As filed with the Securities and Exchange Commission on April 18, 1997
Registration Nos. 333-24509-01
333-24509
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------------------
FB CAPITAL TRUST
FIDELITY BANCORP, INC.
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(Exact Name of Registrants as Specified in their Charters)
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Delaware Requested
Pennsylvania 6035 25-1705405
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(States or Other Jurisdictions (Primary Standard Industry (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Nos.)
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1009 Perry Highway, Pittsburgh, Pennsylvania 15237
(412) 367-3300
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
Mr. William L. Windisch
President and Chief Executive Officer
Fidelity Bancorp, Inc.
1009 Perry Highway, Pittsburgh, Pennsylvania 15237
(412) 367-3300
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(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Please send copies of all communications to:
Samuel J. Malizia, Esq. Ronald H. Janis, Esq.
John J. Spidi, Esq. PITNEY, HARDIN, KIPP & SZUCH
MALIZIA, SPIDI, SLOANE & FISCH, P.C. P.O. Box 1945
1301 K Street, N.W., Suite 700 East, Morristown, New Jersey 07962-1945
Washington, D.C. 20005
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 [ X ]
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.[ ]
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1)______% Preferred
Securities of FB Capital Trust; (2)______% Junior Subordinated Debentures of
Fidelity Bancorp, Inc.; and (3) a Guarantee of Fidelity Bancorp, Inc. of certain
obligations under the Preferred Securities.
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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.
PROSPECTUS
SUBJECT TO COMPLETION, DATED ^ APRIL 18, 1997
[LOGO]
$10,000,000
FB Capital Trust
^% Preferred Securities
(Liquidation Amount $10 per Preferred Security)
fully and unconditionally guaranteed, as described herein, by
Fidelity Bancorp, Inc.
The Preferred Securities offered hereby represent preferred undivided
beneficial interests in the assets of FB Capital Trust, a statutory business
trust created under the laws of the State of Delaware (the "Issuer Trust").
Fidelity Bancorp, Inc. (the "Company") will initially 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
(Continued on next page)
Application ^ has been made to include the Preferred Securities ^ on
Nasdaq's National Market^ under the symbol "FSBIP." 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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UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC(1) COMMISSION (2) ISSUER TRUST (3)(4)
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Per Preferred Security................... $10.00 (4) $10.00
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Total(5)................................. $10,000,000 (4) $10,000,000
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(1) Plus accrued Distributions, if any, from ^, 1997.
(2) The Compan 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 ^ $ .
(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, ^ $ per Preferred Security
(or ^ $ 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
$1,000,000 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 $11,000,000 and $11,000,000,
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.
Ryan, Beck & Co.
The date of this Prospectus is ^ , 1997
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(cover page continued)
Securities, the "Trust Securities"). 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 will therefore 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 15th day of January, April, July and October 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 will also 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
2
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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 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
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MAP
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET
OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
4
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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. 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.
FIDELITY BANCORP, INC.
The Company, a Pennsylvania corporation, is a bank holding company
headquartered in Pittsburgh, Pennsylvania with one subsidiary, Fidelity Savings
Bank (the "Bank"), a Pennsylvania - chartered savings bank. At December 31,
1996, the Company had total consolidated assets of $320.3 million, total
deposits of $233.6 million and total stockholders' equity of $23.1 million. The
Bank's deposits are federally insured by the Savings Association Insurance Fund
("SAIF"), which is administered by the Federal Deposit Insurance Corporation
("FDIC"). The Company's principal business is to serve as a holding company for
the Bank. As a bank holding company, the Company is regulated by the Federal
Reserve.
The Company was formed in 1993 pursuant to a reorganization by the Bank
into the holding company form of organization. The Bank was chartered in 1927.
The Bank is a community oriented savings bank which has traditionally
offered a variety of savings deposit products to its retail customers. The Bank
has historically concentrated its lending primarily on real estate loans secured
by one-to ^ four- family properties. Loans secured by one-to four-family
residences were $81.5 million or 50.9% of total loans receivable at December 31,
1996. To a lesser extent, the Bank originates other loans ^ including commercial
real estate loans, installment loans (primarily home equity and other consumer
loans), commercial business loans and construction loans. Commercial real estate
loans totaled $19.7 million or 12.2% of total loans receivable, installment
loans totaled $36.5 million or 22.8% of total loans receivable and construction
and commercial business loans totaled $18.1 million or 11.3% of total loans
receivable at December 31, 1996. The Bank also has a securities portfolio
primarily consisting of U.S. Treasury and Federal government agency obligations
and mortgage-backed securities. Investment securities amounted to $53.6 million
or 16.7% and mortgage-backed securities amounted to $100.4 million or 31.3% of
the Bank's total assets at December 31, 1996.
As part of its business strategy, the Bank has expanded its installment
and commercial business loan portfolios in recent years. The Bank's operating
strategy includes maintaining its focus as a single family lender, while
expanding its portfolio of installment loans and small business commercial
loans. This strategy is designed to improve the interest rate margins of the
Bank and to decrease its interest rate sensitivity. However, consumer and
commercial lending entails different and additional credit risks when compared
to residential mortgage lending. In particular, commercial loans typically
involve larger loan balances to single borrowers than residential loans and
payment experience on such loans is typically dependent on the successful
operation of the project or the borrower's business.
Operating characteristics of the Bank in recent years include the
following:
o Capital. The Company and the Bank exceed all applicable minimum
regulatory capital requirements. At December 31, 1996, the Company had
Tier 1 risk-based, total risk-based and Tier 1 leverage capital ratios
of 15.10%, 16.15%, and 7.38%, respectively, as compared to the minimum
requirements of 4.0%, 8.0% and 4.0%, respectively. At December 31,
1996, the Bank had Tier 1 risk-based, total risk-based and Tier 1
leverage capital ratios of 14.38%, 15.43% and 7.05%, respectively.
o Profitability. The Company had net income of $623,000 and $413,000 for
the three months ended December 31, 1996 and 1995, respectively. Net
income was $1.3 million, $1.5 million, and $2.4 million for the fiscal
years ended September 30, 1996, 1995 and 1994, respectively. Return on
average assets, excluding a $1.5 million pre-tax charge in 1996
relating to the SAIF one-time special assessment, and excluding income
tax benefit of $530,000 in 1994 relating to a cumulative effect of
change in accounting principle, was .73%, .54%, and .68%, for the years
ended September 30, 1996, 1995 and 1994, respectively. The annualized
return on average assets was .78% and .58%, for the three months ended
December 31, 1996 and 1995, respectively.
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5
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o Asset Quality. Management of the Bank believes that good asset quality
is the key to long term financial strength and, as a result, the Bank's
investments are intended to maintain asset quality and control credit
risk. At December 31, 1996, one-to ^ four-family residential loans
comprised $81.5 million, or 25.4% of total assets and investment and
mortgage-backed securities were $154.0 million, or 48.1% of total
assets. At December 31, 1996, total non-performing assets were $1.4
million, or .42% of total assets.
o Operating Efficiency. The Company's ratio of noninterest expenses to
average assets was 2.18% and 2.20% for the years ended September 30,
1996 and 1995, respectively, excluding the SAIF one-time special
assessment. For the quarter ended December 31, 1996 noninterest
expenses to average assets was 2.00%. The Company's efficiency ratio
(noninterest expenses, excluding the SAIF one-time special assessment,
divided by the sum of net interest income and noninterest income) was
60.3% for the quarter ended December 31, 1996, 66.1% for fiscal 1996
and 71.2% for fiscal 1995.
The executive office of the Company is located at 1009 Perry Highway,
Pittsburgh, Pennsylvania 15237 and its telephone number is (412) 367-3300.
FB CAPITAL TRUST
The Issuer Trust is a statutory business trust formed under Delaware
law pursuant to (i) a trust agreement, dated as of April 1, 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 April 1, 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 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 1009 Perry
Highway, Pittsburgh, Pennsylvania 15237, and its telephone number is (412)
367-3300.
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THE OFFERING
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Securities Offered........................................ The ^% 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 100,000 Preferred Securities at
the offering price, solely to cover over-allotments, if
any.
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 15th day
of January, April, July and October of each year,
commencing ^, 1997. See "Description of
Preferred Securities -- Distributions."
Junior Subordinated Debentures............................ The Issuer Trust will invest the proceeds 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.
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 subordinate and junior in
right of payment to all Senior Indebtedness. See
"Description of Guarantee."
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Right to Defer Interest Payments.......................... The Company has the right, at any time, to 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 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."
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Liquidation of the Issuer Trust........................... The Company, as holder of the Common 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."
The proceeds from the sale of the Preferred
Securities offered hereby will be used by the Issuer
Use of Proceeds........................................... Trust to purchase the Junior Subordinated
Debentures issued by the Company. The proceeds
received by the Company from the sale of the Junior
Subordinated Debentures may be used to contribute
capital through investments in or advances to the
Bank. The remainder of the proceeds will be held
by the Company and may be used to repurchase
stock and other general corporate purposes as well as
to meet debt service obligations of the Company
under the Junior Subordinated Debentures. The
Trust Securities will qualify as Tier 1 or core capital
of the Company, subject to the 25% Capital
Limitation (as defined herein), under the risk-based
capital guidelines of the Federal Reserve. The
portion of the Trust Securities that exceeds the 25%
Capital Limitation will qualify as Tier 2 or
supplementary capital of the Company. 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 "FSBIP."
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RISK FACTORS
Prospective investors should carefully consider the matters set forth
under "Risk Factors," beginning on page ^ 12.
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SELECTED CONSOLIDATED FINANCIAL DATA
The following summary information regarding the Company should be read
in conjunction with the consolidated financial statements of the Company and
notes. Consolidated historical financial and other data regarding the Company at
or for the three months ended December 31, 1996 and 1995 have been prepared by
the Company without audit and may not be indicative of results on an annualized
basis or any other period. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation for such periods or dates have been made.
<TABLE>
<CAPTION>
At or
for the Three Months
Ended December 31, At or for the Fiscal Years Ended September 30,
----------------------- -------------------------------------------------------
1996 1995 1996 1995 1994 1993 1992(3)
---- ---- ---- ---- ---- ---- ----
Operating Data (Dollars in Thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income.......................... $5,603 $4,919 $ 20,986 $ 19,047 $ 17,652 $ 18,515 $ 19,258
Interest expense......................... 3,152 2,878 11,832 11,059 9,435 9,982 12,084
----- ----- ------- ------- ------- ------- -------
Net interest income before provision
for loan losses......................... 2,451 2,041 9,154 7,988 8,217 8,533 7,174
Provision for loan losses................. 115 30 270 230 360 655 483
------- ------- ------- ------- ------- ------- -------
Net interest income after provision for
loan losses............................... 2,336 2,011 8,884 7,758 7,857 7,878 6,691
Gain (loss) on sale of investments and
mortgage-backed securities, net........... (2) (12) 27 (57) 79 751 312
Gain on sale of loans..................... 2 2 17 18 24 57 47
Service fees and other income............. 184 156 688 643 524 569 462
SAIF assessment........................... -- -- 1,537 -- -- -- --
Operating expenses........................ 1,590 1,564 6,536 6,119 5,617 5,650 5,180
----- ----- ------ ------- ------- ------- -------
Income before income tax provision and
cumulative effect of change in accounting
principle................................. 930 593 1,543 2,243 2,867 3,605 2,332
Income tax provision...................... 307 180 226 728 1,025 1,411 1,010
--- --- ------- ------- ------- ------- -------
Net income before cumulative effect of
change in accounting principle(4)......... 623 413 1,317 1,515 1,842 2,194 1,322
Cumulative effect of change in accounting
principle................................. -- -- -- -- 530 -- --
------ ------- ------- ------- ------- ------- -------
Net income(4)............................. $ 623 $ 413 $1,317 $ 1,515 $ 2,372 $ 2,194 $ 1,322
======= ======= ===== ======= ======= ======= =======
Financial Condition Data
Total assets.............................. $320,336 $287,465 $317,874 $281,810 $273,564 $267,205 $252,923
Loans, net................................ 153,509 125,780 151,263 120,904 112,647 106,585 106,407
Mortgage-backed securities (1)............ 100,391 96,330 93,738 101,511 112,236 120,033 96,705
Investment securities and other interest
earning assets(2)......................... 53,593 52,795 59,302 46,523 37,607 30,487 39,910
Savings deposits.......................... 233,642 245,548 234,276 244,083 228,304 234,091 233,979
Advances from FHLB and other
borrowings................................ 60,805 15,850 57,143 13,092 22,601 12,309 --
Stockholders' equity -- substantially
restricted................................ 23,135 22,741 21,778 22,132 20,646 18,544 16,589
Number of full service offices............ 8 8 8 8 8 9 9
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
At or for the
Three Months Ended At or for the Fiscal Years Ended
December 31,(7) September 30,
---------------------- -----------------------------------------------
1996 1995 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
Per Share Data
<S> <C> <C> <C> <C> <C> <C> <C>
Primary earnings (4)(5) ........... $.44 $.30 $.94 $1.09 $1.71 $1.59 $.98
Book value ........................ 16.75 16.70 15.86 16.28 15.30 13.88 12.43
Performance Ratios
Return on average assets (4)(5) . .78% .58% .44% .54% .87% .84% .54%
Return on average equity (4)(5) . 10.93 7.33 5.96 7.13 12.02 12.41 8.31
Net yield on interest-earning
assets ......................... 3.34 3.17 3.33 3.08 3.18 3.38 3.04
Asset Quality Ratios
Non-performing loans to
total loans .................... .85 .36 .73 .25 1.10 1.16 1.55
Non-performing assets to
total loans and other real
estate owned ................... .85 1.12 .97 1.07 1.48 1.46 1.74
Net charge-offs to average
total loans .................... .01 .07 .12 .11 .14 .46 .11
Total allowance for loan
losses to total
non-performing loans ........... 120.00 290.04 132.12 458.01 104.06 86.98 57.41
Capital Ratios
Equity to assets ................ 7.22 7.91 6.85 7.85 7.55 6.94 6.56
Tier 1 risk-based capital ratio . 15.10 15.88 14.85 15.83 15.01 15.15 13.05
Total risk-based capital ratio .. 16.15 16.87 15.84 16.87 16.01 16.11 13.87
Leverage ratio .................. 7.38 7.76 7.64 7.76 7.42 6.77 6.33
Ratios of Earnings to Fixed
Charges (6)
Including interest on deposits(4) 1.30 x 1.21 x 1.13 x 1.20 x 1.30 x 1.36 x 1.19 x
Excluding interest on deposits(4) 2.18 x 3.88 x 1.88 x 3.08 x 5.16 x 14.92 x 11.01 x
</TABLE>
- --------------------
(1) Consists of mortgage-backed securities classified as investments
held-to-maturity and available-for-sale.
(2) Consists of interest-bearing deposits, investments securities classified as
investments held-to-maturity and available-for-sale, and Federal Home Loan
Bank stock.
(3) Fiscal 1992 data reflects the purchase of three branches offices during the
year.
(4) Fiscal 1996 operating results include the effect of a one-time pre-tax
payment to recapitalize the Savings Association Insurance Fund of $1.5
million. Exclusive of the special assessment, net income would have been
approximately $2.2 million; primary earnings per share would have been
$1.56; return on average assets would have been .73%; and return on average
equity would have been 9.88%. The ratio of earnings to fixed charges
including deposits would have been 1.26x and 2.75x excluding deposits.
(5) Fiscal 1994 operating results include the cumulative effect of change in
accounting principle related to accounting for income taxes of $530,000.
Exclusive of the change primary earnings per share would have been $1.33;
return on average assets would have been .68%; and return on average equity
would have been 9.33%.
(6) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes, cumulative effect of change in
accounting principle and fixed charges by fixed charges. Fixed charges,
including interest on deposits, include all interest expense. Fixed
charges, excluding interest on deposits, include interest expense (other
than on deposits) on notes, federal funds purchased and securities sold
under agreements to repurchase, and other funds borrowed. There were no
amortization of notes and debentures expense nor any portion of net rental
expense which was deemed to be equivalent to interest on debt.
(7) Ratios are annualized where appropriate.
- --------------------------------------------------------------------------------
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 information contained in this
Prospectus constitutes a "forward-looking statement" as defined in Section
27A(i)(1) of the Securities Act, the risk factors set forth below are cautionary
statements identifying important factors that could cause actual results to
differ materially from those in the forward-looking statement.
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
12
<PAGE>
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 stockholder 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 stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any such Extension Period,
the Company may further 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
13
<PAGE>
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 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.
14
<PAGE>
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 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
15
<PAGE>
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.
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
16
<PAGE>
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."
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 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 as to
what constitutes Congressional "committee action" with respect to this proposal.
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. 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.
RISK FACTORS RELATING TO 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
17
<PAGE>
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 are not predictable or controllable.
At September 30, 1996 and December 31, 1996, the Company had a one year
cumulative negative gap of 17.0% and 18.2%, respectively. This negative one year
gap position may, as noted above, have a negative impact on earnings in a rising
interest rate environment.
The Bank has undertaken a program to enhance the origination of
consumer, commercial real estate and commercial business loans in an effort to
maintain or improve its interest rate margins and shorten the maturity of its
asset portfolio. Management may be unsuccessful in originating additional
qualified consumer loans, commercial real estate or commercial business loans
and in that case will resort to the purchase of investment securities with lower
yield. The failure to reprice maturing assets at equal or greater yield could
result in lower interest rate margins and lower net income.
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 Stockholders' Equity
In addition to affecting interest income and expense, changes in
interest rates also can affect the value of the Company's investment and
mortgage backed 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 stockholders' equity if retained by the Company as a
result of Statement of Financial Accounting Standards ("SFAS") No. 115.
The Company held investment securities for available-for-sale with a
market value of $50.9 million and an amortized cost of $51.1 million at
September 30, 1996. The market value and the amortized cost of the
mortgage-backed securities available-for-sale portfolio was $62.5 million and
$64.0 million, respectively, at September 30, 1996. Debt and equity securities
which are classified as "available-for-sale" are carried at fair value.
Unrealized gains and losses, net of income tax effect, are recorded as a
separate component of stockholders' 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 stockholders' equity, and conversely,
a decrease in interest rates will likely cause an increase in the Company's
stockholders' equity.
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
18
<PAGE>
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.
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 December 31, 1996, the Company's
subsidiaries had indebtedness and other liabilities of approximately $297.2
million.
Competition
The banking business is highly competitive. In its primary market area,
the Bank competes with other commercial banks, savings and loan associations,
credit unions, finance companies, mutual funds, insurance companies, and
brokerage and investment banking firms operating locally and elsewhere. The
Bank's primary competitors have substantially greater resources and lending
limits than the Bank and may offer certain services, such as trust services,
that the Bank does not provide. The market for attracting savings deposits
and/or originating loans is very competitive which may limit the ability of the
Bank to originate loans and attract savings which provide a desirable interest
rate margin. The profitability of the Company depends upon the Bank's ability to
compete in its primary market area.
FB 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 April 1, 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 will initially 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
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
19
<PAGE>
(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 proceeds from the sale of the Preferred Securities are expected
to qualify as Tier 1 or core capital with respect to the Company under the
guidelines established by the Federal Reserve, however capital received from the
proceeds of the sale of the Preferred Securities cannot constitute more than 25%
of the total Tier 1 capital of the Company (the "25% Capital Limitation").
Amounts in excess of the 25% Capital Limitation will constitute Tier 2 or
supplementary capital of 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 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.
20
<PAGE>
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of
the Company at December 31, 1996, (ii) the consolidated capitalization of the
Company giving effect to the issuance of the Preferred Securities hereby offered
by FB Capital Trust and application by the Company of the net proceeds from the
corresponding sale of the Junior Subordinated Debentures to FB Capital Trust as
if the sale of the Preferred Securities had been consummated on December 31,
1996, and assuming the Underwriter's over-allotment was not exercised, and (iii)
the actual and pro forma capital ratios of the Company.
<TABLE>
<CAPTION>
(Unaudited)
As Adjusted for
Sale of
Actual Preferred Securities
------ --------------------
(Dollars in Thousands)
<S> <C> <C>
INDEBTEDNESS:
FHLB Advances ................................ $13,000 $13,000
Guaranteed preferred beneficial interests in the
Company's subordinated debt (1)................ -- 10,000
SHAREHOLDERS' EQUITY:
Preferred Stock $.01 par value, 5,000,000 shares
authorized, none issued.................... -- --
Common Stock $0.01 par value - 10,000,000
shares authorized; 1,380,977 outstanding........ 14 14
Surplus.......................................... 10,496 10,496
Unrealized loss on securities available for sale,
net of income taxes............................ (411) (411)
Retained Earnings................................ 13,036 13,036
-------- --------
Total Stockholders' equity................... 23,135 23,135
-------- --------
Total Capitalization........................ $ 36,135 $ 46,135
======= =======
COMPANY CAPITAL RATIOS(2):
Equity to total assets.......................... 7.22% 7.02%
Tier 1 risk-based capital ratio(3)............... 15.10 20.14
Total risk-based capital ratio................... 16.15 21.19
Leverage ratio (4)............................... 7.38 9.77
</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 intangibles.
21
<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 ompany 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
$1,000,000 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 15th day of January, April,
July and October of each year (each a "Distribution Date"), to the holders of
the Preferred Securities at the close of business on the 1st day of January,
April, July and October (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
22
<PAGE>
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.
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 stockholder 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 stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any such Extension Period,
the Company may further 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
23
<PAGE>
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 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.
24
<PAGE>
"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 Commonwealth of Pennsylvania 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 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
25
<PAGE>
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
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 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
26
<PAGE>
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, 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.
27
<PAGE>
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
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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
(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
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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 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
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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 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
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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.
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.
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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.
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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.
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 15th day of January, April, July and October
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 1st day of January, April, July or October (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."
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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 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 stockholder 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 stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholders 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
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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 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
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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.
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
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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 stockholder 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 stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock), if at such time (i) there 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.
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
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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 or the holders of at least 25% in
aggregate outstanding principal amount of the outstanding
Junior Subordinated Debentures; or
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(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.
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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.
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.
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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 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 marshalling 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
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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 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.
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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 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
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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
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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 (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
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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 stockholders 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 stockholders of the Company in the event of
liquidation or bankruptcy of the Company are expected to be substantially the
same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material 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 does not address all tax consequences that may be applicable to a
United States Person that is a beneficial owner of Preferred Securities, nor
does it address the tax consequences to, except as noted below, (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 or foreign 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 Malizia, Spidi, Sloane & Fisch, P.C., in its capacity
as special tax counsel to the Company and the Issuer Trust ("Tax Counsel"). This
summary is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, Internal Revenue Service ("IRS") rulings and
pronouncements and judicial
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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 OR FOREIGN 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.
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
Under applicable Treasury regulations (the "Regulations"), a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The Company believes
that the likelihood of its exercising its option to defer payments of interest
is remote. Based on the foregoing, the Company believes 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 on the Junior
Subordinated Debentures in accordance with such Securityholder's method of tax
accounting.
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Under the Regulations, if the Company exercised its option to defer
any payment of interest, the Junior Subordinated Debentures would 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 Regulations have not been addressed in any published rulings or
other published interpretations by the IRS, and it is possible that 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.
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 accrue 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."
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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 as a result of the
Company's deferral of any interest payment, or otherwise, 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 since and including the date of
commencement of the first Extension Period. 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 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
other exempt Securityholders) will be reported to the IRS. "Backup" withholding
at a rate of 31%, or other rate as may be required by the Code or the Treasury
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 applicable Treasury regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
Payment of the proceeds from the disposition of 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 information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup
withholding rules will be allowed as a refund or a credit against such
Securityholder's United States federal income tax liability, provided the
required information is furnished to the IRS.
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It is anticipated that income on the Preferred Securities 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 15, 1996 would modify certain of such rules
generally with respect to payments made after December 31, 1997. 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 as to
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 such recently proposed legislation would
change the deductibility of the interest paid by the Company on the Junior
Subordinated Debentures for federal income tax purposes, and that Congress could
amend such legislation giving it retroactive effect 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. Such a change could give rise to a Tax Event,
which may permit the Company to cause a 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 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 ^, 1997, among the Company, the Issuer Trust and
Ryan, Beck (the "Underwriter"), the Issuer Trust has agreed to sell to the
Underwriter, and the Underwriter has agreed
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to purchase from the Issuer Trust $10,000,000 aggregate Liquidation Amount of
Preferred Securities at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus.
The Underwriting Agreement provides that the obligations of the
Underwriter is 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 at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less 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 $1,000,000 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 ^ $ per Preferred Security (or ^ $ ($ 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. 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.
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.
56
<PAGE>
The Company and the Issuer Trust have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act.
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 Malizia, Spidi,
Sloane & Fisch, P.C., Washington, D.C., counsel to the Company. 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. Malizia,
Spidi, Sloane & Fisch, 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 September
30, 1996 and 1995, and for each of the years in the three-year period ended
September 30, 1996, appearing in the 1996 Annual Report of the Company to its
stockholders and incorporated by reference in the Annual Report on Form 10-KSB
for the year ended September 30, 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, whose report thereon appears
therein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP refers to a change in the method
of accounting for income taxes and accounting for certain investments in debt
and equity securities as of October 1, 1993 and 1994, respectively.
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 at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp Center,
14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Such material also may be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov. 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
"FB Capital Trust," "Description of Preferred Securities,"
57
<PAGE>
"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-KSB for the fiscal year ended September 30,
1996 as amended by Form 10-KSB/A1, and the Company's Quarterly Report on Form
10-QSB for the quarter ended December 31, 1996, previously filed by the Company
with the Commission pursuant to Section 13 of the Exchange Act. Copies of the
Company's 1996 Annual Report to Stockholders and Quarterly Report on Form 10-QSB
for the quarter ended December 31, 1996 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.
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,
Fidelity Bancorp, Inc., 1009 Perry Highway, Pittsburgh, Pennsylvania 15237.
Telephone requests may be directed to (412) 367- 3300.
58
<PAGE>
=================================================== ===========================
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 prospectus 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 [Logo]
prospectus does not constitute an offer to sell or
a solicitation of any offer to buy any of the $10,000,000
securities offered hereby to any person or by
anyone in any jurisdiction in which it is
unlawful to make such offer or solicitation. FB CAPITAL TRUST
Neither the delivery of this prospectus nor any
sale made hereunder shall, under any
circumstances, create any implication that the ^% Preferred Securities
information contained herein is correct as of (Liquidation Amount $10 per
any date subsequent to the date hereof. Preferred Security)
guaranteed, as described herein, by
TABLE OF CONTENTS
PAGE FIDELITY BANCORP, INC.
----
Summary....................................... 5
Selected Consolidated Financial Data..........10
Risk Factors..................................12
FB Capital Trust..............................19
Use of Proceeds...............................20 ----------
Capitalization................................21 PROSPECTUS
Accounting Treatment..........................22 ----------
Description of Preferred Securities...........22
Description of Junior Subordinated Ryan, Beck & Co.
Debentures..................................37
Description of Guarantee......................47
Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee................49 ^ , 1997
Certain Federal Income Tax
Consequences................................51
Certain ERISA Considerations..................55
Underwriting..................................55
Validity of Securities........................57
Experts.......................................57
Available Information.........................57
Incorporation of Certain Documents By
Reference....................................58
=================================================== ===========================
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
* Registration Fees.................................... $2,600
* Legal Services (including Underwriter's counsel)..... 175,000
* Printing and Engraving............................... 25,000
* Nasdaq Listing Fees.................................. 10,600
* Accounting Fees...................................... 35,000
* Trustee Fees and Expenses............................ 20,000
* Blue Sky Fees and Expenses........................... 5,000
* Miscellaneous........................................ 6,800
-------
* TOTAL................................................ $280,000
=======
Item 16. Exhibits:
The exhibits filed as part of this Registration Statement are as
follows:
1.1 Form of Underwriting Agreement.
3.1 Articles of Incorporation of Fidelity Bancorp, Inc. **
3.2 Bylaws of Fidelity Bancorp, Inc. **
4.1 Form of Junior Subordinated Indenture.*
4.2 Form of Junior Subordinated Debenture Certificate.*
4.3 Form of 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
5.1 Opinion of Richards, Layton & Finger.
5.2 Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
8.1 Tax Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
10.1 Employment Agreement with William L. Windisch. ***
10.2 Employee Stock Ownership Plan, as amended. **
10.3 Employee Stock Compensation Program.**
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Richards, Layton & Finger (included in
Exhibit 5.1).
23.3 Consent of Malizia, Spidi, Sloane & Fisch, P.C.
(included in Exhibit 5.2).
24.1 Power of Attorney*
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 FB Capital Trust.
- -------------------
* Previously filed
** Incorporated by reference to the registrant's Registration Statement on
Form S-4, file no. 33-55384.
*** Incorporated by reference to registrant's Annual Report on Form 10-KSB
for the year ended September 30, 1996 filed with the Securities and
Exchange Commission on December 23, 1996.
<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 Pittsburgh, Pennsylvania, as of April 18, 1997.
FIDELITY BANCORP, INC.
By: /s/William L. Windisch
---------------------------------------------------
William L. Windisch
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated as of April 18, 1997.
/s/William L. Windisch* /s/Richard G. Spencer*
- ------------------------------------- ---------------------------------------
William L. Windisch Richard G. Spencer
President and Chief Executive Officer Vice President and Treasurer (Principal
(Principal Executive Officer) Financial and Accounting Officer)
/s/John R. Gales* /s/Robert F. Kastelic*
- ------------------------------------- ---------------------------------------
John R. Gales Robert F. Kastelic
Director Director
/s/Oliver D. Keefer* /s/Charles E. Nettrour*
- ------------------------------------- ---------------------------------------
Oliver D. Keefer Charles E. Nettrour
Director Director
/s/Joanne Ross Wilder*
---------------------------------------
Joanne Ross Wilder
Director
* By /s/William L. Windisch
-------------------------------
William L. Windisch
as Attorney-in-Fact
for each of the persons
indicated
<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 Pittsburgh, Pennsylvania, as of April 18, 1997.
FB CAPITAL TRUST
By: FIDELITY BANCORP, INC.
as Depositor
By: /s/William L. Windisch
---------------------------------------
William L. Windisch
President and Chief Executive Officer
Exhibit 1.1
<PAGE>
FB CAPITAL TRUST
(a Delaware business trust)
1,000,000 Preferred Securities
_____% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
__________, 1997
Ryan, Beck & Co., Inc.
80 Main Street
West Orange, New Jersey 07052
Ladies and Gentlemen:
FB 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 Fidelity Bancorp, Inc., a Pennsylvania 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 in such amounts as are set forth in Schedule A hereto
opposite the name of the Underwriter, 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 100,000 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 ____________, 1997 (the "Trust Agreement"), among the
Company, as depositor, and, together with the Trust, the "Offerors," and Bankers
Trust Company ("Trust Company"), a New York
<PAGE>
banking corporation, as property trustee ("Property Trustee") and as Delaware
trustee ("Delaware Trustee") and William L. Windisch and Richard G. Spencer (the
"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 Preferred Securities
Guarantee Agreement dated as of ____________, 1997 (the "Guarantee Agreement")
between the Company and the Trust Company, as guarantee (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 ____________, 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-_______ and 333- ______ -01) covering 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 and including documents
filed after such effective time under the Securities Exchange Act of 1934, as
amended (the "1934 Act") is herein called the "Registration Statement", and the
prospectus, including the documents incorporated by reference therein pursuant
2
<PAGE>
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 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 a selected
dealer agreement, the form of which is set forth as Exhibit B to this Agreement.
Section 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant
to and agree with each of 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 all times subsequent thereto up to the
Closing Time referred to below and with respect to Option Securities,
up to 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 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 this representation and warranty does not 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 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 1934 Act, and the rules and regulations
3
<PAGE>
of the Commission thereunder (the "1934 Act Regulations") and, when
read together and with the other information in the Prospectus, at the
time the Registration Statement becomes effective and at all times
subsequent thereto up to 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 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 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 and the consolidated results of operations and cash flows of
the Company and its subsidiaries for the periods specified. 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.
4
<PAGE>
(vi) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania with corporate power and authority under such laws to own,
lease and operate its properties and conduct its business as described
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, or 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 savings 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
Fidelity Savings Bank (the "Bank") are insured by the Savings
Association 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 Pennsylvania chartered savings bank duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania 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 Bank 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, the Company does not have any
subsidiaries.
(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 description conforms to the rights set forth in the
instruments defining the same. Subsequent to such date, the Company has
not issued and, other than under the Company's
5
<PAGE>
existing option plans and employee stock ownership plan, is not
obligated to issue, any other shares of capital stock; without limiting
the generality of the foregoing and except for options to purchase
_______ shares of Common Stock granted pursuant to the Company's 1993
Directors' Stock Option Plan and except for options to purchase in the
aggregate __________ shares of Common Stock granted pursuant to the
Company's other option plans there are no options, warrants, calls,
employee benefit or other plans, preemptive rights or commitments of
any character relating to the authorized but unissued capital stock or
any other equity security of the Company or the Bank, except as
disclosed in Note 10 to the consolidated financial statements in the
Prospectus.
(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
and, when executed by the proper officers 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 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 to
the statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments
defining the same; the holders of the Preferred Securities (the
"Securityholders") 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 securityholder 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 and non-assessable undivided
beneficial interests in the assets of the Trust and will conform 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 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
6
<PAGE>
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.
(xiv) The issue 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 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; 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 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; 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 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
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qualifications as have already been obtained, or as may be required
under the 1993 Act or the 1993 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 or, except as disclosed in writing to the Underwriter, was
offered or sold in violation of the 1933 Act.
(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 $ per share quarterly dividend paid on 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
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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
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
could 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.
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(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.
(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 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 all Federal, state and local income, franchise or other tax
returns required to be filed and have made timely payments of all taxes
due and payable in respect of 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.
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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 an
additional 100,000 Preferred 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 you to the Company setting forth the number of Option Securities as to
which the Underwriter are 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 exercise of said option, 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, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
office
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<PAGE>
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. The purchase price may be paid by a single wire transfer from
the Underwriter from which the Underwriter deducts the Commissions and fees owed
to the Underwriter, which shall be deemed to be the equivalent of simultaneous
wire transfers from the various parties due hereunder.
(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 you as many
signed and conformed copies of the Registration Statement as originally filed
and of each amendment thereto,
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whether filed before or after the Registration Statement becomes effective,
copies of all exhibits and documents filed therewith (including documents
incorporated by 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 you 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 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.
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(g) The Company will make generally available (within the
meaning of Rule 158) to its securityholders, the Underwriter and the
Securityholders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement 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 but not later than the first day of
the Company's fiscal quarter next following such effective date.
(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 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 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, a hard-bound copy of the documents
used in connection with the issuance of the Preferred Securities.
(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 forty-five 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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(b) In addition to the commissions due to the Underwriter
under the Price Determination Agreement, at the Closing Time (and at the Option
Closing Date with respect to the Option Securities) and simultaneous with the
payment of the purchase price, the Company shall pay the Underwriter an advisory
fee equal to 1% of the gross proceeds of the Offering.
If (i) the Closing Time does not occur on or before December
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 their
reasonable out-of-pocket expenses, as set forth in this Section 4, including the
reasonable fees and disbursements of counsel for the Underwriter.
Section 5. Conditions of Underwriter' Obligations. The
obligations of the Underwriter to purchase and pay for the Preferred Securities
that they have respectively agreed to purchase pursuant to this Agreement are
subject to the accuracy 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 your consent, 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 you
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' 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
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 43OA).
(b) At the Closing Time, you shall have received:
(i) The favorable opinion, dated as of Closing Time, of
Malizia, Spidi, Sloane & Fisch, 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 C.
(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 D.
(iii) The favorable opinion, dated as of Closing Time, of
Seward & Kissel, counsel for the Indenture Trustee, in form and
substance satisfactory to counsel for the Underwriter, substantially in
the form set forth in Exhibit E.
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(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
Malizia, Spidi, Sloane & Fisch, P.C., special tax counsel for the
Offerors, in form and substance satisfactory to the Underwriter.
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
Maluzi, Spidi, Sloane & Fisch, 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 you and
your 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 its
subsidiaries, considered as one enterprise, other than as set forth in the
Prospectus, (iv) each of the Offerors shall have complied 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
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<PAGE>
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, you shall have received from KPMG Peat Marwick LLP a letter or letters,
dated such date, in form and substance satisfactory to you, confirming that they
are independent certified public accountants with respect to the Company (and
BNAB, as applicable) 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 September 30, 1996 and 1995, and for each of the years in the three
year period ended September 30, 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 September 30,
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, advances from the
Federal Home Loan Bank, real estate owned, or 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 September 30, 1996 included in the
Registration Statement; or
(B) for the period from ____________, 1997 to a
specified date not more than three days prior to the date of
this Agreement, there was any decrease in 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 or non-interest expense, 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
18
<PAGE>
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 pages ____ and ____ 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 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 two 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
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 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.
(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 exercise their 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
19
<PAGE>
date), to the performance by the Offerors of their obligations hereunder and to
the receipt by you 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 Malizia, Spidi, Sloane &
Fisch, P.C., counsel for the Company, addressed to you and
dated the Option Closing Date, in form satisfactory to Pitney,
Hardin, Kipp & Szuch, your counsel, 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 and counsel
for the Indenture Trustee, addressed to you and dated the
Option Closing Date, in form satisfactory to Pitney, Hardin,
Kipp & Szuch, your counsel, 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 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; and
(5) Letters from KPMG Peat Marwick LLP addressed to
the Underwriter and dated the Option Closing Date, in form and
substance satisfactory to the Underwriter and substantially
the same in 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, and 10
shall remain in effect.
Section 6. Indemnification.
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(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 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 if the person asserting any such losses, claims, damages or
liabilities 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
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<PAGE>
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 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
22
<PAGE>
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 discount retained
by it applicable 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 effect the indemnification 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 deem 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) You 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' 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
23
<PAGE>
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 either
federal or Pennsylvania 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 your 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 you
reasonably determine (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.
(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
(Delivery to)
P.O. Box 1945
Morristown, New Jersey 07962-1945
(Mail to)
200 Campus Drive
Florham Park, New Jersey 07932
If to the Company or the Trust:
Fidelity Bancorp, Inc.
1009 Perry Highway
Pittsburgh, Pennsylvania 15237-2105
24
<PAGE>
Attention: William L. Windisch, President and Chief Executive Officer
with a copy to:
John J. Spidi, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square, Suite 700 East
1301 K Street, N.W.
Washington, D.C. 20005
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 trustees of the 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 Newark, 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 to 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.
25
<PAGE>
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 between the Company and the
Underwriter in accordance with its terms.
Very truly yours,
FB CAPITAL TRUST
By:_________________________________
Name:
Title: Administrative Trustee
FIDELITY BANCORP, INC.
By:_________________________________
Name: William L. Windisch
Title: President and Chief Executive Officer
Confirmed and accepted as of
the date first above written:
RYAN, BECK & CO., INC.
By:______________________________
Name: Bruce G. Miller
Title: Senior Vice President
26
<PAGE>
EXHIBIT A
FB CAPITAL TRUST
(a Delaware business trust)
1,000,000 Preferred Securities
___% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security)
PRICE DETERMINATION AGREEMENT
-----------------------------
____________, 1997
Ryan, Beck & Co., Inc.
80 Main Street
West Orange, New Jersey 07052
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated the date hereof
(the "Underwriting Agreement") among FB Capital Trust, a Delaware business
trust, (the "Trust"), Fidelity Bancorp, Inc. (the "Company" and together with
the Trust, the "Offerors") and the Underwriter named above (the "Underwriter").
The Underwriting Agreement provides for the purchase by the Underwriter from the
Trust, subject to the terms and conditions set forth therein, of 1,000,000
shares, subject to a 100,000 adjustment (to cover over-allotments, if any), of
the _____% Cumulative Trust Preferred Securities of the Trust (the "Preferred
Securities"). This Agreement is the Price Determination Agreement referred to in
the Underwriting Agreement.
Pursuant to Section 2 of the Underwriting Agreement, the Offerors agree
with the Underwriter as follows:
1. The public offering price per Preferred Security shall
be $10.
2. The purchase price for the Preferred Securities to be
paid by the Underwriter shall be $10 per Preferred Security.
3. The commission per Preferred Security to be paid by
the Company to the Underwriter for their commitments hereunder shall
be $_____ per Preferred Security.
4. The interest rate on the Preferred Securities shall be
_____% per annum.
<PAGE>
The Offerors represent and warrant to each of the Underwriter that the
representations and warranties of the Offerors set forth in Section 1(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
This Agreement shall be governed by the laws of the State of New
Jersey.
If the foregoing is in accordance with the understanding of the
Underwriter of the agreement between the Underwriter and the Offerors, please
sign and return to the Company a counterpart hereof, whereupon this instrument,
along with all counterparts and together with the Underwriting Agreement, shall
be a binding agreement between the Underwriter and the Offerors in accordance
with its terms and the terms of the Underwriting Agreement.
Very truly yours,
FB CAPITAL TRUST
By: ____________________________________________
Name:
Title: Administrative Trustee
FIDELITY BANCORP, INC.
By: ____________________________________________
Chairman of the Board
Chief Executive Officer
Confirmed and accepted as of
the date first above written:
RYAN, BECK & CO., INC.
By: __________________________
Bruce G. Miller
Senior Vice President
2
<PAGE>
EXHIBIT B
FB CAPITAL TRUST
1,000,000 Preferred Securities
_____% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security)
SELECTED DEALER AGREEMENT
___________ __, 1997
Ladies and Gentlemen:
FB Capital Trust, a Delaware business trust (the "Trust") and Fidelity
Bancorp, Inc., a Pennsylvania corporation (the "Company" and together with the
Trust, the "Offerors"), are offering for sale to the public 1,000,000 shares,
subject to a 100,000 share option (to cover over-allotments, if any) of the
Trust's __% Cumulative Trust Preferred Securities (the "Preferred Securities").
1. The Underwriter named in the enclosed Prospectus has agreed to
purchase from the Trust 1,000,000 Preferred Securities and has an option to
purchase from the Trust any or all of the 100,000 Preferred Securities to cover
over-allotments, if any. The purchase is subject to the terms of an agreement
among the Underwriter and the Offerors (the "Underwriting Agreement"). The
Preferred Securities are more fully described in the Prospectus. The Underwriter
is offering, subject to the terms and conditions stated herein and in the
Underwriting Agreement, a portion of the Preferred Securities to certain dealers
(the "Selling Group") as principals, subject to the terms and conditions stated
herein and in the Underwriting Agreement, subject to modification or
cancellation of the offering without notice, at the initial public offering
price per Preferred Security hereinafter set forth and on the cover page of the
Prospectus (the "Authorized Public Offering Price") less concessions (the
"Selling Concessions").
Authorized Public Offering
Price: $10 per Preferred Security
Dealer's Selling Concession:
$____ per Preferred Security, payable or
allowable as set forth below.
Reallowances: You may reallow not in excess of $____ per
Preferred Security as a Selling Concession
to dealers who are members in good standing
of the National Association of Securities
Dealers, Inc. (the "NASD").
Delivery and Payment: Payment for the Preferred Securities sold to
you hereunder is to be made on ____________,
1997, or such other date as we advise you
<PAGE>
and in such manner as we advise you, against
delivery of the Preferred Securities, which
shall be paid for in full at the applicable
Authorized Public Offering Price or, if we
so advise you, at such price less the
applicable Selling Concession. If payment is
at the applicable Authorized Public Offering
Price, the applicable Selling Concession
will be paid to you upon termination of this
Agreement.
Termination: This Agreement will terminate 30 days from
its date unless sooner terminated or
extended by us.
2. Members of the Selling Group may immediately offer Preferred
Securities for sale and take orders therefor at the Authorized Public Offering
Price, subject to confirmation and allotment by us. We, in turn, are prepared to
receive orders subject to confirmation and allotment by us. We reserve the right
to reject any order in whole or in part or to allot less than the number of
Preferred Securities applied for. Orders transmitted by telephone should be
confirmed by letter or facsimile transmission.
3. By becoming a member of the Selling Group, you agree (a) to take and
pay for Preferred Securities allotted and confirmed to you, (b) not to use any
such Preferred Securities to reduce or cover any short position you may have,
(c) to comply with Rules 2730, 2740, 2750, and 2810, and related interpretive
material of the NASD Conduct Rules, and (d) upon our request, to advise us of
the number of Preferred Securities purchased from us hereunder remaining unsold
by you and to resell to us any and all such unsold Preferred Securities at the
prices stated above, less all of such part of the concession allowed you as we
may determine.
4. It is assumed that the Preferred Securities sold by you will be
effectively placed for investment. If we purchase in the open market, for the
account of the Underwriter, Preferred Securities sold to you and not effectively
placed for investment, we may not allow you the dealer's concession on the
Preferred Securities so purchased or, if such concession has theretofore been
allowed you, you agree to pay it to us on demand.
5. The Underwriter may make purchases and sales of the Preferred
Securities and, in arranging for sales, to over-allot. You agree that until
termination of this Agreement, you will not make purchases or sales of any
Preferred Securities except (a) pursuant to this Agreement, (b) purchases
authorized by us, or (c) in the ordinary course of business as broker or agent
for a customer pursuant to an unsolicited order.
6. Additional copies of the Prospectus will be supplied to you in
reasonable quantity upon request.
7. The Preferred Securities are offered by us for delivery when, as,
and if sold and accepted by the Underwriter and subject to the terms stated
herein and in the Prospectus, to our right to vary the concession and terms of
the offering after their release for public sale, to the approval of counsel as
to legal matters and to withdrawal, cancellation or modification of the offer
without notice.
8. You represent that you are a member in good standing of the NASD or,
if a foreign dealer, that you will conform to the Conduct Rules of the NASD in
making sales in the United States. You represent that you will comply with the
"Free-Riding and Withholding" interpretation (IM-2110-1) of the Board of
Governors of the NASD. You are not authorized to give any information or make
any representations other than as contained in the Prospectus, or to act as
agent for the Underwriter or for us. Nothing will
2
<PAGE>
constitute the Selling Group as an association or other separate entity or
partners with the Underwriter, with us, or with each other, but you will be
responsible for your share of any liability or expense based on any claim to the
contrary. Neither we nor the Underwriter will be under any liability to you,
except for obligations expressly assumed in this Agreement and any liabilities
under the Securities Act of 1933, as amended. No obligations on our part will be
implied or inferred herefrom.
9. The Underwriter will not have any responsibility with respect to the
right of any dealer to sell the Preferred Securities in any jurisdiction,
notwithstanding any information that we may furnish in that connection. Upon
application to us, you will be informed as to the states in which we have been
advised by counsel that the Preferred Securities have been qualified for sale or
are exempt under the respective Blue Sky or securities laws of such states. You
agree that you will not offer or sell such Preferred Securities in violation of
any applicable law including, but not limited to, the Blue Sky or securities
laws of any state or jurisdiction in which such Preferred Securities are offered
or sold by you.
10. This Agreement will be governed and construed in accordance with
the laws of the State of New Jersey.
If you desire to become a member of the Selling Group, please advise us
to that effect immediately by facsimile transmission ((201) 325-0600, attention
________________) and sign and return the enclosed copy of this letter to Ryan,
Beck & Co., Inc., 80 Main Street, West Orange, New Jersey 07052.
Very truly yours,
RYAN, BECK & CO., INC.
By: ___________________________________
Name:
Title:
Confirmed as of the above date:
_________________________________
(Firm Name)
_________________________________
(Street Address)
_________________________________
(City, State and Zip Code)
By: _____________________________
_________________________________
(Title)
3
Exhibit 4.7
<PAGE>
CERTIFICATE OF TRUST
OF
FB CAPITAL TRUST
This Certificate of Trust is being executed as of March 31,
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 "FB 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 all of the
trustees of the Trust, have duly executed this Certificate of Trust as of the
day and year first above written.
BANKERS TRUST (DELAWARE)
as Delaware Trustee
By: /s/ M. Lisa Wilkins
------------------------------------
Name: M. Lisa Wilkins
Title: Assistant Secretary
Exhibit 5.1
<PAGE>
[Richards, Layton & Finger Letterhead]
April 18, 1997
FB Capital Trust
c/o Fidelity Bancorp, Inc.
1009 Perry Highway
Pittsburgh, PA 15237-2105
Re: FB Capital Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel for FB 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 March 31, 1997 (the
"Certificate"), as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on April 1, 1997;
(b) The Trust Agreement of the Trust, dated as of March 31, 1997, among
Fidelity Bancorp, Inc., a Pennsylvania 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 Preferred Securities
of the Trust representing undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as filed by the Company and the Trust with the Securities and
Exchange Commission on April 3, 1997;
(d) A Certificate of Good Standing for the Trust, dated April 1, 1997,
obtained from the Secretary of State;
<PAGE>
FB Capital Trust
April 18, 1997
Page 2
(e) A form of Amended and Restated Trust Agreement, 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.
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.
<PAGE>
FB Capital Trust
April 18, 1997
Page 3
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we hare 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. Section
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
-----------------------------
Exhibit 5.2
<PAGE>
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
Attorneys at Law
One Franklin Square
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Telephone: (202) 434-4660
Telecopier: (202) 434-4661
April 18, 1997
Fidelity Bancorp, Inc.
1009 Perry Highway
Pittsburgh, PA 15237
Gentlemen/Ladies:
We have acted as counsel to Fidelity Bancorp, Inc. (the "Company") in
connection with the preparation and filing by the Company and FB Capital Trust
(the "Trust") of a registration statement (the "Registration Statement") on Form
S-2 under the Securities Act of 1933, as amended (the "Act"), with respect to
the offer and sale of certain of the Trust's Preferred Securities (liquidation
amount $10 per Preferred Security) (the "Preferred Securities") and certain of
the Company's Junior Subordinated Debentures (the "Debentures") and the related
Guarantee Agreement by and between the Company and Bankers Trust Company, as
trustee (the "Guarantee"). In connection therewith, you have requested our
opinion as to certain matters referred to below.
In our capacity as such counsel, we have familiarized ourselves with
the actions taken by the Company in connection with the registration of the
Debentures and the Guarantee. We have examined the originals or certified copies
of such records, agreements, certificates of public officials and others, and
such other documents, including the Registration Statement and the amendment
thereto, as we have deemed relevant and necessary as a basis for the opinions
hereinafter expressed. 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, and the authenticity of the
originals of such latter documents. We are attorneys admitted to practice before
the courts of the United States and the courts of the Commonwealth of
Pennsylvania and, accordingly, we express no opinion with respect to matters
governed by the laws of any jurisdiction other than the federal laws of the
United States or the internal laws of the Commonwealth of Pennsylvania.
Based upon and subject to the foregoing, we are of the opinion that,
when issued (with respect to the Debentures), or executed and delivered (with
respect to the Guarantee), as set forth 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 by bankruptcy, insolvency, moratorium,
reorganization or
<PAGE>
Fidelity Bancorp, Inc.
April 18, 1997
Page 2
similar laws relating to or affecting the enforcement of 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 or
by general equity principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
We consent to the references to this opinion and to Malizia, Spidi,
Sloane & Fisch, P.C. in the Prospectus included as part of the Registration
Statement under the caption "Validity of Securities," and to the inclusion of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/Malizia, Spidi, Sloane & Fisch, P.C.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
Exhibit 8.1
<PAGE>
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
Attorneys at Law
One Franklin Square
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Telephone: (202) 434-4660
Telecopier: (202) 434-4661
April 18, 1997
Board of Directors
Fidelity Bancorp, Inc.
1009 Perry Highway
Pittsburgh, PA 15237-2105
Dear Board Members:
We have acted as special tax counsel to Fidelity Bancorp, Inc. (the
"Company") and to FB Capital Trust (the "Trust") in connection with the
registration statement of the Company and the Trust on Form S-2 (Registration
Nos. 333-24509 and 333-24509-01, for the Company and the Trust, respectively),
as amended ("Registration Statement"), of which a prospectus ("Prospectus") is a
part, filed by the Company and the Trust with the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended. This opinion
is furnished pursuant to the requirements of Item 601(b)(8) of Regulation S-K.
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, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as copies, the authenticity
of such copies and the accuracy and completeness of all corporate 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, we
hereby adopt and incorporate by reference the opinion set forth in the
Prospectus under the caption "Certain Federal Income Tax Consequences."
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 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
<PAGE>
Board of Directors
Fidelity Bancorp, Inc.
April 18, 1997
Page 2
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
Service, 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 hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the Prospectus
under the caption "Certain Federal Income Tax Consequences."
Sincerely,
/s/Malizia, Spidi, Sloane & Fisch, P.C.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
Exhibit 25.1
<PAGE>
- --------------------------------------------------------------------------------
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>
<CAPTION>
<S> <C> <C> <C>
FIDELITY BANCORP, INC. FB CAPITAL TRUST
(Exact name of Registrant as specified (Exact name of Registrant as specified
in its charter) in its charter)
PENNSYLVANIA 25-1705405 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.)
1009 PERRY HIGHWAY c/o FIDELITY BANCORP, INC.
PITTSBURGH, PA 15237 1009 PERRY HIGHWAY
(Address, including zip code PITTSBURGH, PA 15237
of principal executive offices) (Address, including zip code of
principal executive offices)
</TABLE>
Preferred Securities of FB Capital Trust
Junior Subordinated Debentures of Fidelity Bancorp, Inc.
Guarantee of Fidelity Bancorp, Inc. 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,
copy attached.
-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 December
31, 1996.
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 15th day
of April, 1997.
BANKERS TRUST COMPANY
By: /s/Kevin Weeks
------------------------------------------------
Kevin Weeks
Assistant Treasurer
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/96 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
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks December 31, 1996
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
<TABLE>
<CAPTION>
-------------------------
| C400 |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
<S> <C> <C> <C>
ASSETS | / / / / / / / / / / / / / / / / / / |
1. Cash and balances due from depository institutions (from Schedule RC-A): | / / / / / / / / / / / / / / / / / / |
a. Noninterest-bearing balances and currency and coin(1) ................ | 0081 1,545,000 |1.a.
b. Interest-bearing balances(2) ......................................... | 0071 2,494,000 |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 4,368,000 |2.b.
3 Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and Agreement | / / / / / / / / / / / / / / / / / / |
subsidiaries, and in IBFs: | / / / / / / / / / / / / / / / / / / |
a. Federal funds sold ................................................. | 0276 3,651,000 |3.a.
b. Securities purchased under agreements to resell .................... | 0277 3,230,000 |3.b.
4. Loans and lease financing receivables: | / / / / / / / / / / / / / / / / / / |
a. Loans and leases, net of unearned income (from Schedule RC-C)
RCFD 2122 27,239,000 | / / / / / / / / / / / / / / / / / / |4.a.
b. LESS: Allowance for loan and lease losses.RCFD 3123 917,000 | / / / / / / / / / / / / / / / / / / |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 28,889,000 |4.d.
5. Assets held in trading accounts ......................................... | 3545 38,272,000 |5.
6. Premises and fixed assets (including capitalized leases) ................ | 2145 914,000 |6.
7. Other real estate owned (from Schedule RC-M) ............................ | 2150 213,000 |7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) | 2130 184,000 |8.
9. Customers' liability to this bank on acceptances outstanding ............ | 2155 597,000 |9.
10. Intangible assets (from Schedule RC-M) .................................. | 2143 17,000 |10.
11. Other assets (from Schedule RC-F) ....................................... | 2160 6,056,000 |11.
12. Total assets (sum of items 1 through 11) ................................ | 2170 90,430,000 |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>
<C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/96 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
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued ____________________________________
Dollar Amounts in Thousands | / / / / / / / / Bil Mil Thou __ __|
- ---------------------------------------------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
LIABILITIES | / / / / / / / / / / / / / / / / |
13. Deposits: | / / / / / / / / / / / / / / / / |
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) | RCON 2200 11,985,000 |13.a.
(1) Noninterest-bearing(1) .....................RCON 6631 2,734,000....... | / / / / / / / / / / / / / / / / |13.a.(1)
(2) Interest-bearing ............................RCON 6636 6,657,000....... | / / / / / / / / / / / / / / / / |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E part II) | RCFN 2200 21,619,000 |13.b.
(1) Noninterest-bearing ........................RCFN 6631 654,000....... | / / / / / / / / / / / / / / / / |13.b.(1)
(2) Interest-bearing ...........................RCFN 6636 22,731,000....... | / / / / / / / / / / / / / / / / |13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in | / / / / / / / / / / / / / / / / |
domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs: | / / / / / / / / / / / / / / / / |
a. Federal funds purchased ..................................................... | RCFD 0278 6,560,000 |14.a.
b. Securities sold under agreements to repurchase .............................. | RCFD 0279 120,000 |14.b.
15. a. Demand notes issued to the U.S. Treasury .................................... | RCON 2840 0 |15.a.
b. Trading liabilities ......................................................... | RCFD 3548 19,172,000 |15.b.
16. Other borrowed money: | / / / / / / / / / / / / / / / / |
a. With original maturity of one year or less .................................. | RCFD 2332 15,909,000 |16.a.
b. With original maturity of more than one year ................................ | RCFD 2333 3,097,000 |16.b.
17. Mortgage indebtedness and obligations under capitalized leases ................... | RCFD 2910 31,000 |17.
18. Bank's liability on acceptances executed and outstanding ......................... | RCFD 2920 597,000 |18.
19. Subordinated notes and debentures ................................................ | RCFD 3200 1,229,000 |19.
20. Other liabilities (from Schedule RC-G) ........................................... | RCFD 2930 5,235,000 |20.
21. Total liabilities (sum of items 13 through 20) ................................... | RCFD 2948 85,554,000 |21.
| / / / / / / / / / / / / / / / / |
22. Limited-life preferred stock and related surplus ................................. | RCFD 3282 0 |22.
EQUITY CAPITAL | / / / / / / / / / / / / / / / / |
23. Perpetual preferred stock and related surplus .................................... | RCFD 3838 600,000 |23.
24. Common stock ..................................................................... | RCFD 3230 1,001,000 |24.
25. Surplus (exclude all surplus related to preferred stock) ......................... | RCFD 3839 540,000 |25.
26. a. Undivided profits and capital reserves ...................................... | RCFD 3632 3,131,000 |26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ...... | RCFD 8434 ( 14,000) |26.b.
27. Cumulative foreign currency translation adjustments .............................. | RCFD 3284 ( 382,000) |27.
28. Total equity capital (sum of items 23 through 27) ................................ | RCFD 3210 4,876,000 |28.
29. Total liabilities, limited-life preferred stock, and equity capital
(sum of items 21, 22, and 28) .................................................... | RCFD 3300 90,430,000 |29.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
<S> <C> <C> <C>
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 Number
auditors as of any date during 1995 ........................ | RCFD 6724 N/A | M.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified 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
<PAGE>
BY-LAWS
BY-LAWS
FEBRUARY 18, 1997
Bankers Trust Company
New York
<PAGE>
BY-LAWS
BY-LAWS
of
Bankers Trust Company
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons
<PAGE>
BY-LAWS
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such a meeting.
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
ARTICLE III
COMMITTEES
<PAGE>
BY-LAWS
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
<PAGE>
BY-LAWS
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer, and shall also elect a President, a
Senior Vice Chairman, one or more Vice Chairmen, one or more Executive Vice
Presidents, one or more Senior Managing Directors, one or more Managing
Directors, one or more Senior Vice Presidents, one or more Vice Presidents, one
or more General Managers, a Secretary, a Controller, a Treasurer, a General
Counsel, one or more Associate General Counsels, a General Auditor, a General
Credit Auditor, and one or more Deputy Auditors, who need not be directors. The
officers of the corporation may also include such other officers or assistant
officers as shall from time to time be elected or appointed by the Board. The
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman, may from time to time
appoint assistant officers. All officers elected or appointed by the Board of
Directors shall hold their respective offices during the pleasure of the Board
of Directors, and all assistant officers shall hold office at the pleasure of
the Board or the Chairman of the Board or the Chief Executive Officer or, in
their absence, the President, the Senior Vice Chairman or any Vice Chairman. The
Board of Directors may require any and all officers and employees to give
security for the faithful performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
<PAGE>
BY-LAWS
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company which he deems advisable or which the Audit Committee
may request. Additionally, the General Auditor shall have the duty of reporting
independently of all officers of the Company to the Audit Committee at least
quarterly on any matters concerning the internal audit program and the adequacy
of the system of internal controls of the Company that should be brought to the
attention of the directors except those matters responsibility for which has
been vested in the General Credit Auditor. Should the General Auditor deem any
matter to be of special importance, he shall report thereon forthwith to the
Audit Committee. The General Auditor shall report to the Chief Financial Officer
only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right
<PAGE>
BY-LAWS
of any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
which any director or officer of the Company is servicing or served in any
capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer or the President, and (ii) only if and to the extent that, after making
such efforts as the Chairman of the Board, the Chief Executive Officer or the
President shall deem adequate in the circumstances, such person shall be unable
to obtain indemnification from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding,
<PAGE>
BY-LAWS
to the extent permitted by law, or on the basis of the applicable law in effect
at the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
<PAGE>
BY-LAWS
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
I, __Dorothy Robinson___, Assistant Secretary of Bankers Trust Company, New
York, New York, hereby certify that the foregoing is a complete, true and
correct copy of the By-Laws of Bankers Trust Company, and that the same are in
full force and effect at this date.
BY: ___/s/Dorothy Robinsion______
ASSISTANT SECRETARY
DATED: April 15, 1997
