock, for offering or sale in any jurisdiction,
or of the institution or threatening of any proceedings for any of such
purposes. The Offerors will use every reasonable effort to prevent the issuance
of any such stop order or of any order preventing or suspending such use and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) The Offerors will not at any time file or make any amendment to
the Registration Statement, or any amendment or supplement, if the Offerors have
elected to rely upon Rule 430A, to the Prospectus (including documents
incorporated by reference into such prospectus or to the Prospectus) of which
the Underwriter shall not have previously been advised and have previously been
furnished a copy, or to which the Underwriter or counsel for the Underwriter
shall reasonably object.
(c) The Offerors have furnished or will furnish to the Underwriter as
many signed and conformed copies of the Registration Statement as originally
filed and of each amendment thereto, whether filed before or after the
Registration Statement becomes effective, copies of all exhibits and documents
filed therewith (including documents incorporated by
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reference into the Prospectus pursuant to Item 12 of Form S-2 under the 1933
Act) and signed copies of all consents and certificates of experts as the
Underwriter may reasonably request.
(d) The Offerors will deliver or cause to be delivered to the
Underwriter, without charge, from time to time until the effective date of the
Registration Statement, as many copies of each preliminary prospectus as the
Underwriter may reasonably request, and the Offerors hereby consent to the use
of such copies for purposes permitted by the 1933 Act. The Offerors will deliver
or cause to be delivered to the Underwriter, without charge, as soon as the
Registration Statement shall have become effective (or, if the Offerors have
elected to rely upon Rule 430A, as soon as practicable after the Price
Determination Agreement has been executed and delivered) and thereafter from
time to time as requested during the period when the Prospectus is required to
be delivered under the 1933 Act, such number of copies of the Prospectus (as
supplemented or amended) as the Underwriter may reasonably request.
(e) The Company will comply to the best of its ability with the 1933
Act and the 1933 Act Regulations, and the 1934 Act and the 1934 Act Regulations,
so as to permit the completion of the distribution of the Preferred Securities
as contemplated in this Agreement and in the Prospectus. If, at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Preferred Securities, any event shall occur or condition exist as a
result of which it is necessary, in the reasonable opinion of counsel for the
Underwriter or counsel for the Offerors, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the reasonable opinion of either such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such untrue statement or omission or to make the Registration Statement
or the Prospectus comply with such requirements.
(f) The Offerors will use their best efforts, in cooperation with the
Underwriter, to qualify the Preferred Securities and the Junior Subordinated
Debentures, for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Underwriter may designate in writing and
to maintain such qualifications in effect for a period of not less than one year
from the effective date of the Registration Statement; provided, however, that
------------------
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the Preferred Securities
have been qualified as above provided.
(g) The Company will make generally available (within the meaning of
Rule 158) as soon as practible, but not later than the Availability Date (as
defined below) to its security
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holders, the Underwriter and the Security holders an earnings statement (which
need not be audited) of the Company and its subsidiary (in form complying with
the provisions of Rule 158 of the 1933 Act Regulations) covering a period of at
least 12 months beginning after the effective date of the Registration
Statement. For the purpose of the preceding sentence, "Availability Date" means
the 45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such effective date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year, "Availability Date"
means the 90th day after the end of such fourth fiscal quarter.
(h) The Trust shall apply the proceeds from its sale of the Preferred
Securities, combined with the entire proceeds from the issuance by the Trust to
the Company of the Trust's Common Securities, to purchase an equivalent amount
of Junior Subordinated Debentures. The Company and the Bank will use the net
proceeds received by them from the sale of the Junior Subordinated Debentures in
the manner specified in the Prospectus under the caption "Use of Proceeds".
(i) The Offerors, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file promptly all documents required to be
filed with the Commission pursuant to Section 13 or 14 of the 1934 Act
subsequent to the time the Registration Statement becomes effective.
(j) For a period of five years after the Closing Time, the Company
will furnish to the Underwriter, copies of all annual reports, quarterly reports
and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or
such other similar forms as may be designated by the Commission, and such other
documents, reports, Proxy Statements, and information as shall be furnished by
the Company to its stockholders generally.
(k) The Offerors will cause the Preferred Securities to be listed and
will file with the Nasdaq Stock Market all documents and notices required by the
Nasdaq Stock Market of companies that have issued securities that are traded in
the over-the-counter market and quotations for which are reported by the Nasdaq
Stock Market.
(l) The Company shall pay for the legal fees and related filing fees
to its counsel (or counsel to the Underwriter) to prepare one or more "blue sky"
surveys (each, a "Blue Sky Survey") for use in connection with the offering of
the Preferred Securities as contemplated by the Prospectus and a copy of such
Blue Sky Survey or surveys shall be delivered to each of the Company and the
Underwriter.
(m) If, at the time the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
1933 Act Regulations, then the Offerors will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430A and Rule 424(b),
copies of an amended Prospectus, or, if required by such Rule 430A, a post-
effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.
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(n) The Company will, at its expense, subsequent to the issuance of
the Preferred Securities, prepare and distribute to each of the Underwriter and
counsel to the Underwriter, copies of all the documents used in connection with
the issuance of the Preferred Securities in the form of a bond Closing Binder.
(o) The Offerors will not, prior to the Option Closing Date or thirty
(30) days after the date of this Agreement, whichever occurs first, incur any
material liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, or any
transaction with a related party which is required to be disclosed in the
Prospectus pursuant to Item 404 of Regulation S-K under the Securities Act,
except as contemplated by the Prospectus.
(p) During a period of ten days from the date of the Prospectus,
neither the Trust nor the Company will, without the prior written consent of the
Underwriter, directly or indirectly, offer, sell, offer to sell, or otherwise
dispose of any Preferred Securities, any other beneficial interests in the
assets of the Trust, or any preferred securities or other securities of the
Trust or the Company which are substantially similar to the Preferred
Securities, including any guarantee of such securities. The foregoing sentence
shall not apply to any of the Preferred Securities to be sold hereunder.
Section 4. Payment of Expenses and Advisory Fee.
----------------------------------------
(a) The Company will pay and bear all costs and expenses incident to
the performance of its and the Trust's obligations under this Agreement,
including (a) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits), as originally filed and as
amended, the preliminary prospectuses and the Prospectus and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriter, (b) the preparation, printing and distribution of this Agreement,
the Preferred Securities and the Blue Sky Survey, (c) the issuance and delivery
of the Preferred Securities to the Underwriter, including any transfer taxes
payable upon the sale of the Preferred Securities to the Underwriter, (d) the
fees and disbursements of the Company's counsel and accountants, (e) NASD filing
fees, (f) fees and disbursements of counsel in connection with the Blue Sky
Survey, (g) the qualification of the Preferred Securities under the applicable
securities laws in accordance with Section 3(f) and any filing fee for review of
the offering with the NASD, (h) the legal fees and expenses of the Underwriter's
counsel (such counsel's fees shall not exceed $50,000 (exclusive of out-of-
pocket expenses of counsel) and general out-of-pocket expenses of the
Underwriter not to exceed $15,000, (i) the fees and expenses of the Indenture
Trustee, including the fees and disbursements of counsel for the Indenture
Trustee, in connection with the Indenture and the Junior Subordinated
Debentures; (j) the fees and expenses of the Property Trustee and Delaware
Trustee, including the fees and disbursements of counsel for the Property
Trustee and the Delaware Trustee, in connection with the Trust Agreement and the
Certificate of Trust, and (k) all other costs incident to the performance of the
Offerors' obligations hereunder.
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<PAGE>
(b) In addition to the commissions due to the Underwriter under the
Price Determination Agreement, simultaneous with the payment of the purchase
price at the Closing Time (and at the Option Closing Date with respect to the
Option Securities), the Company shall pay the Underwriter an advisory fee equal
to 1% of the gross proceeds of the Initial Securities issued and sold to the
Underwriter at the Closing Time and, if applicable, 1% of the gross proceeds of
the Option Securities, if any, issued and sold to the Underwriter at the Option
Closing Date.
If (i) the Closing Time does not occur on or before August 31, 1997,
(ii) the Company abandons or terminates the Offering, or (iii) this Agreement is
terminated by the Underwriter in accordance with the provisions of Section 5 or
11(a), the Company shall reimburse the Underwriter for all its reasonable out-
of-pocket expenses, as set forth in this Section 4, including the reasonable
fees and disbursements of counsel for the Underwriter; but the Company shall not
in any event be liable to the Underwriter for damages on account of loss of
anticipated profits from the sale of Preferred Securities.
Section 5. Conditions of Underwriter's Obligations. The obligations
----------------------------------------
of the Underwriter to purchase and pay for the Preferred Securities that it has
agreed to purchase pursuant to this Agreement are subject to the accuracy, as of
the Closing Time, of the representations and warranties of the Offerors
contained herein or in certificates of the officers or trustees of the Offerors
or any subsidiary delivered pursuant to the provisions hereof, to the
performance by the Offerors of their obligations hereunder and to the following
further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date of this Agreement or, with the mutual consent of the
Company and the Underwriter, at a later time and date not later, however, than
5:30 P.M. on the first business day following the date hereof, or at such later
time or on such later date as the Company and the Underwriter may agree to in
writing; at the Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act and no
proceedings for that purpose shall have been instituted or shall be pending or,
to the Underwriter's knowledge or the knowledge of the Offerors shall be
contemplated by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of counsel for the Underwriter. If the Offerors have elected to
rely upon Rule 430A, a prospectus containing the Rule 430A Information shall
have been filed with the Commission in accordance with Rule 424(b) (or a post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A).
(b) At the Closing Time, the Underwriter shall have received:
(i) The favorable opinion, dated as of Closing Time, of Stinson, Mag &
Fizzell, P.C., counsel for the Company, in form and substance reasonably
satisfactory to counsel for the Underwriter, substantially in the form set
forth in Exhibit B.
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<PAGE>
(ii) The favorable opinion, dated as of Closing Time, of Richards,
Layton & Finger, special Delaware counsel for the Offerors, in form and
substance satisfactory to counsel for the Underwriter, substantially in the
form set forth in Exhibit C.
(iii) The favorable opinion, dated as of Closing Time, of Seward &
Kissel, counsel for the Indenture Trustee and the Delaware Trustee, in form
and substance satisfactory to counsel for the Underwriter, substantially in
the form set forth in Exhibit D.
(iv) The favorable opinion, dated as of Closing Time, of Pitney,
Hardin, Kipp & Szuch, counsel for the Underwriter, in form and substance
satisfactory to the Underwriter.
(v) The favorable opinion, dated as of Closing Time, of Thacher
Proffitt & Wood, special New Jersey counsel for the Offerors, in form and
substance satisfactory to counsel for the Underwriter, substantially in the form
set forth in Exhibit E.
In giving such opinion, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the federal law of the United
States, upon opinions of other counsel, who shall be counsel satisfactory to
counsel for the Underwriter (the Underwriter agrees and acknowledges that
Stinson, Mag & Fizzell, P.C., and Pitney, Hardin, Kipp & Szuch will rely on the
opinion of Richards, Layton & Finger with respect to matters of Delaware law),
in which case the opinion shall state that counsel believes that the Underwriter
and its counsel are entitled to so rely. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company, the Bank
and the Trust and certificates of public officials.
(c) At the Closing Time and again at the Option Closing Date, (i) the
Registration Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the 1933 Act Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations, the Offerors shall have complied in all material respects with Rule
430A (if they shall have elected to rely thereon) and neither the Registration
Statement nor the Prospectus, as they may then be amended or supplemented, shall
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business, (iii)
no action, suit or proceeding at law or in equity shall be pending or, to the
knowledge of the Offerors, threatened against the Company or any subsidiary or
the Trust that would be required to be set forth in the Prospectus other than as
set forth therein and no proceedings shall be pending or, to the knowledge of
the Offerors, threatened against the Offerors or any subsidiary before or by any
federal, state or other commission, board or administrative agency wherein an
unfavorable decision, ruling or finding could reasonably be expected to
materially adversely affect the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and
17
<PAGE>
its subsidiaries, considered as one enterprise, other than as set forth in the
Prospectus, (iv) each of the Offerors shall have complied, in all material
respects, with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time, (v) the other
representations and warranties of the Offerors set forth in Section l(a) shall
be accurate in all material respects as though expressly made at and as of the
Closing Time, and (vi) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
been initiated or to the best knowledge of the Offerors threatened by the
Commission. At the Closing Time, the Underwriter shall have received a
certificate of the Chairman or the President, and the Chief Financial Officer or
Controller, of the Company, dated as of the Closing Time, to such effect.
(d) At the time that this Agreement is executed by the Company, the
Underwriter shall have received from KPMG Peat Marwick LLP a letter or letters,
dated such date, in form and substance reasonably satisfactory to the
Underwriter, confirming that they are independent certified public accountants
with respect to the Company within the meaning of the 1933 Act and the published
1933 Act Regulations, and stating in effect that:
With respect to the Company:
(i) in their opinion, the consolidated financial statements as of
December 31, 1996 and 1995, and for each of the years in the three year
period ended December 31, 1996 and the related financial statement
schedules, if any, included or incorporated by reference in the
Registration Statement and the Prospectus and covered by their opinions
included therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published 1933
Act Regulations;
(ii) on the basis of a reading of the minutes of all meetings of the
stockholders of the Company and the Bank, of the Board of Directors of the
Company and the Bank and of the Audit and Executive Committees of the Board
of Directors of the Bank since December 31, 1996, inquiries of certain
officials of the Company and its subsidiaries responsible for financial and
accounting matters, and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) at a specified date not more than three days prior to the
date of this Agreement, there was any increase in notes or
subordinated debentures payable, real estate owned, or any decrease in
allowance for loan losses of the Company and its consolidated
subsidiaries or any decrease in total assets, total deposits or
stockholders' equity of the Company and its consolidated subsidiaries
or any increase in the number of outstanding shares of capital stock
of the Company and its consolidated subsidiaries, in each case as
compared with amounts shown in the financial statements at March 31,
1997 incorporated by reference in the Registration Statement; or
(B) for the period from March 31, 1997 to a specified date not
more than three days prior to the date of this Agreement, there was
any decrease in
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<PAGE>
consolidated net interest income, non-interest income or net income or
the (split-adjusted) total or fully diluted per share amounts of net
income or any increase in the consolidated provision for loan losses,
in each case as compared with the comparable period in the preceding
year.
(iii) in addition to the procedures referred to in clause (ii) above,
they have performed other specified procedures, not constituting an audit,
with respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement (including the Selected
Consolidated Financial Data) (having compared such items with, and have
found such items to be in agreement with, the financial statements of the
Company or general accounting records of the Company, as applicable, which
are subject to the Company's internal accounting controls or other data and
schedules prepared by the Company from such records).
(iv) on the basis of a review of schedules provided to them by the
Company, nothing came to their attention that caused them to believe that
the pro forma information, set forth in the Prospectus under the headings
"Capitalization" on page 21 had not been correctly calculated on the basis
described therein.
(e) At the Closing Time, the Underwriter shall have received from KPMG
Peat Marwick LLP letters, in form and substance reasonably satisfactory to the
Underwriter and dated as of the Closing Time, to the effect that they reaffirm
the statements made in the letter(s) furnished pursuant to Section 5(d), except
that the inquiries specified in Section 5(d) shall be made based upon the latest
available unaudited interim consolidated financial statements and the specified
date referred to shall be a date not more than three days prior to the Closing
Time.
(f) At the Closing Time, counsel for the Underwriter shall have been
furnished with all such documents, certificates and opinions as they reasonably
may request for the purpose of enabling them to pass upon the issuance and sale
of the Preferred Securities as contemplated in this Agreement and the matters
referred to in Section 5(c) and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Offerors, the performance of any of the covenants of the Offerors, or the
fulfillment of any of the conditions herein contained; all proceedings taken by
the Company at or prior to the Closing Time in connection with the
authorization, issuance and sale of the Preferred Securities and the Junior
Subordinated Debentures as contemplated in this Agreement shall be reasonably
satisfactory in form and substance to the Underwriter and to counsel for the
Underwriter.
(g) Between the date of this Agreement and the Closing Time, (i) no
downgrading shall have occurred in the rating accorded any securities of the
Company or any deposit instruments of the Bank by any "nationally recognized
statistical rating organization," as that term is defined by the Commission for
purposes of Rule 436(g) (2) under the 1933 Act and (ii) no such organization
shall have given any notice of any intended or potential downgrading or of any
surveillance or review, with possible negative implications, of its rating of
any of the Company's securities or any deposit instruments of the Bank.
19
<PAGE>
(h) The Company shall have paid, or made arrangements satisfactory to
the Underwriter for the payment of, all such expenses as may be required by
Section 4 hereof.
(i) In the event the Underwriter exercises its option provided in
Section 2 hereof to purchase all or any portion of the Option Securities, the
obligations of the Underwriter to purchase the Option Securities that it has
agreed to purchase shall be subject to the accuracy of the representations and
warranties of the Offerors contained herein and of the statements in any
certificates furnished by the Offerors hereunder as of such Option Closing Date
(as if made on such date), to the performance by the Offerors of their
obligations hereunder and to the receipt by the Underwriter on the Option
Closing Date of:
(1) A certificate, dated the Option Closing Date, of the Chairman
or the President and the Chief Financial Officer or Controller of the
Company confirming that the certificate delivered on the Closing Time
pursuant to Section 5(c) hereof remains true as of the Option Closing
Date;
(2) The favorable opinion of Stinson, Mag & Fizzell, P.C.,
counsel for the Company, addressed to the Underwriter and dated the
Option Closing Date, in form reasonably satisfactory to Pitney,
Hardin, Kipp & Szuch, counsel for the Underwriter, relating to the
Option Securities and otherwise to the same effect as the opinion
required by Section 5(b) hereof;
(3) The favorable opinion of Richards, Layton & Finger, special
Delaware counsel for the Offerors, addressed to the Underwriter and
dated the Option Closing Date, in form reasonably satisfactory to
Pitney, Hardin, Kipp & Szuch, counsel for the Underwriter, relating to
the Option Securities and otherwise to the same effect as the opinion
required by Section 5(b) hereof;
(4) The favorable opinion of Seward & Kissel, counsel for the
Indenture Trustee and the Delaware Trustee, addressed to the
Underwriter and dated the Option Closing Date, relating to the Option
Securities and otherwise to the same effect as the opinion required by
Section 5(b) hereof;
(5) The favorable opinion of Pitney, Hardin, Kipp & Szuch, dated
the Option Closing Date, relating to the Option Shares and otherwise
to the same effect as the opinion required by Section 5(b) hereof;
(6) The favorable opinion of Thacher Proffitt & Wood, dated the
Option Closing Date, relating to the Option Securities and otherwise
to the same effect as the opinion required by Section 5(b) hereof, and
(7) Letters from KPMG Peat Marwick LLP addressed to the
Underwriter and dated the Option Closing Date, in form and substance
reasonably satisfactory to the Underwriter and substantially the same
in
20
<PAGE>
form and substance as the letters furnished to the Underwriter
pursuant to Section 5(d) hereof.
(j) The Preferred Securities, the Guarantee and the Junior
Subordinated Debentures shall have been qualified or registered for sale, or
subject to an available exemption from such qualification or registration, under
the Blue Sky Laws of such jurisdictions as shall have been reasonably specified
by the Underwriter and the offering contemplated by this Agreement shall have
been cleared by the NASD.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by the Underwriter on notice to the Offerors at any
time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other Party, except as provided in Section 4.
Notwithstanding any such termination, the provisions of Sections 6, 7, 10 and 12
shall remain in effect.
Section 5A. Conditions of Offeror's Obligations. The obligations of
-----------------------------------
the Offerors to sell and deliver the portion of the Preferred Securities
required to be delivered as and when specified in this Agreement are subject to
the conditions that the Registration Statement shall have become effective and
that as of the Closing Time (or the Option Closing Date with respect to the
Option Securities) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened, and there shall have been no change in the
Internal Revenue Code of 1986 or the regulations promulgated thereunder that
reasonably would be expected to adversely effect the ability of the Company to
deduct the interest paid by it under the Junior Subordinated Debentures.
Section 6. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless the Underwriter,
officers, directors, employees, agents, and counsel of the Underwriter, and each
person, if any, who controls the Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act, against any loss, liability,
claim, damage, and expense whatsoever (which shall include, but not be limited
to amounts incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim or investigation whatsoever
and any and all amounts paid in settlement of any claim or litigation), as and
when incurred, arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, contained in (A) any
Preliminary Prospectus, the Registration Statement, or the Prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto
or in any document incorporated by reference therein or required to be delivered
with any Preliminary Prospectus or the Prospectus or (B) in any application or
other document or communication (collectively called an "application") executed
by or on behalf of the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify the
Preferred Securities under the "blue sky" or securities laws
21
<PAGE>
thereof or filed with the Commission or any securities exchange; unless such
statement or omission or alleged statement or omission was made in reliance upon
and in conformity with written information concerning the Underwriter, the
Underwriting Agreement or the compensation of the Underwriter furnished to the
Company by or on behalf of the Underwriter expressly for inclusion in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in the Underwriting Agreement. The foregoing indemnification
with respect to any preliminary prospectus shall not inure to the benefit of the
Underwriter (or its directors, officers, employees and controlling persons
within the meaning of the federal securities laws) if the person asserting any
such losses, claims, damages or liabilities against the Underwriter (or such
other persons) purchased Preferred Securities and a copy of the Prospectus (as
then amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of the Underwriter
to such person, if such is required by law, in connection with the written
confirmation of the sale of such Preferred Securities to such person and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability, provided that the Company
delivered the Prospectus, as amended or supplemented, to the Underwriter on a
timely basis to permit such delivery or sending. For purposes of this section,
the term "expense" shall include, but not be limited to, counsel fees and costs,
court costs, out-of-pocket costs and compensation for the time spent by the
Underwriter's directors, officers, employees and counsel according to his or her
normal hourly billing rates. The indemnification provisions shall also extend to
all affiliates of the Underwriter, its respective directors, officers,
employees, legal counsel, agents and controlling persons within the meaning of
the federal securities laws. The foregoing agreement to indemnify shall be in
addition to any liability the Company may otherwise have to the Underwriter or
the persons entitled to the benefit of these indemnification provisions.
(b) The Underwriter agrees to indemnify and hold harmless the
Offerors, their directors, officers who signed the Registration Statement, and
each person, if any, who controls the Offerors within the meaning of Section 15
of the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) above, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) or any application in
reliance upon and in conformity with written information about the Underwriter,
the Underwriting Agreement, or the compensation of the Underwriter, furnished to
either of the Offerors by the Underwriter expressly for use in the Registration
Statement (or any amendment thereto) or such Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) or in any application.
(c) An indemnified party shall give prompt notice to the indemnifying
party if any action, suit, proceeding or investigation is commenced in respect
of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve the indemnifying party from its obligations
to indemnify hereunder, except to the extent that the indemnifying party
22
<PAGE>
has been prejudiced in any material respect by such failure. If it so elects
within a reasonable time after receipt of such notice, an indemnifying party may
assume the defense of such action, including the employment of counsel
satisfactory to the indemnified parties and payment of all expenses of the
indemnified party in connection with such action. Such indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the indemnifying party in connection with the
defense of such action or the indemnifying party shall not have promptly
employed counsel satisfactory to such indemnified party or parties or such
indemnified party or parties shall have reasonably concluded that there may be
one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to one or more
of the indemnifying parties, in any of which events such fees and expenses shall
be borne by the indemnifying party and the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. The Company shall be liable for any settlement of any claim against the
Underwriter (or its directors, officers, employees, affiliates or controlling
persons), made with the Company's written consent, which consent shall not be
unreasonably withheld. The Company shall not, without the written consent of the
Underwriter, settle or compromise any claim against it based upon circumstances
giving rise to an indemnification claim against the Company hereunder unless
such settlement or compromise provides that the Underwriter and the other
indemnified parties shall be unconditionally and irrevocably released from all
liability in respect to such claim.
(d) In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court that such indemnification may not
be enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Company, on the one hand, and the
Underwriter, on the other hand, shall contribute to the amount paid or payable
by such indemnified persons as a result of such loss, liability, claim, damage
and expense in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the underwriting, and also the relative fault of the Company,
on the one hand, and the Underwriter, on the other hand, in connection with the
statements, acts or omissions which resulted in such loss, liability claim,
damage and expense, and any other relevant equitable considerations shall also
be considered. No person found liable for a fraudulent misrepresentation or
omission shall be entitled to contribution from any person who is not also found
liable for such fraudulent misrepresentation or omission. Notwithstanding the
foregoing, the Underwriter shall not be obligated to contribute any amount
hereunder that exceeds the amount of the underwriting commission paid by the
Company to the Underwriter with respect to the Preferred Securities purchased by
the Underwriter.
(e) The indemnity and contribution agreements contained herein are in
addition to any liability which the Company may otherwise have to the
Underwriter.
(f) Neither termination nor completion of the engagement of the
Underwriter nor any investigation made by or on behalf of the Underwriter shall
affect the indemnification
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<PAGE>
obligations of the Company or the Underwriter hereunder, which shall remain and
continue to be operative and in full force and effect.
Section 7. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
- --------
statements of the Offerors or its officers or trustees set forth in or made
pursuant to this Agreement will remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Offerors or the
Underwriter or any controlling person and will survive delivery of and payment
for the Preferred Securities.
Section 8. Offering by the Underwriter. The Trust and the Company
---------------------------
are advised by the Underwriter that the Underwriter proposes to make a public
offering of the Preferred Securities, on the terms and conditions set forth in
the Registration Statement from time to time as and when the Underwriter deems
advisable after the Registration Statement becomes effective. Because the NASD
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
Section 9. Termination of Agreement.
--------------------------
(a) The Underwriter may terminate this Agreement, by notice to the
Offerors, at any time at or prior to the Closing Time (i) if there has been,
since the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any outbreak or
escalation of existing hostilities or other national or international calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in the Underwriter's reasonable judgment, impracticable to
market the Preferred Securities or enforce contracts for the sale of the
Preferred Securities, or (iii) if trading in any securities of the Company has
been suspended by the Commission or the National Association of Securities
Dealers, Inc., or if trading generally on the New York Stock Exchange or in the
over-the-counter market has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by such exchange or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority with
appropriate jurisdiction over such matters, or (iv) if a banking moratorium has
been declared by federal, New Jersey or New York authorities, or (v) if there
shall have been such material and substantial change in the market for
securities in general or in political, financial or economic conditions as in
the Underwriter's reasonable judgment makes it inadvisable to proceed with the
Offering, sale and delivery of the Preferred Securities on the terms
contemplated by the Prospectus, or (vi) if the Underwriter reasonably determines
(which determination shall be in good faith) that there has not been
satisfactory disclosure of all relevant financial information relating to the
Offerors in the Offerors' disclosure documents and that the sale of the
Preferred Securities is unreasonable given such disclosures.
24
<PAGE>
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 6 and 7 shall remain in effect.
Section 10. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices shall be addressed as follows:
If to the Underwriter:
Ryan, Beck & Co., Inc.
80 Main Street
West Orange, New Jersey 07052
Attention: Bruce G. Miller, Senior Vice President
with a copy to:
Ronald H. Janis, Esq.
Pitney, Hardin, Kipp & Szuch
(Mail to)
P.O. Box 1945
Morristown, New Jersey 07962-1945
(Delivery to)
200 Campus Drive
Florham Park, New Jersey 07932
If to the Company or the Trust:
Broad National Bancorporation
905 Broad Street
Newark, New Jersey 07012
Attention: James Boyle, Senior Vice President
with a copy to:
Howard H. Mick, Esq.
Stinson, Mag & Fizzell
Suite 2800
Kansas City, Missouri 64106
Section 11. Parties. This Agreement is made solely for the benefit of
-------
the Underwriter, and the officers, directors, employees, agents and counsel of
the Underwriter specified in Section 6, the Trust and the Company and, to the
extent expressed, any person controlling the Trust, the Company or the
Underwriter, and the directors of the Company, or administrators of the
25
<PAGE>
Trust, their respective officers who have signed the Registration Statement, and
their respective executors, administrators, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include any purchaser, as such
purchaser, from the Underwriter of the Preferred Securities.
Section 12. Arbitration. Any claims, controversies, demands,
-----------
disputes or differences between or among the parties hereto or any persons bound
hereby arising out of, or by virtue of, or in connection with, or otherwise
relating to this Agreement shall be submitted to and settled by arbitration
conducted in New Jersey before one or three arbitrators, each of whom shall be
knowledgeable in the field of securities law and investment banking. Such
arbitration shall otherwise be conducted in accordance with the rules then
obtaining of the American Arbitration Association. The parties hereto agree to
share equally the responsibility for all fees of the arbitrators, abide by any
decision rendered as final and binding, and waive the right to appeal the
decision or otherwise submit the dispute to a court of law for a jury or non-
jury trial. The parties hereto specifically agree that neither party may appeal
or subject the award or decision of any such arbitrator to appeal or review in
any court of law or in equity or in any other tribunal, arbitration system or
otherwise. Judgment upon any award granted by such arbitrator may be enforced in
any court having jurisdiction thereof.
Section 13. Governing Law and Time. This Agreement shall be governed
----------------------
by the laws of the State of New Jersey. Specified times of the day refer to New
York City time.
Section 14. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Trust and the
Underwriter in accordance with its terms.
Very truly yours,
BNB CAPITAL TRUST
By:
------------------------------------
Name:
--------------------
Title: Administrator
BROAD NATIONAL BANCORPORATION
By:
------------------------------------
Name: Donald Karp
26
<PAGE>
Title: Chairman and CEO
Confirmed and accepted as of
the date first above written:
RYAN, BECK & CO., INC.
By:
----------------------------------
Name: Bruce G. Miller
Title: Senior Vice President
27
<PAGE>
EXHIBIT LIST TO THE UNDERWRITING AGREEMENT
------------------------------------------
Exhibit A Form of Price Determination Agreement
Exhibit B Form of Opinion of Stinson, Mag & Fizzell, P.C., counsel for the
Company
Exhibit C Form of Opinion of Richards, Layton & Finger, special Delaware
counsel for the Offerors
Exhibit D Form of Opinion of Seward & Kissel, counsel for the Indenture
Trustee and the Delaware Trustee
Exhibit E Form of Opinion of Thacher Proffitt & Wood, special New Jersey
counsel for the Offerors
<PAGE>
EXHIBIT 4.7
CERTIFICATE OF TRUST
OF
BNB CAPITAL TRUST
This Certificate of Trust is being executed as of June 9, 1997 for the
purpose of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C. Sections 3801 et seq. (the "Act").
The undersigned hereby certifies as follows:
1. Name: The name of the business trust is "BNB Capital Trust" (the
"Trust").
2. Delaware Trustee. The name and business address of the Delaware
resident trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:
Bankers Trust (Delaware)
1001 Jefferson Street
Suite 550
Wilmington, Delaware 19801
3. Effective. This Certificate of Trust shall be effective
immediately upon filing in the Office of the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has duly executed this Certificate of Trust as of the day and year first
above written.
BANKERS TRUST (DELAWARE),
not in its individual capacity, but
solely as trustee of the Trust
By: /s/ M. Lisa Wilkins
---------------------------------
Name: M. Lisa Wilkins
Title: Assistant Secretary
<PAGE>
EXHIBIT 5.1
June 23, 1997
BNB Capital Trust
c/o Broad National Bancorporation
905 Broad Street
Newark, New Jersey 07102
Re: BNB Capital Trust
-----------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for BNB Capital Trust, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated June 9, 1997 (the
"Certificate"), as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on June 9, 1997;
(b) The Trust Agreement of the Trust, dated as of June 9, 1997,
among Broad National Bancorporation, a New Jersey corporation (the "Depositor"),
and Bankers Trust (Delaware), a Delaware banking corporation (the "Trustee");
(c) The Registration Statement (the "Registration Statement") on
Form S-2, including a prospectus (the "Prospectus") relating to the Cumulative
Trust Preferred Securities of the Trust representing undivided beneficial
interests in the assets of the Trust (each, a "Preferred
<PAGE>
BNB Capital Trust
June 23, 1997
Page 2
Security" and collectively, the "Preferred Securities"), as filed by the Company
and the Trust with the Securities and Exchange Commission on June 10, 1997;
(d) A Certificate of Good Standing for the Trust, dated June 23,
1997, obtained from the Secretary of State.
(e) A form of the Amended and Restated Trust Agreement, attached as
Exhibit 4.4 to the Registration Statement.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Trust Agreement and the Prospectus, and (vii) that the
Preferred Securities are issued and sold to the Preferred Security Holders in
accordance with the Trust Agreement and the Prospectus. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
<PAGE>
BNB Capital Trust
June 23, 1997
Page 3
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
-------
(S) 3801, et seq.
-- ---
2. The Preferred Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Validity of
Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ RICHARDS, LAYTON & FINGER
<PAGE>
June 24, 1997
Broad National Bancorporation
905 Broad Street
Newark, New Jersey 07102
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-2 (File Nos. 333-28897
and 333-28897-01) (the "Registration Statement") filed by Broad National
Bancorporation (the "Company") and BNB Capital Trust (the "Trust") with the
Securities and Exchange Commission (the "Commission") for the registration
under the Securities Act of 1933, as amended (the "Act"), of (i) 1,150,000
shares of the Trust's Cumulative Trust Preferred Securities, including 150,000
shares which may be offered pursuant to an over-allotment option granted to the
underwriter for this offering, (ii) the Company's Junior Subordinated Debentures
(the "Debentures"), and (iii) the guarantee (the "Guarantee") to be provided by
the Company pursuant to a Guarantee Agreement (as defined below).
We have examined the originals or certified copies of the Certificate of
Incorporation of the Company, the Bylaws of the Company, as presently in effect,
minutes of the applicable meetings of the board of directors and shareholders of
the Company, and such other records, agreements, certificates of public
officials and others as we have deemed relevant and necessary as a basis for the
opinion expressed herein, including the following documents:
1) the form of Guarantee Agreement, attached as Exhibit 4.6 to the
Registration Statement (the "Guarantee Agreement");
2) the form of Junior Subordinated Indenture attached as Exhibit 4.1
to the Registration Statement (the "Indenture"); and
3) the form of Certificate evidencing the Debentures, attached as
Exhibit 4.2 to the Registration Statement (the "Certificate").
<PAGE>
Broad National Bancorporation
June 24, 1997
Page 2
In such examination, we have assumed the genuineness of all signatures on
original documents and the authenticity of all documents submitted to us as
originals, the conformity to original documents of all copies submitted to us
as conformed or photostatic copies, the authenticity of the originals of such
latter documents, and the conformity to the unexecuted forms of Guarantee
Agreement, Indenture and Certificate to the Guarantee Agreement, Indenture and
Certificate as executed and delivered by the parties thereto. In addition, we
have assumed that the Guarantee Agreement, Indenture and Certificate
constitute the entire agreements among the Company and the other parties to
such documents relating to the transactions contemplated thereby, including
the Company's issuance and sale of the Debentures to the Trust and the
Company's provision of the Guarantee, and that each of the parties to such
documents other than the Company has the power and authority to execute and
deliver such documents, and to perform its obligations under, such documents.
Based upon and subject to the foregoing, we are of the opinion that,
when the Guarantee Agreement, the Indenture and the Certificate are executed
and delivered by the parties thereto and the Debentures are issued upon
payment of the consideration specified in the Registration Statement, all as
described in the Registration Statement, the Debentures and the Guarantee
will be the valid and binding obligations of the Company, enforceable in
accordance with their terms, except as the enforceability thereof may be
limited or affected by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or
similar laws relating to or affecting creditors' rights generally or the
rights of creditors of bank holding companies the accounts of whose
subsidiaries are insured by the Federal Deposit Insurance Corporation, by
general equity principles limiting the right to specific performance or other
equitable relief and the discretion of the court, regardless of whether
considered in proceedings at law or in equity, and by an implied covenant of
good faith and fair dealing.
Our opinions and statements expressed herein are restricted to
matters governed by the laws of the United States of America, the laws of
the State of Missouri and the laws of the State of New Jersey. We do not
purport to be expert in the laws of the State of New Jersey and, accordingly,
we have, with your consent, relied exclusively upon the opinion of New Jersey
counsel, Thacher Proffitt & Wood, dated the date hereof (a copy of which is
attached hereto as Annex A), including the assumptions, qualifications and
limitations contained therein, with respect to the opinions and statements
expressed therein. Our opinions and statements expressed herein pertaining to
matters of the law of the State of New Jersey expressed in their said
opinion are limited to the extent set forth in their said opinion.
We consent to the reference to our firm under the caption "Validity
of Securities" in the Prospectus constituting a part of the Registration
and to the inclusion of this
<PAGE>
Broad National Bancorporation
June 24, 1997
Page 3
opinion as an exhibit to the Registration Statement. In giving the foregoing
consents, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Act, or the rules and
regulations of the Commission thereunder.
Very truly yours,
STINSON, MAG & FIZZELL, P.C.
<PAGE>
ANNEX A
[Letterhead of Thacher Proffitt & Wood]
June 24, 1997
Broad National Bancorporation
905 Broad Street
Newark, New Jersey 07102
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-2 (Files Nos. 333-
28897 and 333-28897-01) (the "Registration Statement") filed by Broad National
Bancorporation (the "Company") and BNB Capital Trust (the "Trust") with the
Securities and Exchange Commission (the "Commission") for the registration
under the Securities Act of 1933, as amended (the "Act"), of (i) 1,150,000
shares of the Trust's Cumulative Trust Preferred Securities, including 150,000
shares which may be offered pursuant to an over-allotment option granted to the
underwriter for this offering, (ii) the Company's Junior Subordinated Debentures
(the "Debentures"), and (iii) the guarantee (the "Guarantee") to be provided by
the Company pursuant to a Guarantee Agreement (as defined below).
We have examined the following documents:
1. the form of Guarantee Agreement, attached as Exhibit 4.6 to the
Registration Statement (the "Guarantee Agreement");
2. the form of Junior Subordinated Indenture, attached as Exhibit 4.1 to
the Registration Statement (the "Indenture"); and
3. the form of Certificate evidencing the Debentures, attached as Exhibit
4.2 to the Registration Statement (the "Certificate").
In such examination, we have assumed the genuineness of all signatures affixed
or to be affixed on original documents, the conformity to original documents of
all copies submitted to us as conformed or photostatic copies, the authenticity
of the originals of such latter documents, and the conformity of the unexecuted
forms of Guarantee Agreement, Indenture and Certificate to the Guarantee
Agreement, Indenture and Certificate as delivered to us to those to be executed
and delivered by the parties thereto. In addition, we have assumed that the
Guarantee Agreement, Indenture and Certificate constitute the entire agreements
among the Company and the parties to such documents
<PAGE>
Broad National Bancorporation
June 24, 1997 Page 2
relating to the transactions contemplated thereby, including the Company's
issuance and sale of the Debentures to the Trust and the Company's provision
of the Guarantee, and that each of the parties to such documents has the power
and authority to execute and deliver such documents. We have also assumed the
power of each of the parties, other than the Company, to perform its obligations
under such documents.
Based upon and subject to the foregoing, we are of the opinion that, when
the Guarantee Agreement, the Indenture and the Certificate are executed and
delivered by the parties thereto and the Debentures are issued upon payment of
the consideration specified in the Registration Statement, all as described in
the Registration Statement, the Debentures and the Guarantee will be the valid
and binding obligations of the Company, enforceable in accordance with their
terms, except as the enforceability thereof may be limited or affected by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or the rights of creditors of bank holding companies
the accounts of whose subsidiaries are insured by the Federal Deposit Insurance
Corporation, by general equity principles limiting the right to specific
performance or other equitable relief and the discretion of the court,
regardless of whether considered in proceedings at law or in equity, and by an
implied covenant of good faith and fair dealing.
We consent to the reference to our firm under the caption "Validity of
Securities" in the Prospectus constituting a part of the Registration Statement,
and to the inclusion of this opinion as an exhibit to the Registration
Statement. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act, or the rules and regulations of the Commission thereunder.
We authorize you to deliver a copy of this letter to your counsel, Stinson,
Mag & Fizzell, P.C., and they may rely upon it for purposes of rendering certain
opinions to be filed as an exhibit to the Registration Statement as though it
were addressed to them.
Very truly yours,
THACHER PROFFITT & WOOD
<PAGE>
EXHIBIT 5.3
[Letterhead of Thacher Proffitt & Wood]
June 24, 1997
Broad National Bancorporation
905 Broad Street
Newark, New Jersey 07102
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-2 (Files Nos. 333-
28897 and 333-28897-01) (the "Registration Statement") filed by Broad National
Bancorporation (the "Company") and BNB Capital Trust (the "Trust") with the
Securities and Exchange Commission (the "Commission") for the registration
under the Securities Act of 1933, as amended (the "Act"), of (i) 1,150,000
shares of the Trust's Cumulative Trust Preferred Securities, including 150,000
shares which may be offered pursuant to an over-allotment option granted to the
underwriter for this offering, (ii) the Company's Junior Subordinated Debentures
(the "Debentures"), and (iii) the guarantee (the "Guarantee") to be provided by
the Company pursuant to a Guarantee Agreement (as defined below).
We have examined the following documents:
1. the form of Guarantee Agreement, attached as Exhibit 4.6 to the
Registration Statement (the "Guarantee Agreement");
2. the form of Junior Subordinated Indenture, attached as Exhibit 4.1 to
the Registration Statement (the "Indenture"); and
3. the form of Certificate evidencing the Debentures, attached as Exhibit
4.2 to the Registration Statement (the "Certificate").
In such examination, we have assumed the genuineness of all signatures affixed
or to be affixed on original documents, the conformity to original documents of
all copies submitted to us as conformed or photostatic copies, the authenticity
of the originals of such latter documents, and the conformity of the unexecuted
forms of Guarantee Agreement, Indenture and Certificate to the Guarantee
Agreement, Indenture and Certificate as delivered to us to those to be executed
and delivered by the parties thereto. In addition, we have assumed that the
Guarantee Agreement, Indenture and Certificate constitute the entire agreements
among the Company and the parties to such documents
<PAGE>
Broad National Bancorporation
June 24, 1997 Page 2.
relating to the transactions contemplated thereby, including the Company's
issuance and sale of the Debentures to the Trust and the Company's provision
of the Guarantee, and that each of the parties to such documents has the power
and authority to execute and deliver such documents. We have also assumed the
power of each of the parties, other than the Company, to perform its obligations
under such documents.
Based upon and subject to the foregoing, we are of the opinion that, when
the Guarantee Agreement, the Indenture and the Certificate are executed and
delivered by the parties thereto and the Debentures are issued upon payment of
the consideration specified in the Registration Statement, all as described in
the Registration Statement, the Debentures and the Guarantee will be the valid
and binding obligations of the Company, enforceable in accordance with their
terms, except as the enforceability thereof may be limited or affected by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or the rights of creditors of bank holding companies
the accounts of whose subsidiaries are insured by the Federal Deposit Insurance
Corporation, by general equity principles limiting the right to specific
performance or other equitable relief and the discretion of the court,
regardless of whether considered in proceedings at law or in equity, and by an
implied covenant of good faith and fair dealing.
We consent to the reference to our firm under the caption "Validity of
Securities" in the Prospectus constituting a part of the Registration Statement,
and to the inclusion of this opinion as an exhibit to the Registration
Statement. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act, or the rules and regulations of the Commission thereunder.
We authorize you to deliver a copy of this letter to your counsel, Stinson,
Mag & Fizzell, P.C., and they may rely upon it for purposes of rendering certain
opinions to be filed as an exhibit to the Registration Statement as though it
were addressed to them.
Very truly yours,
THACHER PROFFITT & WOOD
<PAGE>
EXHIBIT 8.1
June 24, 1997
Broad National Bancorporation
905 Broad Street
Newark, New Jersey 07102
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-2 (File Nos. 333-28897
and 333-28897-01)(the "Registration Statement") filed by Broad National
Bancorporation (the "Company") and BNB Capital Trust (the "Trust") with the
Securities and Exchange Commission (the "Commission") for the registration under
the Securities Act of 1933, as amended (the "Act"), of (i) 1,150,000 shares of
the Trust's Cumulative Trust Preferred Securities, including 150,000 shares
which may be offered pursuant to an over-allotment option granted to the
underwriter for this offering, (ii) the Company's Junior Subordinated
Debentures, and (iii) the guarantee to be provided by the Company pursuant to a
Guarantee Agreement.
For the purposes of rendering this opinion, we have reviewed and relied
upon the Registration Statement and such other documents and instruments as we
deemed necessary for the rendering of this opinion. In our examination of
relevant documents, we have assumed the genuineness of all signatures on
original documents and the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as conformed or photostatic copies, the authenticity of the originals of such
latter documents, and the accuracy and completeness of all corporate and other
records made available to us by the Company and the Trust.
Based solely upon our review of such documents, and upon such
information as the Company has provided to us (which we have not attempted to
verify in any respect), and reliance upon such documents and information, the
portion of the Registration Statement under the caption "Certain Federal Income
Tax Consequences" fairly summarizes the material federal income tax consequences
described therein.
Our opinion is limited to the federal income tax matters described above
and does not address any other federal income tax considerations or any state,
local, foreign, or other tax considerations. If any of the information on which
we have relied is incorrect, or if
<PAGE>
Board of Directors
Broad National Bancorporation
June 24, 1997
Page 2
changes in the relevant facts occur after the date hereof, our opinion could be
affected thereby. Moreover, our opinion is based on the Internal Revenue Code
of 1986, as amended, applicable Treasury regulations promulgated thereunder, and
Internal Revenue Service rulings, procedures, and other pronouncements,
published by the United States Internal Revenue Service. These authorities are
all subject to change, and such change may be made with retroactive effect. We
can give no assurance that, after such change, our opinion would not be
different. We undertake no responsibility to update or supplement our opinion.
This opinion is not binding on the Internal Revenue Services, and there can be
no assurance, and none is hereby given, that the Internal Revenue Service will
not take a position contrary to one or more of the positions reflected in the
foregoing opinion, or that our opinion will be upheld by the courts if
challenged by the Internal Revenue Service.
We consent to the reference to our firm under the caption "Certain
Federal Income Tax Consequences" in the Prospectus constituting a part of the
Registration Statement, and to the inclusion of this opinion as an exhibit to
the Registration Statement. In giving the foregoing consents, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Act, or the rules and regulations of the Commission
thereunder.
Sincerely,
STINSON, MAG & FIZZELL, P.C.
<PAGE>
EXHIBIT 11.1
BROAD NATIONAL BANCORPORATION
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
For the
Three Months
Ended March 31, For the Years Ended December 31,
------------------ ------------------------------------------------------
1997 1996(1) 1996 1995(1) 1994(1) 1993(2) 1992(2)
---- ------- ---- ------- ------- ------- -------
(Dollars in thousands, except per share amounts)
------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PRIMARY:
Average number of common shares
outstanding 4,669,188 4,237,474 4,561,066 3,245,081 3,164,227 3,119,656 3,093,766
Assumed exercise of options
outstanding 143,809 88,043 88,712 56,641 4,164 1,513 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Average number of commons shares
and common share equivalents
outstanding 4,812,997 4,325,517 4,649,778 3,301,722 3,168,391 3,121,169 3,093,766
========== ========== ========== ========== ========== ========== ==========
Net income before cumulative effect
of a change in accounting
principle $1,661,150 $1,036,650 $5,273,146 $4,419,660 $4,688,711 $2,050,649 $1,692,972
Less: Cumulative Preferred Dividends 0 0 0 579,548 613,933 609,727 88,144
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income available to common
shareholders before cumulative
effect of a change in accounting
principle $1,661,150 $1,036,650 $5,273,146 $3,840,112 $4,074,778 $1,440,992 $1,604,828
Cumulative effect of a change in
accounting principle 0 0 0 0 0 1,085,603 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income available to common
shareholders $1,661,150 $1,036,650 $5,273,146 $3,840,112 $4,074,778 $2,526,525 $1,604,828
========== ========== ========== ========== ========== ========== ==========
PRIMARY EARNINGS PER COMMON SHARE:
Before cumulative effect of a
change in accounting principle $0.35 $0.24 $1.13 $1.16 $1.29 $0.45 $0.52
Cumulative effect of a change in
accounting principle 0.00 0.00 0.00 0.00 0.00 0.35 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
Primary earnings per common share $0.35 $0.24 $1.13 $1.16 $1.29 $0.80 $0.52
========== ========== ========== ========== ========== ========== ==========
ASSUMING FULL DILUTION:
Average number of common shares
outstanding 4,669,188 4,237,474 4,561,066 3,245,081 3,164,227 3,119,656 3,093,766
Assumed exercise of options
outstanding 181,507 97,264 120,102 68,192 17,396 1,513 0
Assumed conversion of preferred
shares 0 423,743 110,067 1,421,305 1,494,400 1,432,328 122,792
---------- ---------- ---------- ---------- ---------- ---------- ----------
Adjusted average number of common
shares outstanding 4,850,695 4,758,481 4,791,235 4,734,578 4,676,023 4,553,497 3,216,557
========== ========== ========== ========== ========== ========== ==========
Net income before cumulative effect
of a change in accounting
principle $1,661,150 $1,036,650 $5,273,146 $4,419,660 $4,688,711 $2,050,649 $1,663,590
Cumulative effect of a change in
accounting principle 0 0 0 0 0 1,085,603 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income $1,661,150 $1,036,650 $5,273,146 $4,419,660 $4,688,711 $3,136,252 $1,663,590
========== ========== ========== ========== ========== ========== ==========
FULLY DILUTED EARNINGS PER COMMON
SHARE:
Before cumulative effect of a
change in accounting principle $0.34 $0.22 $1.10 $0.93 $1.00 $0.46 $0.52
Cumulative effect of a change in
accounting principle $0.00 $0.00 $0.00 $0.00 $0.00 $0.24 $0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
Fully diluted earnings per
common share $0.34 $0.22 $1.10 $0.93 $1.00 $0.70 $0.52
========== ========== ========== ========== ========== ========== ==========
</TABLE>
(1) All share and per share amounts have been restated to reflect 10% stock
dividend which was distributed October 3, 1996.
(2) All share and per share amounts have been restated to reflect the 10% stock
dividend which was distributed October 3, 1996, and the 5% stock dividend
which was distributed December 16, 1994.
<PAGE>
EXHIBIT 12.1
Broad National Bancorporation
Computation of Ratios of Earnings to Fixed Charges
(Figures in thousands, except ratios)
<TABLE>
<CAPTION>
3/31/97 3/31/96 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income (Loss) Before Taxes $2,914 $1,638 $8,701 $7,551 $5,457 $3,541 $3,004
Interest Expense and Payment of Debt $3,521 $2,613 $11,818 $10,082 $7,464 $11,311 $11,956
Preferred Dividends $0 $0 $0 $580 $617 $639 $59
Subtotal A $6,435 $4,251 $20,519 $18,213 $13,538 $15,491 $15,019
Less: Interest on Deposits $3,509 $2,595 $11,760 $9,913 $7,458 $8,037 $11,185
Subtotal B - Excluding interest on
deposits $2,926 $1,656 $8,759 $8,300 $6,080 $7,454 $3,834
Ratio of Earnings to Fixed Charges 1.83x 1.63x 1.74x 1.71x 1.68x 1.30x 1.25x
Subtotal A / Interest expense and 6435/ 4251/ 20519/ 18213/ 13538/ 15491/ 15019/
preferred dividends 3521 2613 11818 (10082+580) (7464+617) (11311+639) (11956+59)
Ratio of Earnings to Fixed Charges
Excluding interest on deposits 243.83x 92.00x 151.02x 11.08x 9.76x 1.90x 4.62x
Subtotal B / (Interest expense +
preferred div) 2,926/ 1,656/ 8,759/ 8,300/ 6,080/ 7,454/ 3,834/
- Interest on Deposits (3,521- (2,613- (11,813- (10,662- (8,081- (11,950- (12,015-
3,509) 2,595) 11,760) 9,913) 7,458) 8,037) 11,185)
</TABLE>
<PAGE>
EXHIBIT 25.1
------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
<TABLE>
<S> <C>
BROAD NATIONAL BANCORPORATION BNB CAPITAL TRUST
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
NEW JERSEY 22-2395057 DELAWARE REQUESTED
(State or other jurisdiction of (I.R.S. employer (State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.) incorporation or organization) Identification no.)
905 BROAD STREET c/o BROAD NATIONAL BANCORPORATION
NEWARK, NEW JERSEY 07102 905 BROAD STREET
(Address, including zip code NEWARK, NEW JERSEY 07102
of principal executive offices) (Address, including zip code of
principal executive offices)
</TABLE>
Preferred Securities of BNB Capital Trust
Junior Subordinated Debentures of Broad National Bancorporation
Guarantee of Broad National Bancorporation of certain obligations
under the Preferred Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate
trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of
Bankers Trust Company dated August 7, 1990,
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
June 21, 1995 Incorporated herein by
reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
March 20, 1996, copy attached.
Exhibit 2 - Certificate of Authority to commence
business - Incorporated herein by reference
to Exhibit 2 filed with Form T-1 Statement,
Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein
by reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust
Company, as amended on February 18, 1997,
Incorporated herein by reference to Exhibit
2 filed with Form T-1 Statement,
Registration No. 333-24509
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company
required by Section 321(b) of the Act. -
Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition of
Bankers Trust Company dated as of March 31,
1997.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 12th day
of June, 1997.
BANKERS TRUST COMPANY
By: /s/ Kevin Weeks
-------------------------------
Kevin Weeks
Assistant Treasurer
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 12th day
of June, 1997.
BANKERS TRUST COMPANY
By: Kevin Weeks
Kevin Weeks
Assistant Treasurer
-5-
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks March 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
---------------
| C400 |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
<S> <C>
ASSETS | / / / / / / / / / / / / / / / /
1. Cash and balances due from depository institutions (from Schedule RC-A): | / / / / / / / / / /
a. Noninterest-bearing balances and currency and coin(1) .............................| 0081 1,589,000|1.a.
b. Interest-bearing balances(2) ......................................................| 0071 2,734,000|1.b.
2. Securities: | / / / / / / / / / / |
a. Held-to-maturity securities (from Schedule RC-B, column A) ....................... | 1754 0|2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)...................... | 1773 4,433,000|2.b.
3 Federal funds sold and securities purchased under agreements to resell | 1350 26,490,000|3
4. Loans and lease financing receivables: | / / / / / / / / / / |
a. Loans and leases, net of unearned income (from
Schedule RC-C) RCFD 2122 15,941,000 | / / / / / / / / / / |4.a.
b. LESS: Allowance for loan and lease losses........RCFD 3123 708,000 | / / / / / / / / / / |4.b.
c. LESS: Allocated transfer risk reserve ...........RCFD 3128 0 | / / / / / / / / / / |4.c.
d. Loans and leases, net of unearned income, | / / / / / / / / / / |
allowance, and reserve (item 4.a minus 4.b and 4.c) ................................| 2125 15,233,000|4.d.
5. Assets held in trading accounts ..........................................................| 3545 38,115,000|5.
6. Premises and fixed assets (including capitalized leases) .................................| 2145 924,000|6.
7. Other real estate owned (from Schedule RC-M) .............................................| 2150 188,000|7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M) | 2130 175,000|8.
9. Customers' liability to this bank on acceptances outstanding .............................| 2155 618,000|9.
10. Intangible assets (from Schedule RC-M) ....................................................| 2143 17,000|10.
11. Other assets (from Schedule RC-F) .........................................................| 2160 4,424,000|11.
12. Total assets (sum of items 1 through 11) ..................................................| 2170 94,940,000|12.
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Schedule RC--Continued _________________________________________________
Dollar Amounts in Thousands | / / / / / / / / Bil Mil Thou __ __|
<S> <C>
LIABILITIES | / / / / / / / / / / / / / / / / /|
13. Deposits: |/ / / / / / / / / / / / / / / / / |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I)| RCON 2200 14,450,000 |13.a.
(1) Noninterest-bearing(1) ..........RCON 6631 2,917,000.......... | / / / / / / / / / / |13.a.(1)
(2) Interest-bearing ................RCON 6636 11,533,000.......... | / / / / / / / / / / / / / / / / |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule | / / / / / / / / / / / |
RC-E part II) | RCFN 2200 23,456,000 |13.b.
(1) Noninterest-bearing ...........RCFN 6631 1,062,000 | / / / / / / / / / / / / / / / / |13.b.(1)
(2) Interest-bearing ..............RCFN 6636 22,394,000 | / / / / / / / / / / / / / / / / |13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase | RCFD 2800 15,195,000 |14
15. a. Demand notes issued to the U.S. Treasury ...................................| RCON 2840 0 |15.a.
b. Trading liabilities (from Schedule RC-D)....................................| RCFD 3548 18,911,000 |15.b.
16. Other borrowed money: (includes mortgage indebtedness and obligations | / / / / / / / / / / / / / / / |
under capitalized leases): | / / / / / / / / / / / / / / / |
a. With original maturity of one year or less .................................| RCFD 2332 7,701,000 |16.a.
b. With original maturity of more than one year ...............................| RCFD 2333 4,438,000 |16.b.
17. Not applicable .........................| |17.
18. Bank's liability on acceptances executed and outstanding ........................| RCFD 2920 618,000 |18.
19. Subordinated notes and debentures ...............................................| RCFD 3200 1,226,000 |19.
20. Other liabilities (from Schedule RC-G) ..........................................| RCFD 2930 3,971,000 |20.
21. Total liabilities (sum of items 13 through 20) ..................................| RCFD 2948 89,966,000 |21.
| / / / / / / / / / / / / / / / |
22. Not applicable | | 22.
EQUITY CAPITAL | / / / / / / / / / / / / / / / |
23. Perpetual preferred stock and related surplus ...................................| RCFD 3838 600,000 |23.
24. Common stock ....................................................................| RCFD 3230 1,002,000 |24.
25. Surplus (exclude all surplus related to preferred stock) ........................| RCFD 3839 540,000 |25.
26. a. Undivided profits and capital reserves .....................................| RCFD 3632 3,241,000 |26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities .....| RCFD 8434 ( 31,000) |26.b.
27. Cumulative foreign currency translation adjustments .............................| RCFD 3284 ( 378,000) |27.
28. Total equity capital (sum of items 23 through 27) ...............................| RCFD 3210 4,974,000 |28.
29. Total liabilities, limited-life preferred stock, and equity | / / / / / / / / / / |
capital (sum of items 21, 22, and 28) .........................................| RCFD 3300 94,940,000 |29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external auditors as of any date during Number
1996........................................................................| RCFD 6724 1 | M.1
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed
with generally accepted auditing standards by a certified by other external auditors (may be required
public accounting firm which submits a report on the bank by state chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by
conducted in accordance with generally accepted auditing external auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial
submits a report on the consolidated holding company statements by external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax
3 = Directors' examination of the bank conducted in preparation work)
accordance with generally accepted auditing standards by a certified 8 = No external audit work
public accounting firm (may be required by state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
<PAGE>
State of New York,
Banking Department
I, PETER M. PHILBIN, Deputy Superintendent of Bank of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated March 20, 1996, providing for an increase in
authorized capital stock from $1,351,666,670 consisting of 85,166,667 shares
with a par value of $10 each designated as Common Stock and 500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$1,501,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York,
this 21st day of March in the Year of our Lord one thousand
----- -----
nine hundred and ninety-six.
Peter M. Philbin
------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by
the Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Three Hundred Fifty One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,501,666,670), divided into
One Hundred Million, One Hundred Sixty Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE>
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
20th day of March , 1996.
James T. Byrne, Jr.
-----------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
-----------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
-----------------------------
Lea Lahtinen
Sworn to before me this 20th day of March, 1996.
Sandra L. West
- --------------------------------
Notary Public
SANDRA L. WEST Counterpart filed in the
Notary Public State of New York Office of the Superintendent of
No. 31-4942101 Banks, State of New York,
Qualified in New York County This 21st day of March, 1996
Commission Expires September 19, 1996
