<PAGE>
1,000,000 TRUST PREFERRED SECURITIES
INDEPENDENT CAPITAL TRUST II
11% CUMULATIVE TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
[LOGO]
INDEPENDENT BANK CORP.: We are a bank holding company that offers, through
our subsidiary Rockland Trust Company, a full range of commercial and retail
banking and trust services to our customers in Southeastern Massachusetts.
INDEPENDENT CAPITAL TRUST II: Independent Capital Trust II is a subsidiary
of Independent Bank Corp. and a statutory business trust created under Delaware
law.
THE OFFERING: In connection with this offering, the Trust will sell Trust
Preferred Securities to the public and Common Securities to us; use the proceeds
from these sales to buy an equivalent principal amount of 11% Junior
Subordinated Debentures due January 31, 2030 issued by us, and distribute the
future cash payments it receives on the Junior Subordinated Debentures to the
holders of the Trust Preferred Securities and Common Securities.
- For each Trust Preferred Security that you own, you will receive
cumulative cash distributions at an annual rate of 11% on March 31,
June 30, September 30 and December 31 of each year, beginning March 31,
2000. Distribution payments to you may be deferred for up to
20 consecutive calendar quarters.
- The Trust Preferred Securities mature on January 31, 2030.
- The Trust may redeem the Trust Preferred Securities, at a redemption price
of $25 per Trust Preferred Security on or after January 31, 2002, plus
accrued and unpaid distributions, and under certain other circumstances.
- The Trust Preferred Securities have been approved for listing on the
Nasdaq National Market under the symbol "INDBO."
THERE ARE CERTAIN RISKS YOU SHOULD CONSIDER BEFORE INVESTING IN THE TRUST
PREFERRED SECURITIES. SEE "RISK FACTORS" BEGINNING ON PAGE 9.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC COMMISSION TRUST
<S> <C> <C> <C>
Per Trust Preferred Security.......... $25.00 (1) $25.00
Total................................. $25,000,000 (1) $25,000,000
</TABLE>
(1) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be invested in the Junior Subordinated Debentures, we,
Independent Bank Corp., as issuer of the Junior Subordinated Debentures,
have agreed to pay the underwriter $0.875 per Trust Preferred Security (or
$875,000 ($1,006,250 if the underwriter's over-allotment option is exercised
in full) in the aggregate) as compensation.
We and the Trust have granted the underwriter a 30-day option to purchase up
to 150,000 additional Trust Preferred Securities on the same terms and
conditions discussed above solely to cover over-allotments, if any. If this
option is exercised in full, the total Public Offering Price and Proceeds to the
Trust will be $28,750,000 and $28,750,000.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF ANYONE'S INVESTMENT IN THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OBLIGATIONS OF ANY
BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
LEGG MASON WOOD WALKER
INCORPORATED
THE DATE OF THIS PROSPECTUS IS JANUARY 26, 2000
<PAGE>
[LOGO]
. Current Bank and Trust Branches
5 Pending Branch Acquisition Locations
We have not, and the underwriter has not, authorized any other person to provide
you with information other than as provided in this prospectus. This prospectus
is not an offer to sell, nor is it seeking an offer to buy, these Trust
Preferred Securities in any state where the offer or sale is not permitted. The
information in this prospectus is complete and accurate as of the date on the
front cover, but the information may have changed since that date.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Forward Looking Statements.................................. ii
Where You Can Find More Information......................... ii
Summary..................................................... 1
Selected Consolidated Financial and Other Data.............. 8
Risk Factors................................................ 9
Ratios of Earnings to Fixed Charges......................... 15
Use of Proceeds............................................. 15
Capitalization.............................................. 16
Independent Capital Trust II................................ 17
Description of Trust Preferred Securities................... 18
Description of Junior Subordinated Debentures............... 32
Description of Guarantee.................................... 44
Book-Entry Issuance......................................... 46
Relationship Among the Trust Preferred Securities, the
Junior Subordinated
Debentures and the Guarantee.............................. 48
Certain Federal Income Tax Consequences..................... 50
ERISA Considerations........................................ 54
Underwriting................................................ 55
Legal Matters............................................... 56
Experts..................................................... 56
</TABLE>
------------------------
i
<PAGE>
FORWARD LOOKING STATEMENTS
This document contains and incorporates by reference certain forward looking
statements regarding our financial condition, results of operations and
business. These statements are not historical facts and include statements about
our
- confidence,
- strategies about earnings,
- new and existing programs and products,
- relationships,
- opportunities,
- technology, and
- market conditions.
You may identify these statements by looking for
- forward-looking terminology, like "expect," "believe" or "anticipate;"
- expressions of confidence like "strong" or "on-going;" or
- similar statements or variations of those terms.
These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from the results the forward-looking
statements contemplate because of, among others, the following possibilities:
- competitive pressure in the banking and financial services industry
increases significantly;
- changes occur in the interest rate environment; and
- general economic conditions, either nationally, in New England or in the
state of Massachusetts, are less favorable than expected.
------------------------
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Our SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any documents we file with the
SEC at its public reference facilities at 450 Fifth Street, NW, Washington, DC
20549, 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You
can also obtain copies of the documents at prescribed rates by writing to the
Public Reference Section of the SEC at 450 Fifth Street, NW, Washington, DC
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference facilities. Our SEC filings are also available
at the office of the Nasdaq National Market. For further information on
obtaining copies of our public filings at the Nasdaq National Market, you should
call (212) 656-5060.
The Trust is not currently subject to the information reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Trust will become subject to such requirements upon the effectiveness of the
registration statement that contains this prospectus, although it intends to
seek and expects to receive an exemption therefrom.
ii
<PAGE>
We and the Trust have filed with the SEC a registration statement on
Form S-3 (together with all amendments thereto, the "registration statement"),
of which this prospectus is a part, under the Securities Act of 1933, as amended
(the "Securities Act") with respect to the Trust Preferred Securities, the
Junior Subordinated Debentures and the Guarantee, each of which is discussed in
this prospectus. This prospectus does not contain all of the information set
forth in the registration statement, certain portions of which have been omitted
as permitted by the rules and regulations of the SEC. For further information
with respect to us, the Trust, the Trust Preferred Securities, the Junior
Subordinated Debentures and the Guarantee, reference is made to the registration
statement, including its exhibits. The registration statement may be inspected
without charge at the principal office of the SEC in Washington, D.C., and
copies of all or part of it may be obtained from the SEC upon payment of the
prescribed fees.
We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file subsequently
with the SEC will automatically update this prospectus. We incorporate by
reference the documents listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, after the initial
filing of the registration statement that contains this prospectus and prior to
the time that we sell all the securities offered by this prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1998.
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999.
- Current Report on Form 8-K filed with the SEC on October 1, 1999.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning us at the following address: 288 Union
Street, Rockland, Massachusetts 02370, Attention: Corporate Secretary, telephone
(781) 878-6100.
------------------------
WE HAVE NOT, AND THE UNDERWRITER HAS NOT, AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL,
NOR IS IT SEEKING AN OFFER TO BUY, THESE TRUST PREFERRED SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS
COMPLETE AND ACCURATE AS OF THE DATE ON THE FRONT COVER, BUT THE INFORMATION MAY
HAVE CHANGED SINCE THAT DATE.
iii
<PAGE>
SUMMARY
THE ITEMS IN THE FOLLOWING SUMMARY ARE DESCRIBED IN MORE DETAIL LATER IN
THIS PROSPECTUS. THIS SUMMARY PROVIDES AN OVERVIEW OF SELECTED INFORMATION AND
DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER. THEREFORE, YOU SHOULD
ALSO READ THE MORE DETAILED INFORMATION SET OUT IN THIS PROSPECTUS OR
INCORPORATED HEREIN BY REFERENCE. IN THIS PROSPECTUS, REFERENCES TO "WE," "OUR,"
AND "INDEPENDENT" ARE TO INDEPENDENT BANK CORP.
OUR COMPANY
We are the holding company of Rockland Trust Company (the "Bank"), a
Massachusetts trust company which was chartered in 1907. We are headquartered in
Rockland, Massachusetts and at September 30, 1999, we had consolidated assets of
$1.6 billion, deposits of $1.1 billion and stockholders' equity of $94 million.
Through the Bank, we offer a full range of commercial and retail banking and
trust services through our network of 34 banking offices, eight commercial
lending centers, and two trust and financial services offices located in the
Plymouth, Norfolk, and Bristol Counties of Southeastern Massachusetts. We are
the only locally-based commercial bank in Plymouth County. As a community
focused commercial bank, we seek to service the needs of local customers in our
market by developing long-term deposit and lending relationships. As such, we
have become a prominent financial institution in Plymouth County, which
represents the majority of our market area. At June 30, 1998 (the most recent
date for deposit market share information), the Bank had approximately 22.4% of
the total deposits in Plymouth County. That amount represents approximately 178%
of the market share of our closest competitor.
In its lending activities, the Bank has emphasized the origination of
residential and commercial loans within its primary market areas. At
September 30, 1999, the Bank's gross loan portfolio consisted of 30% mortgage
loans collateralized by commercial real estate, 20% of mortgage loans
collateralized by residential real estate, 13% of commercial loans, 5% of real
estate construction loans, and 32% of consumer loans. The Bank stresses asset
quality through its emphasis on lending in its local markets where management is
most qualified to make educated underwriting decisions and the application of
generally conservative underwriting criteria.
In May 1997, we issued $28.75 million of 9.28% cumulative trust preferred
securities of Independent Capital Trust I ("Trust I"), which are scheduled to
mature in 2027. Trust I invested the proceeds of the sale of these securities in
$29.64 million of 9.28% junior subordinated debentures issued by us.
Distributions on these securities are payable quarterly in arrears on the last
day of March, June, September and December, such distributions can be deferred
at our option for up to five years. The trust preferred securities can be
prepaid in whole or in part on or after May 19, 2002 at a redemption price equal
to $25 per security plus accumulated but unpaid distributions thereon to the
date of the redemption. The trust preferred securities of Trust I are quoted on
the Nasdaq National Market under the symbol "INDBP."
PENDING BRANCH ACQUISITION. In September 1999, we entered into an agreement
with Fleet Financial Group, Inc., Fleet National Bank and BankBoston, N.A. to
acquire 12 branches, two of which are located in Brockton, Massachusetts, which
is within our primary market area, and ten of which are located on Cape Cod,
Massachusetts in Barnstable County, a market contiguous to where we presently
operate. The 12 branches to be acquired presently have total deposits
aggregating approximately $269 million. In connection with the acquisition,
which is subject to, among other things, the receipt of regulatory approvals, we
expect to acquire approximately $150 million of commercial and consumer loans.
Following the acquisition, we will have approximately $1.8 billion in assets,
$1.3 billion in deposits and 46 retail branches. We expect to pay a core deposit
premium of approximately $32 million in connection with the acquisition. We
filed our regulatory applications in October 1999 and presently expect that the
transaction will close during the third quarter of 2000.
<PAGE>
Our principal office is located at 288 Union Street, Rockland, Massachusetts
02370 and our telephone number is (781) 878-6100.
INDEPENDENT CAPITAL TRUST II
Independent Capital Trust II (the "Trust"), the issuer of the Trust
Preferred Securities, is a statutory business trust formed by us under the
Delaware Business Trust Act. The Trust exists for the sole purpose of
(i) issuing common securities of the Trust (the "Common Securities") to us and
the Trust Preferred Securities (the Trust Preferred Securities and the Common
Securities are referred to in this prospectus as the "Trust Securities") for
cash and investing the proceeds in an equivalent amount of 11% Junior
Subordinated Deferrable Interest Debentures due January 31, 2030 (the "Junior
Subordinated Debentures") issued by us and (ii) engaging in other activities
that are necessary or incidental to the issuance of the Trust Securities and the
investment in the Junior Subordinated Debentures.
The Trust has no separate financial statements. We do not believe that the
statements would be significant to you because the Trust is a direct wholly
owned subsidiary of the Company, has no independent operations and exists solely
for the reasons summarized above.
The Trust's principal office is located at c/o The Bank of New York, 101
Barclay Street, New York, New York 10286 and its telephone number is
(212) 815-5359.
RISK FACTORS
Prior to making an investment decision, you should carefully consider all of
the information in this prospectus, and, in particular, you should evaluate the
risk factors set forth under the caption "Risk Factors," which are described
immediately following this Summary.
2
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Issuer of the Trust Preferred Securities..... Independent Capital Trust II, a Delaware
statutory business trust.
Securities offered........................... 1,000,000 11% Trust Preferred Securities,
liquidation amount $25 per security
(1,150,000 Trust Preferred Securities if the
underwriter's over-allotment option is
exercised in full). The Trust Preferred
Securities represent preferred undivided
beneficial interests in the Trust's assets,
which will consist solely of the Junior
Subordinated Debentures and payments under
the Junior Subordinated Debentures.
The Trust will sell the Trust Preferred
Securities to the public and the Common
Securities to us. The Trust will use the
proceeds from the sale of the Trust
Securities to buy the Junior Subordinated
Debentures from us.
Distributions................................ If you purchase the Trust Preferred
Securities, you will be entitled to receive
cumulative cash distributions at a 11% annual
rate. Distributions will accumulate from the
date the Trust issues the Trust Preferred
Securities, and will be paid quarterly in
arrears on March 31, June 30, September 30
and December 31 of each year, beginning on
March 31, 2000. Distributions on the Trust
Preferred Securities may be deferred, as
described below. The initial cash
distribution payable on March 31, 2000 will
equal $0.46 for each Trust Preferred
Security. Subsequent cash distributions will
equal approximately $0.69 for each Trust
Preferred Security.
The record date for distributions on the
Trust Preferred Securities will be one
business day prior to the relevant
distribution date for so long as the Trust
Preferred Securities remain in book-entry
form (if not book-entry form the record date
will be the fifteenth day of the month in
which the distributions are made).
Maturity..................................... The Junior Subordinated Debentures will
mature on January 31, 2030.
Redemption................................... We may redeem some or all of the Junior
Subordinated Debentures on or after
January 31, 2002 at a redemption price of
$25 per Junior Subordinated Debenture plus
accrued and unpaid distributions.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
In addition, we may redeem all of the Junior
Subordinated Debentures at our option:
- if certain tax events occur;
- if there is a change in the Investment
Company Act of 1940 that requires the
Trust to register under that law; or
- if there is a change in, among other
things, the regulatory capital adequacy
guidelines that apply to us.
These circumstances are collectively referred
to as "Special Events."
We will not redeem the Junior Subordinated
Debentures before they mature without
approval by the regulatory agencies which
supervise us if such approval is then
required under applicable requirements.
The Trust will use the cash proceeds of any
redemption of the Junior Subordinated
Debentures to pay the liquidation amount for
an equal amount of Trust Preferred
Securities. The liquidation amount you will
receive will be equal to the redemption price
described above.
Deferral of distributions.................... The Trust relies solely on payments made by
us on the Junior Subordinated Debentures to
pay distributions on the Trust Preferred
Securities. If no event of default under the
Junior Subordinated Debentures has occurred
or is continuing, we have the right, at one
or more times, to defer interest payments on
the Junior Subordinated Debentures for up to
20 consecutive calendar quarters, but not
beyond the maturity date of the Junior
Subordinated Debentures. If we defer interest
payments on the Junior Subordinated
Debentures:
- the Trust will also defer distributions
on the Trust Preferred Securities;
- your distributions will continue to
accrue at an annual rate of 11% of the
liquidation amount of $25 per Trust
Preferred Security; and
- you will accumulate additional
distributions at the same rate,
compounded quarterly, on any unpaid
distributions (to the extent permitted
by law).
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
When a deferral period ends, we will be
required to pay to the Trust all accumulated
and unpaid interest due on the Junior
Subordinated Debentures and, when the Trust
receives this payment, it will be required to
pay all accumulated and unpaid distributions
on the Trust Securities.
If we defer payments of interest on the
Junior Subordinated Debentures, the Trust
Preferred Securities will be treated as being
issued with original issue discount for
United States federal income tax purposes.
This means that you will still be required to
include this income in your gross income for
United States federal income tax purposes
before you receive any corresponding cash
distribution, even if you are a cash basis
taxpayer.
We have agreed to certain restrictions if we
exercise our right to defer interest
payments. During any period in which we defer
interest payments on the Junior Subordinated
Debentures, we will not be permitted to (with
limited exceptions described under
"Description of Junior Subordinated
Debentures--Option to Extend Interest Payment
Date"):
- declare or pay dividends or make other
distributions on, redeem, purchase or
acquire, or make liquidation payments
with respect to, our capital stock;
- pay interest, principal or a premium
on, or repay, repurchase or redeem any of
our debt securities that rank equal
with or junior to the Junior
Subordinated Debentures; or
- make guarantee payments with respect to
the foregoing.
Guarantee.................................... We will fully and unconditionally guarantee
the Trust Preferred Securities based on:
- our obligations to make payments on the
Junior Subordinated Debentures;
- our obligations under a guarantee
executed for your benefit (the
"Guarantee"); and
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
- our obligations under the Trust
Agreement, which sets forth the terms of
the Trust Securities.
If we do not make payments on the Junior
Subordinated Debentures, the Trust will not
have sufficient funds to make payments on the
Trust Preferred Securities. The Guarantee
does not cover payments when the Trust does
not have sufficient funds. Instead, you (to
the fullest extent of the law) or the
property trustee may enforce the holder's
rights under the Junior Subordinated
Debentures directly against us.
Distribution of the Junior Subordinated
Debentures................................. We may dissolve the Trust at any time and
distribute the Junior Subordinated Debentures
to you, subject to any required approval by
the regulatory agencies which supervise us.
If the Junior Subordinated Debentures are
distributed, we will use our best efforts to
list them on a national securities exchange
or comparable automated quotation system.
Ranking...................................... Our obligations under the Junior Subordinated
Debentures are unsecured and will rank junior
in priority of payment to our current and any
future senior and subordinated indebtedness
and will be effectively subordinated to all
existing and future liabilities and
obligations of our subsidiaries, including
the Bank. As of September 30, 1999, we had no
senior or subordinated indebtedness
outstanding and our subsidiaries had total
liabilities (excluding liabilities owed to
us) of $1.5 billion. Our obligations under
the Junior Subordinated Debentures will rank
equal to other junior subordinated debentures
issued or to be issued by us to similar
trusts, including the junior subordinated
debentures sold to Trust I in May 1997.
Our obligations under the Guarantee are
unsecured and will rank in priority of
payment:
- junior to all of our indebtedness,
except for those liabilities made equal
or subordinate to the Junior
Subordinated Debentures by their terms;
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
- equal to all other guarantees issued or
to be issued by us with respect to other
similar trust preferred securities,
including the issuance of $28.75
million of trust preferred securities
of Trust I in May 1997; and
- senior to our capital stock.
Limited voting rights........................ Except in limited circumstances, you as a
holder of the Trust Preferred Securities will
have no voting rights.
Listing...................................... The Trust Preferred Securities have been
approved for listing on the Nasdaq National
Market under the symbol "INDBO."
Book-entry................................... The Trust Preferred Securities will be
represented by a global security that will be
deposited with and registered in the name of
The Depositary Trust Company, New York, New
York or its nominee. This means that you will
not receive a certificate for your Trust
Preferred Securities.
Use of proceeds.............................. The Trust plans to use the proceeds from the
sale of the Trust Securities to purchase the
Junior Subordinated Debentures from us. We
intend to use the net proceeds from the sale
of the Junior Subordinated Debentures for
general corporate purposes, which shall
include capital contributions to the Bank,
and for working capital.
- To the extent that the previously
announced branch acquisition
transaction with Fleet Financial Group,
Inc. is completed, the offering will
ensure that the Bank will continue to
be "well capitalized" following
consummation of the transaction.
Initially, we may use the net proceeds to
make short-term investments.
</TABLE>
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial and other data below should be read in
connection with the financial information included in our Annual Report on
Form 10-K for the year ended December 31, 1998 and our Quarterly Report on
Form 10-Q for the nine months ended September 30, 1999. See "Where You Can Find
More Information."
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
----------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
BALANCE SHEET DATA: ---------- ---------- ---------- ---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets............................... $1,565,400 $1,514,730 $1,575,069 $1,370,007 $1,092,793 $987,589 $929,194
Loans, net of unearned discount............ 1,019,295 909,284 941,112 828,132 695,406 628,141 590,689
Securities held to maturity................ 233,565 308,743 284,944 308,112 290,894 226,896 256,785
Securities available for sale.............. 201,640 200,916 195,199 131,842 26,449 32,628 4,250
Total deposits............................. 1,066,656 986,332 1,043,317 988,148 918,572 871,085 796,612
FHLB borrowings............................ 265,224 301,224 313,724 206,724 78,000 20,000 25,000
Stockholders' equity....................... 94,086 96,291 95,848 92,493 81,110 72,572 64,202
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
OPERATIONS DATA: ---------- ---------- ---------- ---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income............................ $ 83,386 $ 80,818 $ 108,712 $ 93,820 $ 77,424 $ 72,918 $ 63,540
Interest expense........................... 37,620 36,480 49,569 41,578 32,354 29,143 22,029
---------- ---------- ---------- ---------- ---------- -------- --------
Net interest income........................ 45,766 44,338 59,143 52,242 45,070 43,775 41,511
Provision for possible loan losses......... 2,945 2,721 3,960 2,260 1,750 1,000 801
---------- ---------- ---------- ---------- ---------- -------- --------
Net interest income after provision for
loan losses.............................. 42,821 41,617 55,183 49,982 43,320 42,775 40,710
Non-interest income........................ 10,907 9,745 13,125 11,742 11,381 10,341 10,005
Non-interest expenses...................... 33,918 31,828 41,697 38,595 36,951 38,000 41,069
Minority interest expense.................. 2,001 2,001 2,668 1,645 -- -- --
---------- ---------- ---------- ---------- ---------- -------- --------
Income before income taxes................. 17,809 17,533 23,943 21,484 17,750 15,116 9,646
Income taxes............................... 5,423 5,785 7,804 7,326 6,153 4,729 1,533
---------- ---------- ---------- ---------- ---------- -------- --------
Net income................................. $ 12,386 $ 11,748 $ 16,139 $ 14,158 $ 11,597 $ 10,387 $ 8,113
========== ========== ========== ========== ========== ======== ========
PER SHARE DATA:
Net income:
Basic.................................... $ 0.87 $ 0.79 $ 1.10 $ 0.97 $ 0.80 $ 0.72 $ 0.56
Diluted.................................. 0.86 0.78 1.08 0.95 0.79 0.71 0.56
Cash dividends............................. 0.30 0.30 0.40 0.34 0.25 0.18 0.08
Book value, end of period.................. 6.71 6.59 6.63 6.25 5.55 5.00 4.45
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
SELECTED FINANCIAL RATIOS(1): ---------- ---------- ---------- ---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets................... 1.06% 1.11% 1.12% 1.15% 1.13% 1.10% 0.94%
Return on average equity................... 17.28 16.20 16.71 16.45 15.20 15.28 13.36
Net interest margin........................ 4.25 4.44 4.36 4.52 4.72 4.97 5.19
Operating expenses as a percent of average
assets................................... 2.90 3.01 2.88 3.14 3.60 4.02 4.75
Nonperforming loans as a percent of gross
loans.................................... 0.38 0.60 0.56 0.69 0.63 0.83 1.31
Nonperforming assets as a percent of total
assets at end of period.................. 0.26 0.37 0.34 0.43 0.43 0.60 1.26
Reserve for possible loan losses as a
percent of loans, net of unearned
discount................................. 1.44 1.50 1.46 1.53 1.76 1.92 2.32
Reserve for possible loan losses as a
percent of nonperforming loans at end of
period................................... 372.89 242.94 255.69 215.14 273.89 229.33 174.45
Dividend payout ratio...................... 34.88 37.97 37.03 35.78 31.64 25.35 14.28
Capital ratios at end of period:
Tier 1 leverage capital ratio............ 7.93 8.13 7.91 8.64 7.35 7.24 6.76
Tier 1 risk-based capital ratio.......... 10.77 11.81 11.38 13.52 10.89 10.67 10.05
Total risk-based capital ratio........... 12.03 13.06 12.63 14.78 12.15 11.92 11.31
Ratio of earnings to fixed charges(2):
Including interest on deposits............. 1.47x 1.47x 1.48x 1.51x 1.54x 1.51x 1.43x
Excluding interest on deposits............. 2.18x 2.31x 2.27x 3.02x 4.26x 5.00x 5.66x
</TABLE>
- ------------------------------
(1) With the exception of end-of-period ratios, all ratios are based on average
daily balances during the indicated periods.
(2) See "Ratios of Earnings to Fixed Charges."
8
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY READ THE FOLLOWING RISK FACTORS BEFORE YOU DECIDE TO
BUY ANY TRUST PREFERRED SECURITIES. YOU SHOULD ALSO CONSIDER THE OTHER
INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS THAT ARE INCORPORATED BY
REFERENCE.
RISKS RELATED TO AN INVESTMENT IN THE TRUST PREFERRED SECURITIES
PAYMENTS ON THE TRUST PREFERRED SECURITIES ARE ENTIRELY DEPENDENT ON OUR MAKING
PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES; THE GUARANTEE COVERS PAYMENTS
ONLY IF THE TRUST HAS CASH AVAILABLE.
The Trust's ability to timely pay distributions (including the $25 per Trust
Preferred Security liquidation distribution) is entirely dependent on our making
the related payments on the Junior Subordinated Debentures when due. If we do
not make payments on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to pay distributions or the $25 per Trust Preferred Security
liquidation amount. Because the Guarantee does not cover payments when the Trust
does not have sufficient funds, you will not be able to rely upon the Guarantee
for payment of these amounts. Instead, you may directly sue us or seek other
remedies to collect your pro rata share of payments owed or rely on the property
trustee to enforce the Trust's rights under the Junior Subordinated Debentures
directly against us.
THE TRUST'S ABILITY TO MAKE PAYMENTS ON THE TRUST PREFERRED SECURITIES DEPENDS
ON OUR ABILITY TO MAKE PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES.
The Junior Subordinated Debentures and the Guarantee will be exclusively our
obligations. We are a bank holding company regulated by the Board of Governors
of the Federal Reserve System and substantially all of our assets are held by
our subsidiaries. Our ability to make payments on the Junior Subordinated
Debentures depends primarily on the results of operations of our subsidiaries
and their ability to provide funds to us. Our subsidiaries are separate and
distinct legal entities and have no obligations to pay any amounts due under the
Junior Subordinated Debentures or to make funds available, whether by dividend,
loan or otherwise, for such purpose. In addition, there are various legal
limitations on the extent to which certain of our subsidiaries may extend
credit, pay dividends or otherwise supply funds to, or engage in transactions
with, us or some of our subsidiaries. The Trust will be unable to make payments
to you if we do not receive funds from our subsidiaries which allow us to pay
interest on or principal of the Junior Subordinated Debentures.
Our right to participate in any distribution of the assets of any
subsidiary, including the Bank, upon a subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of that
subsidiary, except to the extent that we may be recognized as a creditor of that
subsidiary. As a consequence, the Junior Subordinated Debentures and the
Guarantee will be effectively subordinated to all existing and future
liabilities of our subsidiaries. As of September 30, 1999, our subsidiaries had
total liabilities (excluding liabilities owed to us) of $1.5 billion. Holders of
the Junior Subordinated Debentures and beneficiaries of the Guarantee should
look only to our assets for payments on the Junior Subordinated Debentures or
under the Guarantee, as the case may be. There is no limit under the Trust
Preferred Securities, the Junior Subordinated Debentures or the Guarantee as to
our subsidiaries' ability to incur additional indebtedness.
OUR OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES WILL
BE SUBORDINATED IN RIGHT OF PAYMENT TO OUR CURRENT AND FUTURE SENIOR AND
SUBORDINATED INDEBTEDNESS.
Our obligations under the Guarantee are unsecured and will rank in priority
of payment:
- junior to all of our indebtedness, except for those liabilities made equal
or subordinate to the Guarantee by their terms;
9
<PAGE>
- equal to all other guarantees issued or to be issued by us with respect to
other similar trust preferred securities, including the issuance of
$28.75 million of trust preferred securities of Trust I in May 1997; and
- senior to our capital stock.
This means that we cannot make any payments on the Guarantee if we default
on a payment of any of our other liabilities, except those liabilities made
equal with or subordinate to the Guarantee by their terms. In the event of our
bankruptcy, liquidation or dissolution, our assets would be available to pay
obligations under the Guarantee only after all payments have been made on our
other liabilities, except those liabilities made equal with or subordinate to
the Guarantee by their terms.
Our obligations under the Junior Subordinated Debentures are unsecured and
will rank junior in priority of payment to our current and future senior and
subordinated indebtedness, and will be effectively subordinated to all existing
and future liabilities and obligations of our subsidiaries, including the Bank.
This means that we cannot make any payments of principal (including redemption
payments) or interest on the Junior Subordinated Debentures if we default on a
payment on any of our senior indebtedness or subordinated indebtedness. In the
event of our bankruptcy, liquidation or distribution, our assets would be
available to pay obligations under the Junior Subordinated Debentures only after
all payments have been made on our senior indebtedness and our subordinated
indebtedness. As of September 30, 1999, we had no senior or subordinated
indebtedness outstanding and our subsidiaries had total liabilities (excluding
liabilities owed to us) of $1.5 billion. There is no limit under the Trust
Preferred Securities, the Junior Subordinated Debentures or the Guarantee as to
our ability to incur additional indebtedness, including indebtedness that ranks
senior in priority of payment to the Junior Subordinated Debentures and the
Guarantee.
OUR ABILITY TO DEFER INTEREST PAYMENTS HAS ADVERSE TAX CONSEQUENCES FOR YOU AND
MAY AFFECT THE TRADING PRICE FOR THE TRUST PREFERRED SECURITIES.
So long as no event of default under the Junior Subordinated Debentures has
occurred and is continuing, we may defer interest payments one or more times on
the Junior Subordinated Debentures for up to 20 consecutive calendar quarters,
but not beyond the maturity date of the Junior Subordinated Debentures.
If we defer interest payments on the Junior Subordinated Debentures, the
Trust will also defer distributions on the Trust Preferred Securities. During a
deferral period, you will be required to accrue income (in the form of original
issue discount) for United States federal income tax purposes equal to the
interest that accrues on your pro-rata share of the Junior Subordinated
Debentures held by the Trust. As a result, you must include the accrued but
unpaid income in your gross income for United States federal income tax purposes
before you receive cash, even if you are a cash basis taxpayer. You will also
not receive the cash related to any accrued and unpaid interest from the Trust
if you sell the Trust Preferred Securities before the end of any deferral
period. The Trust Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest on the Junior Subordinated
Debentures.
During a deferral period, your tax basis in the Trust Preferred Securities
will increase by the amount of accrued but unpaid distributions. If you sell the
Trust Preferred Securities during a deferral period, your increased tax basis
will decrease the amount of any capital gain or increase the amount of any
capital loss that you may have otherwise realized on the sale. A capital loss,
except in certain limited circumstances, cannot be applied to offset ordinary
income. As a result, deferral of distributions could result in ordinary income,
and a related tax liability for the holder, and a capital loss that may only be
used to offset a capital gain.
We do not currently intend to exercise our right to defer interest payments
on the Junior Subordinated Debentures. However, if we exercise our right in the
future, we expect that the market
10
<PAGE>
price of the Trust Preferred Securities would be adversely affected. If you sell
the Trust Preferred Securities during a deferral period, you may not receive the
same return on your investment as someone who continues to hold the Trust
Preferred Securities.
WE MAY REDEEM THE TRUST PREFERRED SECURITIES AT ANY TIME UPON THE OCCURRENCE OF
A SPECIAL EVENT.
At any time that a Special Event occurs and continues, we may redeem all of
the Junior Subordinated Debentures. A Special Event means a Tax Event, an
Investment Company Event or a Regulatory Capital Event and is more fully
described under "Description of Trust Preferred Securities--Redemption" and
defined under "Description of Trust Preferred Securities--Definitions." If there
is a Special Event and we redeem the Junior Subordinated Debentures, the Trust
must redeem the Trust Preferred Securities within 90 days at a redemption price
equal to the liquidation amount of $25 per Trust Preferred Security, plus
accrued and unpaid distributions. We may exercise this right only if we receive
any required approval by the regulatory agencies which supervise us.
WE MAY REDEEM SOME OR ALL OF THE JUNIOR SUBORDINATED DEBENTURES ON OR AFTER
JANUARY 31, 2002, WHICH WILL CAUSE THE TRUST TO REDEEM SOME OR ALL OF THE TRUST
PREFERRED SECURITIES.
We may redeem some or all of the Junior Subordinated Debentures on or after
January 31, 2002, which will cause the Trust Preferred Securities to be redeemed
on that date. You should assume that we will exercise our redemption option if
we are able to refinance our obligations at a lower interest rate or if it is
otherwise in our interest to redeem the Junior Subordinated Debentures. If less
than all of the Junior Subordinated Debentures are redeemed, the Trust must
redeem an amount of Trust Preferred Securities having an aggregate liquidation
value equal to the principal amount of the Junior Subordinated Debentures that
have been redeemed. We can exercise this right only if we receive any required
approval by the regulatory agencies which supervise us.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES MAY ADVERSELY AFFECT THE
MARKET PRICE FOR THE TRUST PREFERRED SECURITIES AND HAVE TAX CONSEQUENCES FOR
YOU.
We may dissolve the Trust at any time before the maturity of the Junior
Subordinated Debentures on January 31, 2030. As a result, and subject to the
terms of the Trust Agreement, the Trustees may distribute the Junior
Subordinated Debentures to the holders of Trust Preferred Securities. Although
we have agreed to use our best efforts to list the Junior Subordinated
Debentures on a national securities exchange or comparable automated quotation
system if this occurs, there can be no assurance that the Junior Subordinated
Debentures will be approved for listing or that a trading market will exist for
the Junior Subordinated Debentures.
We cannot predict the market price of the Junior Subordinated Debentures
that may be distributed. Accordingly, the Junior Subordinated Debentures that
you receive upon a distribution, or the Trust Preferred Securities you hold
pending such a distribution, may trade at a price that is less than the price
you paid to purchase the Trust Preferred Securities. Because you may receive
Junior Subordinated Debentures, you must also make an investment decision with
regard to the Junior Subordinated Debentures. You should carefully review all
the information regarding the Junior Subordinated Debentures contained in this
prospectus.
Under current United States federal income tax laws, a distribution of the
Junior Subordinated Debentures to you upon the dissolution of the Trust would
not be a taxable event to you. However, if the Trust is classified for United
States federal income tax purposes as an association taxable as a corporation at
the time it is dissolved, the distribution of the Junior Subordinated Debentures
would be a taxable event to you. In addition, if there is a change in law, a
distribution of the Junior Subordinated Debentures upon the dissolution of the
Trust could be a taxable event to you.
11
<PAGE>
THE HOLDERS OF THE TRUST PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED
DEBENTURES ARE NOT PROTECTED BY COVENANTS IN THE INDENTURE OR THE TRUST
AGREEMENT.
Neither the Indenture, which sets forth the terms of the Junior Subordinated
Debentures, nor the Trust Agreement, which sets forth the terms of the Trust
Securities, protects holders of Junior Subordinated Debentures, or Trust
Preferred Securities, respectively, in the event we experience significant
adverse changes in our financial condition or results of operations. In
addition, neither the Indenture nor the Trust Agreement limits our ability or
the ability of our subsidiaries to incur additional indebtedness, including
indebtedness that ranks senior to the Junior Subordinated Debentures and the
Guarantee. Therefore, the provisions of these governing instruments should not
be considered a significant factor in evaluating whether we will be able to
comply with our obligations under the Junior Subordinated Debentures or the
Guarantee.
YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of Trust Preferred Securities, you will have limited voting
rights. Your voting rights will relate only to the modification of the Trust
Preferred Securities and the exercise of the Trust's rights as holder of the
Junior Subordinated Debentures. In general, only we can replace or remove any of
the Trustees. The property trustee, the administrative trustees and we may amend
the Trust Agreement without your consent for certain things, including to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust. You also will have no voting rights on matters submitted to
a vote of our stockholders. However, if an event of default under the Trust
Agreement occurs and is continuing, the holders of at least a majority in
aggregate liquidation amount of the Trust Preferred Securities may replace the
property trustee and the Delaware trustee.
POTENTIAL TAX LAW CHANGES COULD REQUIRE US TO REDEEM THE TRUST PREFERRED
SECURITIES.
From time to time, certain tax law changes have been proposed that would
deny interest deductions to corporate issuers of debt instruments with terms
that include certain of the terms of the Junior Subordinated Debentures. In
addition, the Internal Revenue Service ("IRS") has in the past challenged
taxpayers' treatment as indebtedness of securities issued with characteristics
similar to the Junior Subordinated Debentures. To date, these tax law change
proposals have not been enacted and the only known challenge that has advanced
as far as litigation was settled short of trial, with resolution favorable to
the taxpayer's position. However, if any similar tax law change were enacted or
a challenge by the IRS were upheld, that event could give rise to a Tax Event
(as defined under "Description of Trust Preferred Securities--Redemption") which
could result in an early redemption of the Trust Preferred Securities.
THERE MAY BE NO ACTIVE OR LIQUID MARKET FOR THE TRUST PREFERRED SECURITIES.
Before this offering, there has been no market for the Trust Preferred
Securities. The Trust Preferred Securities have been approved for listing on the
Nasdaq National Market. We cannot predict whether an active and liquid trading
market for the Trust Preferred Securities will develop or whether a continued
quotation of the Trust Preferred Securities will be available on the Nasdaq
National Market. Although the underwriter has informed the Trust and us that it
intends to make a market in the Trust Preferred Securities, the underwriter is
not obligated to do so and any such market-making activity may be terminated at
any time without notice. Future trading prices of the Trust Preferred Securities
will depend on many factors including, among other things, prevailing interest
rates, our operating results and financial condition, and the market for similar
securities. Our 9.28% cumulative trust preferred securities issued by Trust I in
May 1997 are quoted on the Nasdaq National Market under the symbol "INDBP."
12
<PAGE>
RISKS RELATING TO OUR COMPANY
CHANGES IN INTEREST RATES COULD REDUCE OUR PROFITABILITY.
Our ability to make a profit, like that of most financial institutions,
substantially depends upon our net interest income, which is the difference
between the interest income we earn on our interest-earning assets (such as
loans and investment securities) and the interest expense we pay on our
interest-bearing liabilities (such as deposits and borrowings). Certain assets
and liabilities, however, may react in different degrees to changes in market
interest rates. Further, interest rates on some types of assets and liabilities
may fluctuate prior to changes in broader market interest rates, while rates on
other types may lag behind. Additionally, some of our assets, such as
adjustable-rate mortgages, have features, including payment and rate caps, which
restrict changes in their interest rates.
Factors such as inflation, recession, unemployment, money supply,
international disorders, instability in domestic and foreign financial markets,
and other factors beyond our control may affect interest rates. Changes in
market interest rates will also affect the level of voluntary prepayments on our
loans and the receipt of payments on our mortgage-backed securities resulting in
the receipt of proceeds that may be reinvested at a lower rate than the loan or
mortgage-backed security being prepaid. Although we pursue an asset-liability
management strategy designed to control our risk from changes in market interest
rates, changes in interest rates can still have a material adverse effect on our
profitability.
OUR ALLOWANCE FOR LOAN LOSSES MAY BE INADEQUATE TO COVER LOSSES ACTUALLY
INCURRED, WHICH COULD AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE JUNIOR
SUBORDINATED DEBENTURES.
We maintain an allowance for loan losses in an amount we believe is
sufficient to provide for known and inherent risks in our loan portfolio. If the
Bank incurs actual losses on its loans in excess of its allowance for loan
losses, it may have insufficient income to extend credit, pay dividends or
otherwise supply funds to us. If this occurs, we may be unable to make payments
of interest and principal on the Junior Subordinated Debentures, and the Trust
may be unable to make payments of interest and principal to you.
A SIGNIFICANT AMOUNT OF OUR LOANS ARE CONCENTRATED IN MASSACHUSETTS, AND ADVERSE
CONDITIONS IN MASSACHUSETTS COULD NEGATIVELY IMPACT OUR OPERATIONS.
Substantially all of the loans we originate are secured by properties
located in or are made to businesses which operate in Massachusetts. Because of
the current concentration of our loan origination activities in Massachusetts,
in the event of adverse economic conditions in Massachusetts, we would likely
experience higher rates of loss and delinquency on our loans than if our loans
were more geographically diversified. Additionally, our loans may be subject to
a greater risk of default than other comparable loans in the event of adverse
economic, political or business developments or natural hazards that may affect
Massachusetts and the ability of property owners in Massachusetts to make
payments of principal and interest on the underlying loans, which could have an
adverse effect on our results of operations or financial condition.
COMPETITION WITH OTHER FINANCIAL INSTITUTIONS COULD ADVERSELY AFFECT OUR
PROFITABILITY.
We face substantial competition in originating loans and in attracting
deposits. This competition in originating loans comes principally from other
banks, other savings institutions, mortgage banking companies, consumer finance
companies, insurance companies and other institutional lenders and purchasers of
loans. In attracting deposits, we compete with insured depository institutions
such as banks, savings institutions and credit unions, as well as institutions
offering uninsured investment alternatives including money market funds. These
competitors may offer higher interest rates than we do, which could result in
either our attracting fewer deposits or in our being required to increase our
rates in order to attract deposits. Increased deposit competition could increase
our cost of funds and
13
<PAGE>
adversely affect our ability to generate the funds necessary for our lending
operations, thereby adversely affecting our results of operations. A number of
institutions with which we compete have significantly greater assets, capital
and other resources. In addition, many of our competitors are not subject to the
same extensive federal regulation that governs our business. As a result, many
of our competitors have advantages over us in conducting certain businesses and
providing certain services.
OUR FUTURE PROFITS WILL BE AFFECTED BY OUR ABILITY TO SUCCESSFULLY INTEGRATE THE
NEW BRANCHES TO BE ACQUIRED FROM FLEET FINANCIAL GROUP, INC.
We have agreed, subject to regulatory approval, to acquire 12 branches, two
of which are located in Brockton, Massachusetts, which is within our primary
market area, and ten of which are located on Cape Cod, Massachusetts in
Barnstable County, a market contiguous to where we presently operate. In
connection with the acquisition, we will acquire approximately $269 million of
deposits and $150 million of commercial and consumer loans. Our future profits
will be affected by our ability to retain the acquired deposits, to generate
revenues from the new branch locations as well as the loans we are acquiring, to
manage the costs associated with the acquired branch offices and to otherwise
successfully integrate the new branches into our operations.
CHANGES IN STATUTES AND REGULATIONS COULD ADVERSELY AFFECT US.
We are subject to extensive regulation and supervision by federal and state
authorities. Such supervision and regulation establish a comprehensive framework
of activities in which an institution may engage, and are intended primarily for
the protection of the federal deposit insurance fund and the Bank's depositors.
This regulatory structure also provides our regulators with significant
discretion in the performance of their supervisory and enforcement duties. Any
change in such regulation, whether by our regulators or as a result of
legislation subsequently enacted by the Congress of the United States, could
have a substantial impact on the Bank and its operations. Additional legislation
and regulations may be enacted or adopted in the future that could significantly
affect our powers, authority and operations, which could have a material adverse
effect on our operations.
14
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to fixed
charges for the respective periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratios of earnings to fixed charges:
Including interest on deposits................. 1.47x 1.48x 1.51x 1.54x 1.51x 1.43x
Excluding interest on deposits................. 2.18x 2.27x 3.02x 4.26x 5.00x 5.66x
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, earnings
represent income before extraordinary items and cumulative effect of changes in
accounting principles plus applicable income taxes and fixed charges. Fixed
charges includes gross interest expense (exclusive of interest on deposits in
one case and inclusive of such interest in the other) and one-third of rent
expenses which approximates the interest expense of such charges.
USE OF PROCEEDS
All of the proceeds from the sale of the Trust Preferred Securities together
with proceeds of the Common Securities will be invested by the Trust in the
Junior Subordinated Debentures to be issued by us. We intend to use the
estimated net proceeds from the sale of the Junior Subordinated Debentures of
approximately $23.9 million ($27.5 million if the underwriter's over-allotment
option is exercised in full) for general corporate purposes, including capital
contributions to the Bank, and for working capital. To the extent that the
previously announced branch acquisition transaction with Fleet Financial
Group, Inc. is completed, the offering will ensure that the Bank will continue
to be "well capitalized" following consummation of the transaction. See
"Summary--Our Company." Initially, the net proceeds may be used to make
short-term investments.
15
<PAGE>
CAPITALIZATION
The following table sets forth our unaudited consolidated capitalization as
of September 30, 1999 and such capitalization as adjusted, to reflect the sale
of the Trust Preferred Securities, the issuance of the Junior Subordinated
Debentures and the application of the estimated net proceeds as described in
"Use of Proceeds." You should also read the more detailed information included
or incorporated by reference in this prospectus, including the financial
statements and related notes.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Company-obligated mandatorily redeemable 9.28% trust
preferred securities of Independent Capital Trust I due
May 19, 2027.............................................. $ 28,750 $ 28,750
Company-obligated mandatorily redeemable 11% trust preferred
securities of Independent Capital Trust II due
January 31, 2030(1)....................................... -- 25,000
---------- ----------
Stockholders' equity:
Preferred stock, $0.01 par share, 1,000,000 shares
authorized; none issued................................. -- --
Common stock, par value $0.01, 30,000,000 shares
authorized, 14,863,821 shares issued.................... 149 149
Surplus................................................... 45,024 45,024
Retained earnings......................................... 64,329 64,329
Treasury stock, 854,893 shares............................ (11,628) (11,628)
Transitional unrealized loss on common stock shares held
in rabbi trust.......................................... (1,312) (1,312)
Accumulated other comprehensive income.................... (2,476) (2,476)
---------- ----------
Total stockholders' equity.................................. $ 94,086 $ 94,086
---------- ----------
Total liabilities, minority interest in subsidiaries and
stockholders' equity...................................... $1,565,400 $1,590,400
========== ==========
</TABLE>
- ------------------------
(1) The sole assets of the Trust, which is our subsidiary, will be the Junior
Subordinated Debentures which will mature on January 31, 2030. We will own
all of the Common Securities issued by the Trust.
16
<PAGE>
INDEPENDENT CAPITAL TRUST II
The Trust is a statutory business trust formed under Delaware law upon the
filing of a certificate of trust with the Delaware Secretary of State. The Trust
will be governed by the terms of the Amended and Restated Declaration of Trust
of the Trust (the "Trust Agreement") which will be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Trust exists
for the exclusive purposes of (i) issuing and selling the Trust Securities,
(ii) using the proceeds from the sale of Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in other activities that are
incidental or necessary to these purposes. The Junior Subordinated Debentures
will be the sole assets of the Trust, and, accordingly, payments under the
Junior Subordinated Debentures will be the sole revenues of the Trust.
All of the Common Securities will be owned by us. We will acquire Common
Securities with a $25 liquidation amount, equal to at least 3% of the total
capital of the Trust. While the Common Securities will have terms equal in
priority of payment with the Trust Preferred Securities, if we default on the
Junior Subordinated Debentures, then cash distributions and liquidation,
redemption and other amounts payable on the Common Securities will be
subordinated to the Trust Preferred Securities in priority of payment.
The Trust has a term of approximately 31 years, but may be dissolved earlier
as provided in the Trust Agreement. The Trust's business and affairs are
conducted by the Issuer Trustees, who are appointed by us as holder of the
Common Securities. The trustees for the Trust will be The Bank of New York, as
the Property Trustee (the "Property Trustee"), The Bank of New York (Delaware),
as the Delaware Trustee (the "Delaware Trustee") and three Administrative
Trustees who are our officers (each, an "Administrative Trustee" and
collectively, the "Administrative Trustees"). The Property Trustee, the Delaware
Trustee and the Administrative Trustees are collectively referred to as the
"Issuer Trustees" in this prospectus. The Property Trustee will act as sole
indenture trustee under the Trust Agreement. The Bank of New York will also act
as trustee under the Guarantee and the Indenture. The duties and obligations of
each Issuer Trustee are governed by the Trust Agreement. The holder of the
Common Securities of the Trust or, if an event of default under the Trust
Agreement has occurred and is continuing, the holders of not less than a
majority in liquidation amount of the Trust Preferred Securities, will be
entitled to appoint, remove or replace the Property Trustee and/or the Delaware
Trustee. In no event will the holders of the Trust Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, whose
voting rights will be vested exclusively in the holder of the Common Securities.
We will pay all fees, expenses, debts and obligations related to the Trust
and the offering of the Trust Preferred Securities and will pay, directly or
indirectly, all ongoing costs and expenses of the Trust, except the Trust's
obligations with respect to the Trust Preferred Securities and the Common
Securities.
For financial reporting purposes, the Trust will be treated as our
subsidiary and, accordingly, the accounts of the Trust will be included in our
Consolidated Financial Statements. We will present the Trust Preferred
Securities as a separate line item in our consolidated Statement of Financial
Condition entitled "Company-Obligated Mandatorily Redeemable Trust Preferred
Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of
the Company" and we will include appropriate disclosures about the Trust
Preferred Securities, the Guarantee and the Junior Subordinated Debentures in
the notes to our Consolidated Financial Statements. For financial reporting
purposes, we will record distributions payable on the Trust Preferred Securities
as "minority interest income of subsidiaries" in our Consolidated Statements of
Operations. We treat the 9.28% trust preferred securities issued by Trust I in
May 1997 and the related junior subordinated debentures in the same manner.
17
<PAGE>
DESCRIPTION OF TRUST PREFERRED SECURITIES
This summary of certain provisions of the Trust Preferred Securities, the
Common Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms, and
the Trust Indenture Act. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this prospectus forms a part. The
Trust Agreement will be qualified under the Trust Indenture Act. The Property
Trustee will act as the indenture trustee (the "Debenture Trustee") for purposes
of complying with the Trust Indenture Act.
GENERAL
The Administrative Trustees will issue the Trust Preferred Securities on
behalf of the Trust pursuant to the terms of the Trust Agreement. We will own
all of the Common Securities. The Trust Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Trust and the
holders of the Trust Preferred Securities will be entitled to a preference in
certain circumstances with respect to Distributions (as defined below) and
amounts payable on redemption or liquidation over the Common Securities, as well
as other benefits as described in the Trust Agreement. The Trust Agreement
prohibits the issuance by the Trust of any securities other than the Trust
Securities or the incurrence of any indebtedness by the Trust.
The Trust Preferred Securities will rank equal in priority of payment, and
payments will be made thereon PRO RATA with the Common Securities except under
certain circumstances. See "--Subordination of Common Securities." Legal title
to the Junior Subordinated Debentures will be held by the Property Trustee in
trust for the benefit of the holders of the Trust Securities. The Guarantee will
not guarantee payment of Distributions or amounts payable on redemption of the
Trust Preferred Securities or liquidation of the Trust when the Trust does not
have funds on hand legally available for such payments.
DISTRIBUTIONS
PAYMENT OF DISTRIBUTIONS. Distributions on each Trust Preferred Security
will be cumulative, will accrue from January 31, 2000 and will be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing March 31, 2000, at the annual rate of 11% of the stated
liquidation amount of $25 per Trust Preferred Security ("Distributions"). The
initial Distribution will equal $0.46 for each Trust Preferred Security.
Subsequent Distributions will equal approximately $0.69 for each Trust Preferred
Security. Distributions in arrears for more than one quarter will (to the extent
permitted by law) accrue interest at the rate per annum of 11% thereof
compounded quarterly. Distributions shall be made to the holders of the Trust
Preferred Securities on the relevant record date, which for so long as the Trust
Preferred Securities remain in book-entry form, will be one Business Day prior
to the relevant Distribution Date (as defined below) and, in the event the Trust
Preferred Securities are not in book-entry form, will be the fifteenth day of
the month in which the relevant Distribution Date occurs. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months and, for any period of less than a full calendar
quarter, on the basis of the actual number of days elapsed in the quarter based
on 30-day months. In the event that any date on which Distributions are payable
on the Trust Preferred Securities is not a Business Day (as defined below),
payment of the Distribution payable will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect to any
such delay), except that if the next succeeding Business Day falls in the next
succeeding calendar year, the payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date (each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than a Saturday
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or a Sunday, or a day on which banking institutions in the City of New York, New
York or Rockland, Massachusetts are authorized or required by law or executive
order to close.
DEFERRAL PERIOD. So long as no Debenture Event of Default shall have
occurred and be continuing, we will have the right under the Indenture to defer
the payment of interest on the Junior Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive calendar quarters
with respect to each deferral period (each, a "Deferral Period"), provided that
no Deferral Period shall end on a date other than an Interest Payment Date (as
defined herein) or extend beyond January 31, 2030, which is the "Stated Maturity
Date." Upon any such election, quarterly Distributions on the Trust Preferred
Securities will be deferred by the Trust during such Deferral Period.
Distributions to which holders of the Trust Preferred Securities are entitled
during any such Deferral Period will accumulate additional Distributions thereon
at the rate per annum of 11% thereof, compounded quarterly from the relevant
Distribution Date. The term "Distributions," as used herein, includes any such
additional Distributions.
Prior to the termination of any Deferral Period, we may further extend the
Deferral Period, provided that an extension will only be permitted under the
Trust Agreement to the extent that the Deferral Period, together with all other
extensions occurring both before and after such extension, does not exceed 20
consecutive calendar quarters, end on a date other than an Interest Payment Date
or extend beyond the Stated Maturity Date. Upon the termination of any such
Deferral Period and the payment of all amounts then due on any Interest Payment
Date, we may elect to begin a new Deferral Period, subject to the above
requirements. No interest shall be due and payable during a Deferral Period,
except at the end of the period. If Distributions are deferred, the deferred
Distributions and accrued interest will be paid to holders of the Trust
Preferred Securities as they appear on the books and records of the Trust on the
record date for Distributions due at the end of the Deferral Period. We must
give the Property Trustee, the Administrative Trustees and the Debenture Trustee
notice of our election of any such Deferral Period (or an extension thereof) at
least five Business Days prior to the earlier of (i) the date the Distributions
on the Trust Preferred Securities would have been payable except for the
election to begin such Deferral Period and (ii) the date the Administrative
Trustees are required to give notice to any securities exchange or automated
quotation system or to holders of such Trust Preferred Securities of the record
date or the date such Distributions are payable, but in any event not less than
five Business Days prior to such record date. There is no limitation on the
number of times that we may elect to begin a Deferral Period.
During any such Deferral Period, we may not
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our capital
stock;
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities (including any other
debentures related to other trust preferred securities ("Other
Debentures")) that rank equal with or junior in right of payment to the
Junior Subordinated Debentures; or
- make any guarantee payments with respect to any guarantee made by us of
the debt securities of any of our subsidiaries (including other guarantees
of trust preferred securities) if such guarantee ranks equal with or
junior in right of payment to the Junior Subordinated Debentures.
However, we will not be in violation of the Indenture if, during the
Deferral Period, we:
- declare or pay dividends or make distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, our common
stock;
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- declare a dividend in connection with the implementation of a
stockholders' rights plan, or issue stock under any such plan in the
future, or redeem or repurchase of any such rights pursuant to any such
plan;
- make payments under the Guarantee;
- purchase any fractional shares as a result of a reclassification of our
capital stock;
- purchase any fractional interests in shares of our capital stock pursuant
to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged therefor; or
- purchase common stock as a result of the issuance of common stock or
rights under any of our benefit plans for directors, officers or employees
or any of our dividend reinvestment plans.
We do not currently intend to exercise our option to defer payments of
interest on the Junior Subordinated Debentures.
SOURCE OF DISTRIBUTION. The Trust's funds available for distribution to
holders of the Trust Preferred Securities will be limited to payments under the
Junior Subordinated Debentures. If we do not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Trust Preferred Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) will be guaranteed by us on a
limited basis.
REDEMPTION
MANDATORY REDEMPTION OF THE TRUST PREFERRED SECURITIES. Upon the repayment
or redemption at any time, in whole or in part, of any Junior Subordinated
Debentures, the proceeds from such repayment or redemption will be applied by
the Property Trustee to redeem a Like Amount (as defined below) of the Trust
Securities, upon not less than 30 nor more than 60 days' notice of a date of
redemption (the "Redemption Date"), at a redemption price equal to $25 per Trust
Preferred Security plus any accrued and unpaid Distributions thereon to the
Redemption Date. If less than all of the Junior Subordinated Debentures are to
be prepaid on a Redemption Date, then the proceeds of such prepayment will be
allocated PRO RATA to the Preferred and Common Trust Securities, as described
below.
OPTIONAL REDEMPTION OF THE JUNIOR SUBORDINATED DEBENTURES. On or after
January 31, 2002, we will have the right to redeem the Junior Subordinated
Debentures in whole at any time or in part from time to time at a redemption
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed for
redemption. We would redeem the Junior Subordinated Debentures upon not less
than 30 nor more than 60 days written notice, in each case subject to receipt of
prior approval if it is then required under applicable regulatory requirements.
If we redeem the Junior Subordinated Debentures, the Trust Securities will be
redeemed as described in the preceding paragraph.
SPECIAL EVENT OR DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES. If a
Special Event (as defined below) occurs and is continuing, we will have the
right upon not less than 30 nor more than 60 days written notice to redeem the
Junior Subordinated Debentures in whole (but not in part) and thereby cause a
mandatory redemption of the Trust Securities in whole (but not in part) at the
redemption price within 90 days following the occurrence of such Special Event,
in each case subject to receipt of prior approval if it is then required under
applicable regulatory requirements. If a Special Event has occurred and is
continuing and we do not elect to redeem the Junior Subordinated Debentures (and
thereby cause a mandatory redemption of the Trust Securities) or to dissolve the
Trust and, after satisfaction of creditors as required by applicable law, cause
the Junior Subordinated Debentures to be
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distributed to holders of the Trust Securities, the Trust Securities will remain
outstanding and Additional Sums (as defined below) may be payable on the Junior
Subordinated Debentures.
DEFINITIONS. The terms described in the preceding paragraph have the
following meanings:
"Additional Sums" means the additional amounts as may be necessary to be
paid by us with respect to the Junior Subordinated Debentures in order that the
amount of Distributions then due and payable by the Trust on the outstanding
Trust Securities will not be reduced as a result of any additional taxes, duties
and other governmental charges to which the Trust has become subject.
An "Investment Company Event" means the receipt by us of an opinion of
counsel experienced in such matters to the effect that, as a result of any
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940 (the "Investment Company Act"), which change
becomes effective on or after the original issuance of the Trust Preferred
Securities.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Trust Preferred Securities based upon the relative Liquidation
Amounts of such classes and the proceeds of which will be used to pay the
redemption price of such Trust Securities, 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 Trust, Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the holders to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
A "Regulatory Capital Event" means that we shall have received an opinion of
independent bank regulatory counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws or any regulations of the United States or any
rules, guidelines or policies of applicable regulatory agencies or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of the Trust
Agreement, there is more than an insubstantial risk that the Trust Preferred
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier 1 Capital (or its then equivalent) for purposes of the capital
adequacy guidelines of the Board of Governors of the Federal Reserve (or any
successor regulatory authority with jurisdiction over bank holding companies),
or any capital adequacy guidelines as then in effect and applicable to us. The
distribution of the Junior Subordinated Debentures in connection with the
dissolution of the Trust by us will not in and of itself constitute a Regulatory
Capital Event.
A "Special Event" means a Tax Event, an Investment Company Event or a
Regulatory Capital Event, as the case may be.
A "Tax Event" means the receipt by us and the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws or any
regulations of the United States or of any political subdivision or taxing
authority, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after the date of the Trust Agreement, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior
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Subordinated Debentures, (ii) interest payable by us on the Junior Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by us, in whole or in part, for United States federal income tax
purposes or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a minor amount of other taxes, duties or other
governmental charges.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We will have the right at any time to dissolve the Trust and, after
satisfaction of liabilities to creditors of the Trust as required by applicable
law, to cause the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust. This right is
subject to (i) our having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Trust Preferred
Securities and (ii) prior approval by the applicable regulatory authorities if
it is then required under applicable regulatory requirements.
After the date is fixed for any distribution of Junior Subordinated
Debentures to holders of the Trust Securities, (i) the Trust Securities will no
longer be deemed to be outstanding, (ii) The Depository Trust Company ("DTC" or
"Depositary") or its nominee will receive, in respect of each registered global
certificate, if any, representing Trust Securities held by it, a registered
global certificate or certificates representing the Junior Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing Trust Securities not held by DTC or its nominee will be deemed to
represent Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of such Trust Securities with an interest rate identical to
the distribution rate of, and accrued and unpaid interest equal to the
accumulated and unpaid Distributions on, such Trust Securities until such
certificates are presented to the Administrative Trustees or their agent for
cancellation, whereupon we will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Junior Subordinated
Debentures.
We can give no assurance as to the market prices for the Trust Preferred
Securities, or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Securities, if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Trust Preferred Securities that you may
purchase, or the Junior Subordinated Debentures that you may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that you paid to purchase the Trust Preferred Securities.
If the Junior Subordinated Debentures are distributed to the holders of
Trust Preferred Securities, we will use our best efforts to list the Junior
Subordinated Debentures on a national securities exchange or comparable
automated quotation system.
REDEMPTION PROCEDURES
If applicable, Trust Securities will be redeemed at the redemption price
with the proceeds from the contemporaneous repayment or redemption of the Junior
Subordinated Debentures. Any redemption of Trust Securities will be made and the
redemption price shall be payable on the Redemption Date only to the extent that
the Trust has funds legally available for the payment of such redemption price.
The Trust may not redeem fewer than all of the outstanding Trust Preferred
Securities unless all accrued and unpaid Distributions have been paid on all
Trust Preferred Securities for all quarterly Distribution periods terminating on
or prior to the date of redemption. If a partial redemption of the Trust
Preferred Securities would result in the delisting of the Trust Preferred
Securities by a national securities exchange or other organization on which the
Trust Preferred Securities are listed, then, pursuant to the Indenture, we may
only redeem the Junior Subordinated Debentures in whole and, as a result, the
Trust may only redeem the Trust Preferred Securities in whole.
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If the Trust gives a notice of redemption in respect of the Trust Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the Redemption Date, to the extent that we have deposited with the
Property Trustee by 10:00 a.m., New York City time, funds sufficient to pay the
redemption price with respect to the Trust Preferred Securities held by DTC or
its nominees, the Property Trustee will deposit or cause the Paying Agent (as
defined herein) to deposit irrevocably with DTC funds sufficient to pay the
redemption price and will give DTC or its nominees irrevocable instructions and
authority to pay the redemption price to the holders of such Trust Preferred
Securities. See "Book-Entry Issuance." If such Trust Preferred Securities are no
longer in book-entry form, the Property Trustee, to the extent we have deposited
with the Property Trustee funds sufficient to pay the redemption price, will
irrevocably deposit with the Paying Agent for such Trust Preferred Securities
funds sufficient to pay the aggregate redemption price and will give such Paying
Agent irrevocable instructions and authority to pay the redemption price to the
holders thereof upon surrender of their certificates evidencing such Trust
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date shall be payable to the holders of such Trust
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 the
Trust Preferred Securities called for redemption will cease, except the right of
the holders of such Trust Preferred Securities to receive the redemption price,
but without interest on such redemption price and such Trust Preferred
Securities will cease to be outstanding. In the event that any Redemption Date
of Trust Preferred Securities is not a Business Day, then the redemption price
payable on such date will be paid on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such next succeeding Business Day falls in the next calendar
year, such payment shall be made on the immediately preceding Business Day. In
the event that we fail to repay the Junior Subordinated Debentures on maturity
or payment of the redemption price is improperly withheld or refused and not
paid either by the Trust or by us pursuant to the Guarantee as described under
"Description of Guarantee," (i) Distributions on Trust Preferred Securities will
continue to accrue at the then applicable rate from the Redemption Date
originally established by the Trust to the date such redemption price is
actually paid and (ii) the actual payment date will be the Redemption Date for
purposes of calculating the redemption price.
Subject to the Trust Agreement and applicable law (including, without
limitation, United States federal securities law), we or our subsidiaries may at
any time and from time to time purchase outstanding Trust Preferred Securities
by tender, in the open market or by private agreement.
Payment of the redemption price on the Trust Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Trust Preferred
Securities will be made on the Redemption Date.
If less than all of the Trust Securities issued by the Trust are to be
redeemed on a Redemption Date, then the aggregate redemption price for such
Trust Securities to be redeemed will be allocated PRO RATA to the Trust
Preferred Securities and Common Securities based upon the relative Liquidation
Amounts of the Trust Securities or such other method as the Trustee shall deem
appropriate, not more than 60 days prior to the date fixed for redemption. The
particular Trust Preferred Securities to be redeemed will be selected by the
Property Trustee from the outstanding Trust Preferred Securities not previously
called for redemption, by such method as the Property Trustee deems fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple thereof) of the Liquidation Amount of
Trust Preferred Securities. The Property Trustee will promptly notify the
security registrar in writing of the Trust Preferred Securities selected for
redemption and, in the case of any Trust 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 Trust Preferred Securities shall
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relate to the portion of the aggregate Liquidation Amount of Trust 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 prior to the Redemption Date to each holder of Trust Securities at its
registered address. Unless we default in payment of the redemption price on, or
in the repayment of, the Junior Subordinated Debentures, on and after the
Redemption Date, Distributions will cease to accrue on the Trust Securities
called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the redemption price of, the Trust
Securities, as applicable, shall be made PRO RATA based on the Liquidation
Amount of the Trust Securities. However, if on any Distribution Date or
Redemption Date a Debenture Event of Default (as described in "Description of
Junior Subordinated Debentures--Debenture Events of Default") shall have
occurred and be continuing, no payment of any Distribution on, or applicable
redemption price of, any of the Common Securities, and no other payment on
account of the redemption, liquidation or other acquisition of the Common
Securities, will be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Trust Preferred Securities for
all Distribution periods terminating on or prior to the Debenture Event of
Default, or in the case of payment of the redemption price, the full amount of
such redemption price shall have been made or provided for, and all funds
available to the Property Trustee will first be applied to the payment in full
in cash of all Distributions on, or redemption price of, the Trust Preferred
Securities then due and payable.
In the case of any Event of Default under the Trust Agreement relating to a
Debenture Event of Default (as described in "--Events of Default; Notice"), as
holder of the Common Securities, we will be deemed to have waived any right to
act with respect to such Event of Default until the effect of such Event of
Default has been cured, waived or otherwise eliminated. Until any such Event of
Default has been so cured, waived or otherwise eliminated, the Property Trustee
will act solely on behalf of the holders of the Trust Preferred Securities and
not on behalf of us as holder of the Common Securities, and only the holders of
the Trust Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
We will have the right at any time to dissolve the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Preferred Securities. Our right is subject to (i) our having received an opinion
of an independent tax counsel experienced in such matters to the effect that
such distribution will not be a taxable event to holders of Trust Preferred
Securities for United States federal income tax purposes, and (ii) our having
received prior approval if it is then required under applicable regulatory
requirements. See "--Distribution of Junior Subordinated Debentures."
In addition, the Trust will automatically dissolve upon the first to occur
of: (i) certain events of our bankruptcy, dissolution or liquidation; (ii) the
distribution of a Like Amount of the Junior Subordinated Debentures to the
holders of the Trust Securities, if we have given written direction to the
Property Trustee to dissolve the Trust (which direction is optional and, except
as described above, wholly within our discretion); (iii) redemption of all of
the Trust Securities; (iv) expiration of the term of the Trust; and (v) the
entry of an order for the dissolution of the Trust by a court of competent
jurisdiction.
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If a dissolution occurs as described in clause (i), (ii), (iv), or
(v) above, the Trust will be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing to the holders of the Trust Securities, after satisfaction of
liabilities to creditors of the Trust, a Like Amount of the Junior Subordinated
Debentures. However, if such a distribution is determined by the Property
Trustee not to be practicable, the holders will be entitled to receive out of
the assets of the Trust legally available for distribution, after satisfaction
of liabilities to creditors of the Trust, an amount equal to 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 Trust has
insufficient assets on hand legally available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Trust Securities shall be paid on a PRO RATA basis. However, if a Debenture
Event of Default has occurred and is continuing, the Trust Preferred Securities
will have a priority over the Common Securities. See "--Subordination of Common
Securities."
If we elect not to redeem the Junior Subordinated Debentures prior to
maturity in accordance with their terms and either elect not to or are unable to
liquidate the Trust and distribute the Junior Subordinated Debentures to holders
of the Trust Securities, the Trust Securities will remain outstanding until the
repayment of the Junior Subordinated Debentures on the Stated Maturity Date.
If we elect to dissolve the Trust and thereby cause the Junior Subordinated
Debentures to be distributed to holders of the Trust Preferred Securities in
liquidation of the Trust, we shall continue to have the right to redeem the
Junior Subordinated Debentures prior to their stated maturity, subject to
certain conditions.
EVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Trust Preferred Securities, regardless of the
reason for such Event of Default and whether it occurs voluntary or involuntary
or by operation of law or pursuant to any order, rule or regulation:
- the occurrence of a Debenture Event of Default (see "Description of Junior
Subordinated Debentures--Debenture Events of Default");
- default by the Trust in the payment of any Distribution when it becomes
due and payable, and continuation of such default for a period of
30 days;
- default by the Trust in the payment of the redemption price of any Trust
Security when it becomes due and payable;
- 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 default or breach in the performance of a covenant or warranty
which is addressed in the second or third clause above), and continuation
of the default or breach, for a period of 60 days after there has been
given, by registered or certified mail, to the defaulting Issuer Trustee
or Trustees by the holders of at least 25% in aggregate Liquidation Amount
of the outstanding Trust Preferred Securities, a written notice specifying
the default or breach and requiring it to be remedied and stating that the
notice is a "Notice of Default" under the Trust Agreement; or
- the occurrence of certain events of bankruptcy or insolvency with respect
to the Property Trustee and the failure by us to appoint a successor
Property Trustee within 60 days of the event.
Within 90 days after the occurrence of any Event of Default known to the
Property Trustee, the Property Trustee will transmit notice of the Event of
Default to the holders of the Trust Preferred Securities, the Administrative
Trustees and us, unless the Event of Default has been cured or waived. We and
the Administrative Trustees are required to file annually with the Property
Trustee a certificate
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as to whether or not we or 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, the Trust
Preferred Securities will have a preference over the Common Securities. See
"--Subordination of Common Securities" and "--Liquidation Distribution Upon
Default." Upon a Debenture Event of Default, unless the principal of all the
Junior Subordinated Debentures has already become due and payable, either the
Debenture Trustee or the holders of not less than 25% in aggregate principal
amount of the Junior Subordinated Debentures then outstanding may declare all of
the Junior Subordinated Debentures to be due and payable immediately by giving
notice in writing to us (and to the Property Trustee, if notice is given by
holders of the Junior Subordinated Debentures). If the Debenture Trustee or the
holders of the Junior Subordinated Debentures fail to declare the principal of
all of the Junior Subordinated Debentures due and payable upon a Debenture Event
of Default, the holders of at least 25% in Liquidation Amount of the Trust
Preferred Securities then outstanding will have the right to declare the Junior
Subordinated Debentures immediately due and payable. In either event, payment of
principal and interest on the Junior Subordinated Debentures will remain
subordinated to the extent provided in the Indenture. In addition, holders of
the Trust Preferred Securities have the right in certain circumstances to bring
a direct action against us ("Direct Action"). See "Description of Junior
Subordinated Debentures--Enforcement of Certain Rights by Holders of Trust
Preferred Securities."
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any
Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed by the holders of a
majority in Liquidation Amount of the outstanding Trust Preferred Securities. In
no event will the holders of the Trust Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in us, as the holder of the Common Securities. No
resignation or removal of an Issuer Trustee (other than an Administrative
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.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default has occurred and is continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any property of the Trust may at the time be
located, we, as the holder of the Common Securities, and the Administrative
Trustees shall have the right to appoint one or more persons either to act as a
co-trustee, jointly with the Property Trustee, of all or any part of such
property, or to act as separate trustee of any such property, in either case,
with such powers as may be provided in the instrument of appointment, and to
vest in the person or persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of the Trust
Agreement. In case a Debenture Event of Default has occurred and is continuing,
the Property Trustee alone will have power to make the appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee or the Delaware Trustee that is
not a natural person may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Issuer Trustee is a party, or any Person 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
the Person shall be otherwise qualified and eligible.
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MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below or as otherwise described under "--Distribution of
Junior Subordinated Debentures." The Trust may, at our request, with the consent
of the Administrative Trustees but without the consent of the holders of the
Trust Preferred Securities, the Property Trustee or the Delaware Trustee, merge
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to a trust organized under the laws of any State; provided, that (i) the
successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Trust Securities or (b) substitutes for the Trust
Securities other securities having substantially the same terms as the Trust
Securities (the "Successor Securities"), so long as the Successor Securities
rank the same as the Trust Securities rank in priority with respect to
Distributions and payments upon liquidation, redemption and otherwise, (ii) we
expressly appoint a trustee of such successor entity possessing the same powers
and duties as the Property Trustee with respect to the Junior Subordinated
Debentures, (iii) the Trust Preferred Securities or the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Trust Preferred Securities are then listed or quoted, if any, (iv) if the Trust
Preferred Securities (including any Successor Securities) are rated by any
nationally recognized statistical rating organization prior to the transaction,
the merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Trust Securities (including any Successor Securities)
or, if the Junior Subordinated Debentures are so rated, the Junior Subordinated
Debentures, to be downgraded by any such nationally recognized statistical
rating organization, (v) the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities), (vi) the successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, we have received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) the merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect (other than any dilution of such holders' interests in the new
entity), (b) following the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment Company
Act, and (c) the Trust will continue to be, or the successor entity will be,
classified as a grantor trust for federal income tax purposes, (viii) we or any
permitted successor or assignee owns all of the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee and
(ix) the Property Trustee is given an officer's certificate and an opinion of
counsel each to the effect that all conditions precedent in the Trust Agreement
to the transactions have been satisfied. Notwithstanding the foregoing, the
Trust will not, except with the consent of holders of 100% in Liquidation Amount
of the Trust Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it if
the consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity not to be classified as a
grantor trust for United States federal income tax purposes or each holder of
the Trust Securities not to be treated as owning an undivided interest in the
Junior Subordinated Debentures.
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VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "--Mergers, Consolidations, Amalgamations
or Replacements of the Trust" and "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Trust Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by us, the Property
Trustee and the Administrative Trustees, without the consent of the holders of
the Trust 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, which shall not be inconsistent with the
other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Trust will not be required to register as an
investment company under the Investment Company Act. However, the amendment to
the Trust Agreement under these circumstances may not adversely affect the
interests of the holders of the Trust Securities. Any amendments of the Trust
Agreement under these circumstances will become effective when notice is given
to the holders of the Trust Securities. The Trust Agreement may be amended by
the Administrative Trustees, the Property Trustee and us (i) with the consent of
holders representing a majority (based upon Liquidation Amount) of the
outstanding Trust Securities and (ii) upon receipt by the Issuer Trustees of an
opinion of counsel experienced in such matters 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 Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from status as an
investment company under the Investment Company Act. However, without the
consent of each holder of Trust Securities, the Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or reduce the amount payable on redemption thereof 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 payment
on or after the specified date. Notwithstanding the foregoing, no amendments or
modification may be made to the Trust Agreement if such amendment or
modification would (i) cause the Trust to be classified as other than a grantor
trust for United States federal income tax purposes, (ii) reduce or otherwise
adversely affect the powers of the Property Trustee in contravention of the
Trust Indenture Act or (iii) cause a Special Event.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, subject to the requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in Liquidation Amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
direct the exercise of any trust or power conferred on the Debenture Trustee
with respect to the Junior Subordinated Debentures, waive any past defaults
under the Indenture that are waivable under the Indenture, exercise any right to
rescind or annul a declaration of acceleration of the maturity of the principal
of the Junior Subordinated Debentures, or consent to any amendment, modification
or termination of the Indenture or the Junior Subordinated Debentures, where the
consent will be required. However, where a consent under the Indenture would
require the consent of each affected holder of Junior Subordinated Debentures,
no consent may be given by the Property Trustee without the prior approval of
each holder of the Trust Preferred Securities. The Issuer Trustees will not
revoke any action previously authorized or approved by a vote of the holders of
the Trust Preferred Securities except by subsequent vote of those holders. The
Property Trustee will notify each holder of Trust Preferred Securities within
90 days of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Trust Preferred Securities prior to taking any of the foregoing actions,
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the Property Trustee will obtain an opinion of counsel experienced in such
matters to the effect that the Trust will not be classified as an association
taxable as a corporation for United States federal income tax purposes on
account of such action.
Any required approval of holders of Trust Preferred Securities may be given
at a meeting of the holders convened for that purpose or pursuant to written
consent without prior notice. The Administrative Trustees will cause a notice of
any meeting at which holders of Trust Preferred Securities are entitled to vote
to be given to each holder of record of Trust Preferred Securities in the manner
set forth in the Trust Agreement.
No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Trust Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Trust Preferred Securities that are owned by us, the Trustees or any affiliate
of us or any Trustees, will, for purposes of such vote or consent, be treated as
if they were not outstanding.
GLOBAL TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be represented by one or more global
certificates (a "Global Trust Preferred Security") registered in the name of DTC
or its nominee (the "Depositary"). Beneficial interests in the Trust Preferred
Securities will be shown on, and transfer thereof will be effected only through,
records maintained by persons that have accounts with such Depositary
("Participants"). Except as described below, Trust Preferred Securities in
certificated form will not be issued in exchange for the global certificates.
See "Book-Entry Issuance."
A global security will be exchangeable for Trust Preferred Securities
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies us that it is unwilling or unable to continue as
a depositary for the global security and no successor depositary shall have been
appointed within 90 days, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered to act as such depositary, (ii) the Trust in its
sole discretion determines that the global security may be so exchangeable, or
(iii) there shall have occurred and be continuing an Event of Default under the
Indenture. Any global security that is exchangeable as described in the
preceding sentence will be exchangeable for definitive certificates registered
in the names as the Depositary shall direct. We expect that the instructions
will be based upon directions received by the Depositary with respect to
ownership of beneficial interests in the global security. In the event that
Trust Preferred Securities are issued in definitive form, the Trust Preferred
Securities will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below.
Unless and until it is exchanged in whole or in part for individual Trust
Preferred Securities, a Global Trust Preferred Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any nominee to a successor Depositary or any nominee of
the successor.
Payments on Trust Preferred Securities represented by a global security will
be made to the Depositary, as the depositary for the Trust Preferred Securities.
In the event the Trust Preferred Securities are issued in definitive form,
Distributions will be payable, the transfer of the Trust Preferred Securities
will be registrable, and Trust Preferred Securities will be exchangeable for
Trust Preferred Securities of other denominations of a like aggregate
Liquidation Amount, at the corporate trust office of the Property Trustee, or at
the offices of any paying agent or transfer agent appointed by the
Administrative Trustees by check mailed to the address of the persons entitled
thereto or by wire transfer. For a description of the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other manners, See "Book-Entry Issuance."
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Upon the issuance of a Global Trust Preferred Security, and the deposit of
the Global Trust Preferred Security with or on behalf of the Depositary, the
Depositary for the Global Trust Preferred Security or its nominee will credit,
on its book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Trust Preferred Securities represented by
the Global Trust Preferred Securities to the accounts of Participants. These
accounts will be designated by the dealers, underwriters or agents with respect
to the Trust Preferred Securities. Ownership of beneficial interests in a Global
Trust Preferred Security will be limited to Participants or persons that may
hold interests through Participants. Ownership of beneficial interests in the
Global Trust Preferred Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of the securities in definitive form. These
limits and laws may impair the ability to transfer beneficial interest in a
Global Trust Preferred Security.
So long as the Depositary for a Global Trust Preferred Security, or its
nominee, is the registered owner of the Global Trust Preferred Security, the
Depositary or the nominee, as the case may be, will be considered the sole owner
or holder of the Trust Preferred Securities represented by the Global Trust
Preferred Security for all purposes under the Trust Agreement governing such
Trust Preferred Securities. Except as provided below, owners of beneficial
interest in a Global Trust Preferred Security will not be entitled to have any
of the individual Trust Preferred Securities represented by such Global Trust
Preferred Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Trust Preferred Securities in definitive
form and will not be considered the owners or holders under the Trust Agreement.
Neither the Property Trustee, any Paying Agent (as defined below), the
Securities Registrar (as defined below) for the Trust Preferred Securities nor
we will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of the
Global Trust Preferred Security representing the Trust Preferred Securities or
for maintaining supervising or reviewing any records relating to the beneficial
ownership interests.
We expect that the Depositary for Trust Preferred Securities or its nominee,
upon receipt of any payment of the Liquidation Amount or Distributions in
respect of a permanent Global Trust Preferred Security, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate Liquidation Amount of such
Global Trust Preferred Security as shown on the records of such Depositary or
its nominee. We also expect that payments by Participants to owners of
beneficial interests in such Global Trust Preferred Security held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." These payments will be the responsibility
of such Participants.
If the Depositary for the Trust Preferred Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by us within 90 days, the Trust will issue
individual Trust Preferred Securities in exchange for the Global Trust Preferred
Security. In addition, the Trust may at any time and in its sole discretion,
subject to any limitations described herein relating to the Trust Preferred
Securities, determine not to have any Trust Preferred Securities represented by
one or more Global Trust Preferred Securities and, in that event, will issue
individual Trust Preferred Securities in exchange for the Global Trust Preferred
Security. In any such instance, an owner of a beneficial interest in a Global
Trust Preferred Security will be entitled to physical delivery of individual
Trust Preferred Securities represented by the Global Trust Preferred Security
equal in Liquidation Amount to the beneficial interest and to have the Trust
Preferred Securities registered in its name. Individual Trust Preferred
Securities so issued will be issued in denominations, unless otherwise specified
by us, of $25 and integral multiples thereof.
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PAYMENT AND PAYING AGENCY
Payments on the Trust Preferred Securities held in global form will be made
to the Depositary, which will credit the relevant accounts at the Depositary on
the applicable Distribution Dates. Payments on the Trust Preferred Securities
that are not held by the Depositary will be made by check mailed to the address
of the holder entitled thereto as the address which appears on the register. 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
Administrative Trustees and us. The Paying Agent will be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees. In the
event that the Property Trustee will no longer be the Paying Agent, the
Administrative Trustees will appoint a successor (which will be a bank or trust
company acceptable to the Administrative Trustees and us) to act as Paying
Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will initially act as registrar and transfer agent for
the Trust Preferred Securities (the "Securities Registrar"). Registration of
transfers of the Trust Preferred Securities will be effected without charge by
or on behalf of the Trust, but upon payment of any tax or other governmental
charges that may be imposed in connection with any transfer or exchange. The
Trust will not be required to register or cause to be registered the transfer of
the Trust Preferred Securities after they 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 the duties as are specifically set
forth in the Trust Agreement and, during the existence of an 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 Trust
Securities unless it is offered reasonable indemnity or security against the
costs, expenses and liabilities that might be incurred. If no Event of Default
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the Trust
Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of the Trust Securities
are entitled under the Trust Agreement to vote, then the Property Trustee may
take the action as is directed by the holders of the Trust Securities, and, if
not so directed, may take action as it deems advisable and in the best interests
of the holders of the Trust Securities and will have no liability except for its
own bad faith, negligence or willful misconduct. The Property Trustee also
serves as the property trustee, guarantee trustee and the indenture trustee with
respect to the 9.28% trust preferred securities issued by Trust I in May 1997
and the related junior subordinated debentures due May 19, 2027.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an investment company required to be registered under the
Investment Company Act or classified as other than a grantor trust for United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated by us as indebtedness for United States federal
income tax purposes. In this connection, we and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that we and the
Administrative Trustees determine in our discretion to be necessary or desirable
for these purposes, as long as the action does not adversely affect the
interests of the holders of the Trust Securities or vary the terms thereof. The
Administrative Trustees also serve as administrative trustees of Trust I.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under an Indenture, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the Debenture Trustee and us. The Indenture will be qualified under the Trust
Indenture Act. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Indenture does not purport to be complete, and
is qualified in its entirety by reference to all of the provisions of the
Indenture and those terms made a part of the Indenture by the Trust Indenture
Act. The form of the Indenture has been filed as an exhibit to the Registration
Statement.
Concurrently with the issuance of the Trust Preferred Securities, the Trust
will invest the proceeds, together with the consideration paid by us for the
Common Securities, in Junior Subordinated Debentures issued by us. The Junior
Subordinated Debentures will be issued as unsecured debt under the Indenture.
We may dissolve the Trust at any time and, after satisfaction of liabilities
to creditors of the Trust, cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
If the Junior Subordinated Debentures are distributed to the holders of the
Trust Preferred Securities, we will use our best efforts to list the Junior
Subordinated Debentures on a national securities exchange or comparable
automated quotation system.
GENERAL
The Junior Subordinated Debentures will bear interest at the annual rate of
11% of the principal amount thereof, payable quarterly in arrears on the last
day of March, June, September and December of each year (each, an "Interest
Payment Date"), commencing March 31, 2000, to the person in whose name each
Junior Subordinated Debenture is registered, subject to certain exceptions, on
the Business Day immediately preceeding the relevant Interest Payment Date.
Notwithstanding the above, in the event that either (i) Junior Subordinated
Debentures are held by the Property Trustee and the Trust Preferred Securities
are no longer in book-entry only form or (ii) the Junior Subordinated Debentures
are not represented by a Global Subordinated Debenture, the record date for such
payment shall be the fifteenth day of the month in which the relevant Interest
Payment Date occurs. The amount of each interest payment due with respect to the
Junior Subordinated Debentures will include amounts accrued through the date the
interest payment is due. We anticipate that, until the dissolution, if any, of
the Trust, each Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Trust Preferred
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and, for any period of less
than a full calendar quarter, on the basis of the actual number of days elapsed
in the quarter based upon 30-day months. In the event that any date on which
interest is payable on the Junior Subordinated Debentures is not a Business Day,
then payment of the interest payable will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that if the next succeeding Business Day falls in the
next succeeding calendar year, then the payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. 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 11% thereof, compounded quarterly.
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 January 31, 2030 (the
"Stated Maturity Date"). On or after January 31, 2002, we will have the right to
redeem the Junior Subordinated Debentures in whole at any time or in part from
time to time at a redemption price equal to 100% of the principal amount thereof
plus accrued and unpaid interest on the Junior Subordinated Debentures
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so redeemed to the date fixed for redemption, subject to our having received
prior approval if it is then required under applicable regulatory requirements.
In the event that we elect to redeem the Junior Subordinated Debentures, we will
give notice to the Debenture Trustee, and the Debenture Trustee will give notice
of the redemption to the holders of the Junior Subordinated Debentures no less
than 30 days or more than 60 days prior to the effectiveness thereof.
The Junior Subordinated Debentures will rank equal with all Other Debentures
and will be unsecured and will rank subordinate and junior in right of payment
to all Senior and Subordinated Indebtedness (as defined under "Description of
Junior Subordinated Debentures--Subordination") to the extent and in the manner
set forth in the Indenture.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is continuing, we
will have the right under the Indenture to defer the payment of interest on the
Junior Subordinated Debentures at any time and from time to time for a period
not exceeding 20 consecutive calendar quarters, provided that no Deferral Period
may end on a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. At the end of such Deferral Period, we must pay all
interest then accrued and unpaid (together with interest thereon at the annual
rate of 11%, compounded quarterly, to the extent permitted by applicable law).
During a Deferral Period, interest will continue to accrue and, if the Junior
Subordinated Debentures have been distributed to holders of the Trust Preferred
Securities, holders of Junior Subordinated Debentures (or holders of the Trust
Preferred Securities while Trust Preferred Securities are outstanding) will be
required to accrue such deferred interest income for United States federal
income tax purposes prior to the receipt of cash attributable to such income.
See "Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
During a Deferral Period, we will not undertake any of the actions set forth
below under "--Certain Covenants We Have Made."
Prior to the termination of any such Deferral Period, we may further extend
such Deferral Period, provided that such extension does not cause such Deferral
Period together with all previous and further extensions within the Deferral
Period to exceed 20 consecutive calendar quarters, end on a date other than an
Interest Payment Date or extend beyond the Stated Maturity Date. Upon the
termination of any such Deferral Period and the payment of all amounts then due
on any Interest Payment Date, we may elect to begin a new Deferral Period,
subject to the above requirements. No interest will be due and payable during a
Deferral Period, except at the end of that period. We must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of
election of any Deferral Period (or an extension thereof) at least five Business
Days prior to the earlier of (i) the next succeeding date on which Distributions
on the Trust Preferred Securities are payable or (ii) the date the Trust is
required to give notice to any securities exchange or to holders of Trust
Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than five Business Days prior to the record
date. The Debenture Trustee will give notice of our election to begin or extend
a new Deferral Period to the holders of the Trust Preferred Securities.
ADDITIONAL SUMS
If the Trust or the Property Trustee is required to pay any additional
taxes, duties, assessments or other governmental charges as a result of a Tax
Event, we will pay additional amounts as may be required so that the
Distributions payable by the Trust shall not be reduced as a result of any such
additional taxes, duties, assessments or other governmental charges ("Additional
Sums").
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REDEMPTION
Subject to our having received any prior approval required under applicable
regulatory requirements, the Junior Subordinated Debentures are redeemable prior
to maturity at our option on or after January 31, 2002, in whole (at any time)
or in part (from time to time), at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest on the Junior Subordinated
Debentures to the date of redemption.
The Junior Subordinated Debentures are also redeemable prior to maturity at
any time in whole (but not in part), within 90 days following the occurrence of
a Special Event, in each case at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest on the Junior Subordinated
Debentures so redeemed to the date fixed for redemption. If a partial redemption
of the Trust Preferred Securities resulting from a partial redemption of the
Junior Subordinated Debentures would result in a delisting of the Trust
Preferred Securities, then we may redeem the Junior Subordinated Debentures in
whole only.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at the holder's registered address. Unless we default
in payments of the redemption price, on and after the redemption date, interest
ceases to accrue on the Junior Subordinated Debentures or portions called for
redemption.
The Junior Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
Under certain circumstances involving the dissolution of the Trust, the
Junior Subordinated Debentures may be distributed to the holders of the Trust
Preferred Securities in liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust. See "Description of Trust Preferred
Securities--Liquidation Distribution Upon Dissolution." If distributed to
holders of the Trust Preferred Securities in liquidation, the Junior
Subordinated Debentures will initially be issued in the form of one or more
global securities and the Depositary or any successor depositary for the Trust
Preferred Securities will act as depositary for the Junior Subordinated
Debentures. We anticipate that the depositary arrangements for the Junior
Subordinated Debentures be substantially identical to those in effect for the
Trust Preferred Securities. If the Junior Subordinated Debentures are
distributed to the holders of Trust Preferred Securities upon the liquidation of
the Trust, we will use our best efforts to list the Junior Subordinated
Debentures on the Nasdaq National Market or such other stock exchanges or
automated quotation system, if any, on which the Trust Preferred Securities are
then listed or quoted. We can give no assurance as to the market price of any
Junior Subordinated Debentures that may be distributed to the holders of Trust
Preferred Securities.
CERTAIN COVENANTS WE HAVE MADE
If at any time (1) there shall have occurred any event of which we have
actual knowledge that (a) is, or with the giving of notice or the lapse of time,
or both, would be, a Debenture Event of Default and (b) in respect of which we
shall not have taken reasonable steps to cure, (2) we are in default with
respect to our payment of any obligations under the Guarantee while the Junior
Subordinated Debentures are held by the Property Trustee, or (3) we shall have
given notice of our election of a Deferral Period as provided in the Indenture
and shall not have rescinded such notice, and such Deferral Period, or any
extension thereof, shall have commenced and be continuing, then we will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock;
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- make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any of our debt securities (including Other
Debentures) that rank equal with or junior in right of payment to the
Junior Subordinated Debentures; or
- make any guarantee payments with respect to any guarantee by us of the
debt securities of any of our subsidiaries (including under Other
Guarantees) if such guarantee ranks equal or junior in right of payment to
the Junior Subordinated Debentures.
We will not violate the terms of the Indenture if we:
- declare or pay dividends or make distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of our common
stock;
- declare a dividend in connection with the implementation of a
stockholders' rights plan, or issue stock under any plan in the future, or
redeem or repurchase any rights under such a plan;
- make payments under the Guarantee;
- purchase fractional shares as a result of a reclassification of our
capital stock;
- purchase fractional interests in shares of our capital stock pursuant to
the conversion or exchange provisions of our capital stock or the security
being converted or exchanged; or
- purchase common stock as a result of the issuance of common stock or
rights under any of our benefit plans for directors, officers or employees
or any of our dividend reinvestment plan.
So long as the Trust Securities remain outstanding, we also have agreed
(i) to maintain 100% direct or indirect ownership of the Common Securities;
provided, however, that any permitted successor to us under the Indenture may
succeed to our ownership of such Common Securities, (ii) to not voluntarily
dissolve, wind-up or terminate the Trust, except in connection with the
distribution of the Junior Subordinated Debentures or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement,
(iii) to timely perform our duties as sponsor of the Trust, (iv) to use our
reasonable efforts to cause the Trust (a) to remain a business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Trust Agreement, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes, and (v) to use our reasonable efforts to cause each holder of
Trust Securities to be treated as owning an undivided beneficial interest in the
Junior Subordinated Debentures.
SUBORDINATION
In the Indenture, we have covenanted and agreed that any Junior Subordinated
Debentures issued thereunder will be subordinate and junior in right of payment
to all Senior and Subordinated Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of which we are the subject, the holders of Senior and
Subordinated Indebtedness will first be entitled to receive payment in full of
principal of all Allocable Amounts (as defined below) on such Senior and
Subordinated Indebtedness before the holders of Junior Subordinated Debentures
will be entitled to receive or retain any payment in respect thereof. As of
September 30, 1999, we had no Senior and Subordinated Indebtedness outstanding.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior and Subordinated Indebtedness outstanding
at the time of such acceleration will first be entitled to receive payment in
full of such amounts due thereon (including any amounts due upon
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acceleration) before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal, or interest, if any, in respect of the
Junior Subordinated Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to any Senior and Subordinated
Indebtedness, or an event of default with respect to any Senior and Subordinated
Indebtedness resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any default.
We are a holding company and almost all of our operating assets are owned by
our subsidiaries. We are a legal entity separate and distinct from our
subsidiaries. Holders of Junior Subordinated Debentures should look only to us
for payments on the Junior Subordinated Debentures. The principal sources of our
income are dividends, interest and fees from our subsidiaries. We rely primarily
on dividends from the Bank to meet our obligations for payment of principal and
interest on our corporate expenses. There are regulatory limitations on the
payment of dividends directly or indirectly to us from the Bank. As of
September 30, 1999, under applicable banking statutes, the total capital
available for payment of dividends by the Bank to us was approximately
$27 million. However, bank regulatory authorities have the power to prohibit any
act, including the payment of dividends, if such act would reduce bank capital
to a point that, in the opinion of such regulatory authorities, would render the
Bank undercapitalized and thus constitute an unsafe or unsound banking practice.
In addition, the Bank is subject to certain restrictions imposed by federal law
on any extensions of credit to, and certain other transactions with, us and
certain affiliates, and on investments in stock or other securities. These
restrictions prevent us and our affiliates from borrowing from the Bank unless
the loans are secured by various types of collateral. Further, secured loans,
other transactions and investments by the Bank are generally limited in amount
as to us and as to each of our affiliates to 10% of the Bank's capital and
surplus and as to us and all of our other affiliates to an aggregate of 20% of
the Bank's capital and surplus.
Because we are a holding company, our right to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Trust
Preferred Securities to benefit indirectly from such distribution), is subject
to the prior claims of creditors of that subsidiary (including depositors, in
the case of the Bank), except to the extent we may be recognized as a creditor
of that subsidiary. At September 30, 1999, our subsidiaries had total
liabilities (excluding liabilities owed to us) of $1.5 billion. Accordingly, the
Junior Subordinated Debentures will be effectively subordinated to all existing
and future liabilities of our subsidiaries and all liabilities of any of our
future subsidiaries. The Indenture does not limit our or our subsidiaries'
ability to incur or issue other secured or unsecured debt, including Senior and
Subordinated Indebtedness.
DEFINITIONS. For purposes of the foregoing paragraphs, the following
definitions apply:
"Allocable Amounts," when used with respect to any Senior and Subordinated
Indebtedness, means all amounts due or to become due on the Senior and
Subordinated Indebtedness less, if applicable, any amount which would have been
paid to, and retained by, the holders of the Senior and Subordinated
Indebtedness (whether as a result of the receipt of payments by the holders of
such Senior and Subordinated Indebtedness from us or any other obligated party
or from any holders of, or trustee in respect of, other indebtedness that is
subordinate and junior in right of payment to the Senior and Subordinated
Indebtedness) but for the fact that such Senior and Subordinated Indebtedness is
subordinated or junior in right of payment to (or subject to a requirement that
amounts received on such Senior and Subordinated Indebtedness be paid over to
obligees on) trade accounts payable or accrued liabilities arising in the
ordinary course of business.
"Indebtedness" means with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent:
(i) every obligation of any person for money
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borrowed; (ii) every obligation of the person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of the person with respect to letters of credit,
banker's acceptances or similar facilities issued for the account of the person;
(iv) every obligation of the person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) every capital lease
obligation of the person; (vi) all indebtedness of the person whether incurred
on or prior to the date of the Indenture or thereafter incurred, for claims in
respect of derivative products, including interest rate, foreign exchange rate
and commodity forward contracts, options and swaps 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 person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Senior and Subordinated Indebtedness" means the principal of (and premium,
if any) and interest, if any (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to us whether or
not the claim for post-petition interest is allowed in such proceeding), on our
Indebtedness whether incurred on or prior to the date of the Indenture or
thereafter incurred, unless in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that the obligations
are not superior in right of payment to the Junior Subordinated Debentures or to
other Indebtedness which is equal with, or subordinated to, the Junior
Subordinated Debentures. However, Senior and Subordinated Indebtedness does not
include (i) any of our Indebtedness which when incurred and without respect to
any election under section 1111(b) of the United States Bankruptcy Reform Act of
1978, as amended, was without recourse to us, (ii) any Indebtedness we have to
any of our subsidiaries, (iii) Indebtedness to any of our employees, and
(iv) any other debt securities issued pursuant to the Indenture.
DENOMINATIONS, REGISTRATION AND TRANSFER
If the Junior Subordinated Debentures are distributed to the holders of the
Trust Preferred Securities, the Junior Subordinated Debentures will be
represented by global certificates registered in the name of the Depositary or
its nominee (the "Global Subordinated Debenture"). Beneficial interests in the
Junior Subordinated Debentures will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary. Except as described
below, Junior Subordinated Debentures in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance."
Unless and until a Global Subordinated Debenture is exchanged in whole or in
part for the individual Junior Subordinated Debentures, it may not be
transferred except as a whole by the Depositary for the Global Subordinated
Debenture to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
nominee to a successor Depositary or any nominee of the successor.
A Global Subordinated Debenture will be exchangeable for Junior Subordinated
Debentures registered in the names of persons other than the Depositary or its
nominee only if (i) the Depositary notifies us that it is unwilling or unable to
continue as a depositary for such Global Subordinated Debenture and no successor
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered to act as such depositary, (ii) we in our sole
discretion determine that the Global Subordinated Debenture will be so
exchangeable or (iii) there shall have occurred and be continuing a Debenture
Event of Default with respect to the Global Subordinated Debenture. Any Global
Subordinated Debenture that is exchangeable pursuant to the preceding sentence
will be exchangeable for definitive certificates registered in such names as the
Depositary shall direct. It is expected that the instructions will be based upon
directions received by the Depositary from its Participants with respect
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to ownership of beneficial interests in the Global Subordinated Debenture. In
the event that Junior Subordinated Debentures are issued in definitive form, the
Junior Subordinated Debentures will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices described
below.
Payments on Junior Subordinated Debentures represented by a Global
Subordinated Debenture will be made to the Depositary, as the depositary for the
Junior Subordinated Debentures. In the event Junior Subordinated Debentures will
be registrable, Junior Subordinated Debentures will be exchangeable for Junior
Subordinated Debentures of other denominations of a like aggregate principal
amount, at the corporate office of the Debenture Trustee, or at the offices of
any paying agent or transfer agent appointed by us, provided that payment of
interest may be made at our option by check mailed to the address of the persons
entitled thereto or by wire transfer. In addition, if the Junior Subordinated
Debentures are issued in certificated form, the record dates for payment of
interest will be the fifteenth day of the month in which such payment is to be
made. For a description of the Depositary and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Book-Entry Issuance."
We will appoint the Debenture Trustee as securities registrar under the
Indenture (the "Securities Registrar"). 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. We may at any time rescind the designation of any transfer agent or
approve a change in the location through which any transfer agent acts, provided
that we maintain a transfer agent in the place of payment. We may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither we 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 Junior Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Junior
Subordinated Debentures so selected for redemption, except, in the case of any
Junior Subordinated Debentures being redeemed in part, any portion thereof not
to be redeemed.
GLOBAL SUBORDINATED DEBENTURES
Upon the issuance of the Global Subordinated Debenture and the deposit of
such Global Subordinated Debenture with or on behalf of the Depositary, the
Depositary for the Global Subordinated Debenture or its nominee will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the individual Junior Subordinated Debentures represented by the
Global Subordinated Debenture to the accounts of persons that have accounts with
such Depositary ("Participants"). Ownership of beneficial interests in a Global
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants). The laws of some states
require that certain purchasers of securities take physical delivery of the
securities in definitive form. These limits and laws may impair the ability to
transfer beneficial interests in a Global Subordinated Debenture.
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So long as the Depositary for a Global Subordinated Debenture, or its
nominee, is the registered owner of the Global Subordinated Debenture, the
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Junior Subordinated Debentures represented by the Global
Subordinated Debenture for all purposes under the Indenture governing the Junior
Subordinated Debentures. Except as provided below, owners of beneficial
interests in a Global Subordinated Debenture will not be entitled to have any of
the individual Junior Subordinated Debentures represented by such Global
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated Debentures
in definitive form and will not be considered the owners or holders under the
Indenture.
Payments of principal of and interest on individual Junior Subordinated
Debentures represented by a Global Subordinated Debenture registered in the name
of the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owner of the Global Subordinated Debenture
representing the Junior Subordinated Debentures. Neither we nor the Debenture
Trustee, any Paying Agent, or the Securities Registrar for such Junior
Subordinated Debentures will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Subordinated Debenture representing the Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
If the Depositary is at any time unwilling, unable or ineligible to continue
as depositary and a successor depositary is not appointed by us within 90 days
after we receive notice or otherwise become aware of the situation, we will
issue individual Junior Subordinated Debentures in exchange for the Global
Subordinated Debenture. In addition, we may at any time and in our sole
discretion, determine not to have the Junior Subordinated Debentures represented
by one or more Global Subordinated Debenture and, in such event, we will issue
individual Junior Subordinated Debentures in exchange for the Global
Subordinated Debenture. Further, if we so specify with respect to the Junior
Subordinated Debentures, an owner of a beneficial interest in a Global
Subordinated Debenture representing Junior Subordinated Debentures may, on terms
acceptable to us, the Debenture Trustee and the Depositary for such Global
Subordinated Debenture, receive individual Junior Subordinated Debentures in
exchange for such beneficial interests. In any such instance, an owner of a
beneficial interest in a Global Subordinated Debenture will be entitled to
physical delivery of individual Junior Subordinated Debentures registered in its
name. Individual Junior Subordinated Debentures so issued will be issued in
denominations, unless otherwise specified by us, of $25 and integral multiples
thereof.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on Junior Subordinated Debentures
will be made at the office of the Debenture Trustee in the City of New York or
at the office of such Paying Agent or Paying Agents as we may designate from
time to time, except that at our option, payment of any interest may be made,
except in the case of Junior Subordinated Debentures in global form, (i) by
check mailed to the address of the Person entitled thereto as the address
appears in the register for Junior Subordinated Debentures or (ii) by transfer
to an account maintained by the person as specified in the register, provided
that proper transfer instructions have been received by the relevant record
date. Payment of any interest on any Junior Subordinated Debenture will be made
to the person in whose name such Junior Subordinated Debenture is registered at
the close of business on the record date. We may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent; however
we will at all times be required to maintain a Paying Agent in each place of
payment for the Junior Subordinated Debentures.
We expect that the Depositary or its nominee, upon receipt of any payment of
principal or interest in respect of a permanent Global Subordinated Debenture
representing the Junior Subordinated Debentures, immediately will credit
Participants' accounts with payments in amounts proportionate to
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their respective beneficial interest in the principal amount of the Global
Subordinated Debenture as shown on the records of such Depositary or its
nominee. We also expect that payments by Participants to owners of beneficial
interests in such Global Subordinated Debenture held through the Participants
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name." These payments will be the responsibility of such
Participants.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by us in trust, for the payment of the principal of or interest on any
Junior Subordinated Debenture and remaining unclaimed for two years after such
principal or interest has become due and payable will, at our request, be repaid
to us and the holder of such Junior Subordinated Debenture will thereafter look,
as a general unsecured creditor, only to us for payment thereof.
MODIFICATION OF INDENTURE
From time to time we and the Debenture Trustee may, without the consent of
the holders of Junior Subordinated Debentures, amend, waive or supplement the
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any action does not
adversely affect the interest of the holders of Junior Subordinated Debentures),
and qualifying, or maintaining the qualification of, the Indenture under the
Trust Indenture Act. The Indenture contains provisions permitting us and the
Debenture Trustee, with the consent of the holders of a majority in principal
amount of Junior Subordinated Debentures, to modify the Indenture in a manner
affecting the rights of the holders of Junior Subordinated Debentures; provided
that no such modification may, without the consent of the holders of each
outstanding Junior Subordinated Debenture so affected, (i) change the Stated
Maturity Date, or reduce the principal amount of the Junior Subordinated
Debentures or reduce the rate or extend the time of payment of interest except
pursuant to our right under the Indenture to defer the payment of interest or
make the principal of, or interest on, the Junior Subordinated Debentures
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Junior Subordinated Debentures to institute suit for the
payment thereof, or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures, the holders of which are required to consent to any
modification of the Indenture; provided that so long as any of the Trust
Preferred Securities remain outstanding, no modification may be made that
adversely affects the holders of such Trust Preferred Securities, and no
termination of the Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Indenture may be effective,
without the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Trust Preferred Securities unless and until the
principal amount of the Junior Subordinated Debentures and all accrued and
unpaid interest thereon have been paid in full and certain other conditions are
satisfied. If the consent of the Property Trustee, as holder of the Junior
Subordination Debentures, is required under the Indenture with respect to
amendments, waivers or supplements of the Indenture or the Junior Subordinated
Debentures, the Property Trustee shall request the direction of the holders of
the Trust Securities with respect to such amendments, waivers or supplements and
shall vote as directed by a majority in Liquidation Amount of the Trust
Securities voting together as a single class. Where a consent under the
Indenture would require the consent of each holder of Junior Subordinated
Debentures, no such consent shall be given by the Property Trustee without the
prior consent of each holder of Trust Preferred Securities. In addition, we and
the Debenture Trustee may execute, without the consent of any holder of Junior
Subordinated Debentures, any supplemental Indenture for the purpose of creating
any new series of Junior Subordinated Debentures.
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DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default," regardless of the reason and whether it is
voluntary or involuntary or effected by operation of law or pursuant to any
judgment, decree, order, rule or regulation:
- failure for 30 days to pay any interest on the Junior Subordinated
Debentures or any Other Debentures, when due (except the deferral of any
interest during a Deferral Period);
- failure to pay any principal on the Junior Subordinated Debentures or any
Other Debentures when due whether at maturity, upon redemption, by
declaration of acceleration of maturity or otherwise;
- failure to observe or perform certain other covenants contained in the
Indenture for 60 days after written notice to us from the Debenture
Trustee or the holders of at least 25% in aggregate outstanding principal
amount of Junior Subordinated Debentures;
- certain events of our bankruptcy, insolvency or reorganization.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have, subject to certain exceptions, the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee or exercising any trust or power conferred on
the Debenture Trustee, with respect to the Junior Subordinated Debentures. The
Debenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures may declare the principal
amount of, and any interest on, the Junior Subordinated Debentures to be due and
payable immediately upon a Debenture Event of Default; provided that, in the
case of certain events of bankruptcy, insolvency or reorganization, such amounts
shall automatically become due and payable. If the Debenture Trustee or holders
of the Junior Subordinated Debentures fail to make the declaration, the holders
of at least 25% in the aggregate Liquidation Amount of the Trust Preferred
Securities will have the right. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul the
declaration and waive the default if the default (other than the non-payment of
the principal of the Junior Subordinated Debentures which has become due solely
by such acceleration) has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of the Junior
Subordinated Debentures fail to annul such declaration and waive the default,
the holders of a majority in aggregate Liquidation Amount of the Trust Preferred
Securities shall have the right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures may, on behalf of the holders of all the Junior
Subordinated Debentures, waive any past default, except a default in the payment
of principal on 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 Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
In case a Debenture Event of Default occurs and is continuing as to Junior
Subordinated Debentures, the Property Trustee will have the right to declare the
principal of and the interest on such Junior Subordinated Debentures, and any
other amounts payable under the Indenture, to be due and payable and to enforce
its other rights as a creditor with respect to such Junior Subordinated
Debentures.
The Indenture requires the annual filing by us with the Debenture Trustee of
a certificate as to the absence of certain defaults under the Indenture.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and is
attributable to our failure to pay the principal of or interest on the Junior
Subordinated Debentures on the due date, a holder of Trust Preferred Securities
may institute a Direct Action. We may not amend the Indenture to remove the
right to bring a Direct Action without the prior written consent of the holders
of all of the Trust Preferred Securities. If the right to bring a Direct Action
is removed, the Trust may become subject to the reporting obligations under the
Exchange Act and the rules and regulations thereunder. Notwithstanding any
payments made to a holder of Trust Preferred Securities by us in connection with
a Direct Action, we will remain obligated to pay the principal of or interest on
the Junior Subordinated Debentures, and we will be subrogated to the rights of
the holder of such Trust Preferred Securities with respect to payments on the
Trust Preferred Securities to the extent of any payments made by us to such
holder in any Direct Action.
The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures, other than those set forth in the preceding paragraph, unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of Trust Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that we may not consolidate with or merge into any
other person or convey, transfer or lease our properties as an entirety, or
substantially as an entirety, to any person, unless: (i) we are the surviving
person, or the person formed by or surviving any consolidation or merger (if
other than us) or to which the sale, conveyance, transfer or lease of property
is made is a person organized and existing under the laws of the United States
or any state thereof or the District of Columbia; (ii) upon any consolidation,
merger, sale, conveyance, transfer or lease, the due and punctual payment of the
principal of and interest on the Junior Subordinated Debentures according to
their tenor and the due and punctual performance and observance of all the
covenants and conditions of the Indenture to be kept or performed by us will be
expressly assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect) satisfactory in form
to the Debenture Trustee executed and delivered to the Debenture Trustee, by the
person formed by the consolidation, or into which we will have been merged, or
by the person which will have acquired our property, as the case may be;
(iii) after giving effect to the consolidation, merger, sale, conveyance,
transfer or lease, no Default or Event of Default, or any event which, after
notice or lapse of time or both, would become a Default or an Event of Default,
will have occurred and be continuing; (iv) the consolidation, merger, sale,
conveyance, transfer or lease does not cause the Junior Subordinated Debentures
to be downgraded by a nationally recognized statistical rating organization; and
(v) certain other conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving us that may adversely affect holders of the Junior
Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity or called for redemption within one year, and we deposit or cause 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, on the Stated Maturity Date or the Redemption Date, then the
Indenture will cease to be of further effect (except as to our obligations to
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pay all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and we will be deemed
to have satisfied and discharged the Indenture. The Indenture also provides that
we may be discharged from our obligations under the Indenture by depositing,
with the Debenture Trustee or the defeasance agent, funds or U.S. Government
Securities, in trust, pledged for and solely dedicated to the benefit of holders
of the Debentures, sufficient to pay and discharge each installment of principal
and interest on the Debentures through the Stated Maturity Date. We will only be
permitted to take this latter action if, among other things, we deliver to the
Debenture Trustee an opinion of counsel (who may be counsel for us) to the
effect that the holders of the Junior Subordinated Debentures will not recognize
income, gain or loss for federal income tax purposes as a result of our actions
and will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit and
defeasance had not occurred.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has and will be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
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DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by The Bank of New York (the
"Guarantee Trustee") and us concurrently with the issuance by the Trust of the
Trust Preferred Securities for the benefit of the holders from time to time of
the Trust Preferred Securities. The Guarantee will be qualified as an Indenture
under the Trust Indenture Act. This summary of certain provisions of the
Guarantee does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of the Guarantee and the
Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this prospectus forms a part.
GENERAL
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Preferred Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
We will irrevocably agree to pay in full on a subordinated basis, the
Guarantee Payments (as defined below) to the holders of the Trust Preferred
Securities, as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert other than the defense of
payment. The following payments with respect to the Trust Preferred Securities,
to the extent not paid by or on behalf of the Trust (the "Guarantee Payments"),
will be subject to the Guarantee: (i) any accrued and unpaid Distributions
required to be paid on the Trust Preferred Securities, to the extent that the
Trust has funds on hand legally available therefor at such time, (ii) the
applicable redemption price with respect to the Trust Preferred Securities
called for redemption, to the extent that the Trust has funds on hand legally
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Trust (other than in connection
with the distribution of the Junior Subordinated Debentures to holders of the
Trust Preferred Securities or the redemption of all Trust Preferred Securities),
the lesser of (a) the liquidation amount of the Trust Preferred Securities plus
all accrued and unpaid Distributions on the Trust Preferred Securities, to the
extent the Trust has funds legally available therefor at the time, and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Trust Preferred Securities after satisfaction of liabilities to creditors of the
Trust as required by applicable law. Our obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by us to the holders
of the Trust Preferred Securities or by causing the Trust to pay such amounts to
such holders.
We will, through the Guarantee, the Trust Agreement, the Junior Subordinated
Debentures and the Indenture, taken together, fully, irrevocably and
unconditionally guarantee all of the Trust's obligations under the Trust
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Trust Preferred Securities. See "Relationship
Among the Trust Preferred Securities, the Junior Subordinated Debentures and the
Guarantee."
STATUS OF THE GUARANTEE
If we do not make interest payments on the Junior Subordinated Debentures
held by the Trust, the Trust will not be able to pay Distributions on the Trust
Preferred Securities and will not have funds legally available therefor. The
Guarantee will rank subordinate and junior in right of payment to all Senior and
Subordinated Indebtedness. The Guarantee will rank equal to the Junior
Subordinated Debentures, Other Debentures (including the junior subordinated
debentures issued in connection with the issuance of the trust preferred
securities of Trust I in May 1997), the guarantee on the Common Securities, any
other guarantee on future issuances of trust preferred securities and any senior
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preferred stock which may be hereafter issued by the Company. Because we are a
holding company, our right to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that subsidiary, except to the
extent we may be recognized as a creditor of that subsidiary. Accordingly, our
obligations under the Guarantee effectively will be subordinated to all existing
and future liabilities of our subsidiaries and all liabilities of any of our
future subsidiaries. Claimants should look only to our assets for payments under
the Guarantee. For more information, please refer to "Description of Junior
Subordinated Debentures--General."
The Guarantee will constitute a guarantee of payment and not of collection,
which means the guaranteed party may institute a legal proceeding directly
against us to enforce its rights under the Guarantee without first instituting a
legal proceeding against any other person or entity. The Guarantee will be held
for the benefit of the holders of the Trust Preferred Securities. The Guarantee
will not be discharged except by payment of the Guarantee Payments in full to
the extent not paid by the Trust or upon distribution to the holders of the
Trust Preferred Securities of the Junior Subordinated Debentures. The Guarantee
does not limit our ability to incur or issue other secured or unsecured debt,
including Senior and Subordinated Indebtedness, whether under the Indenture, any
other indenture that we may enter into in the future or otherwise.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon our failure to
perform any of our payment or other obligations. The holders of a majority in
aggregate Liquidation Amount of the Trust Preferred Securities will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee. Any holder of the Trust Preferred Securities may institute
a legal proceeding directly against us to enforce the Guarantee Trustee's rights
under the Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity. Notwithstanding the
foregoing, if we fail to make a payment under the Guarantee, a holder of Trust
Preferred Securities may directly institute a proceeding against us for
enforcement of the Guarantee for payment to the holder of the Trust Preferred
Securities of the holder's pro rata portion of the principal of or interest on
the Junior Subordinated Debentures on or after the due dates specified in the
Junior Subordinated Debentures.
We, as guarantor, will be required to file annually with the Guarantee
Trustee a certificate as to whether or not we are in compliance with all the
conditions and covenants applicable to us under the Guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of the Trust Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of a majority of the aggregate Liquidation Amount of such outstanding
Trust Preferred Securities. All guarantees and agreements contained in the
Guarantee Agreement shall bind our successors, assigns, receivers, trustees and
representatives and shall inure to the benefit of the holders of the Trust
Preferred Securities then outstanding.
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 Trust Preferred Securities, upon full
payment of the Liquidation Amount payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee will continue to be effective or will be
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reinstated, as the case may be, if at any time any holder of the Trust Preferred
Securities must restore payment of any sums paid under the Trust Preferred
Securities or the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by us in performance of the Guarantee, will undertake to perform only
such duties as are specifically set forth in the Guarantee and, in case a
default with respect to the Guarantee has occurred, 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 will be under no obligation to exercise any of the powers vested in it
by the Guarantee at the request of any holder of the Trust Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the Trust
Preferred Securities and the Junior Subordinated Debentures. The Trust Preferred
Securities and the Junior Subordinated Debentures will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global certificates will be
issued for the Trust Preferred Securities and the Junior Subordinated Debentures
and will be deposited with the Depositary.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, as a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
"Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The Depositary
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain custodial relationships with Direct Participants,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the SEC.
Purchases of Trust Preferred Securities or Junior Subordinated Debentures
within the Depositary system must be made by or through Direct Participants,
which will receive a credit for the Trust Preferred Securities or Junior
Subordinated Debentures on the Depositary's records. The ownership interest of
each actual purchaser of each Trust Preferred Securities and each Subordinated
Debenture ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchases, but we expect that
Beneficial Owners will receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased Trust
Preferred Securities or Junior Subordinated Debentures. Transfers
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of ownership interests in the Trust Preferred Securities or Junior Subordinated
Debentures are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Trust Preferred
Securities or Junior Subordinated Debentures, except in the event that use of
the book-entry system for the Junior Subordinated Debentures is discontinued.
The Depositary has no knowledge of the actual Beneficial Owners of the Trust
Preferred Securities or Junior Subordinated Debentures; the Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Trust Preferred Securities or Junior Subordinated Debentures are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Trust Preferred Securities or Junior Subordinated Debentures. If less than
all of the Trust Preferred Securities or the Junior Subordinated Debentures are
being redeemed, the Property Trustee will determine by lot or PRO RATA the
amount of the Trust Preferred Securities of each Direct Participant to be
redeemed.
Although voting with respect to the Trust Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Trust
Preferred Securities or Junior Subordinated Debentures, as applicable, in those
instances in which a vote is required, neither the Depositary nor Cede & Co.
will itself consent or vote with respect to Trust Preferred Securities or Junior
Subordinated Debentures. Under its usual procedures, the Depository would mail
an omnibus proxy (the "Omnibus Proxy") to the relevant Issuer Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts such
Trust Preferred Securities or Junior Subordinated Debentures are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Trust Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Issuer Trustee to the
Depositary. The Depositary's practice is to credit Direct Participants' accounts
on the relevant payment date in accordance with their respective holdings shown
on the Depositary's records unless the Depositary has reason to believe that it
will not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of the
Depositary, the relevant Issuer Trustee, the Trust or us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to the Depositary is the responsibility of the relevant
Issuer Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Trust Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the relevant
Issuer Trustee and us. In the event that a successor securities depositary is
not obtained, definitive Trust Preferred Securities or Junior Subordinated
Debentures certificates representing such Trust Preferred Securities or Junior
Subordinated Debentures are required to be printed and delivered. We, at our
option, may decide to discontinue use the system of book-entry transfers through
the Depositary (or a successor depositary). After a Debenture Event of Default,
the holders of a majority in liquidation preference of Trust Preferred
Securities or aggregate principal amount of Junior Subordinated Debentures may
determine to discontinue the system of
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book-entry transfers through the Depositary. In any such event, definitive
certificates for such Trust Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Trust and
we believe to be accurate but neither the Trust nor we assume any responsibility
for the accuracy thereof. Neither the Trust nor we have any responsibility for
the performance by the Depositary or its Participants of their respective
obligations as described herein or under the rules and procedures governing
their respective operations.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by us as and to
the extent set forth under "Description of Guarantee." Taken together, our
obligations under the Junior Subordinated Debentures, the Indenture, the Trust
Agreement and the Guarantee will provide, in the aggregate, a full, irrevocable
and unconditional guarantee of payments of Distributions and other amounts due
on the Trust Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Trust Preferred Securities. If and to the extent
that we do not make the required payments on the Junior Subordinated Debentures,
the Trust will not have sufficient funds to make the related payments, including
Distributions, on the Trust Preferred Securities. The Guarantee will not cover
any such payment when the Trust does not have sufficient funds on hand legally
available therefor. In such event, the remedy of a holder of Trust Preferred
Securities is to institute a Direct Action. Our obligations under the Guarantee
will be (i) subordinate and junior in right of payment to all Senior and
Subordinated Indebtedness, except for those liabilities made equal or
subordinate to the Guarantee by their terms, (ii) PARI PASSU to all other
guarantees issued or to be issued by us with respect to other similar trust
preferred securities, including the issuance of $28.75 million of trust
preferred securities of Trust I in May 1997; (iii) senior to our capital stock
and (iv) effectively subordinated to the liabilities and obligations of our
subsidiaries.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Trust Preferred Securities, because:
(i) the aggregate principal amount of the Junior Subordinated Debentures will be
equal to the sum of the aggregate Liquidation Amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Junior
Subordinated Debentures will match the Distribution rate and Distribution and
other payment dates for the Trust Securities; (iii) we shall pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations to
holders of Trust Securities under the Trust Securities; and (iv) the Trust
Agreement will provide that the Trust is not authorized to engage in any
activity that is not consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
A holder of any Trust Preferred Security may institute a legal proceeding
directly against us to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
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A default or event of default under any Senior and Subordinated Indebtedness
would not constitute a default or Event of Default under the Trust Agreement.
However, in the event of payment defaults under, or acceleration of, Senior and
Subordinated Indebtedness, the subordination provisions of the Indenture will
provide that no payments may be made in respect of the Junior Subordinated
Debentures until such Senior and Subordinated Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. Failure to make
required payments on Junior Subordinated Debentures would constitute an Event of
Default under the Trust Agreement.
LIMITED PURPOSE OF THE TRUST
The Trust Preferred Securities will represent preferred beneficial interests
in the Trust, and the Trust exists for the sole purpose of issuing and selling
the Trust Securities, using the proceeds from the sale of the Trust Securities
to acquire the Junior Subordinated Debentures and engaging in other activities
that are necessary or incidental thereto. A principal difference between the
rights of a holder of a Trust Preferred Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture will
be entitled to receive from us the principal amount of and interest on Junior
Subordinated Debentures held, while a holder of Trust Preferred Securities is
entitled to receive Distributions from the Trust (or, in certain circumstances,
from us under the Guarantee) if and to the extent the Trust has funds on hand
legally available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary dissolution, winding-up or
liquidation of the Trust, after satisfaction of the liabilities of creditors of
the Trust as required by applicable law, the holders of the Trust Preferred
Securities will be entitled to receive, out of assets held by the Trust, the
Liquidation Distribution in cash. See "Description of Trust Preferred
Securities--Distribution of Junior Subordinated Debentures." Upon our voluntary
or involuntary liquidation or bankruptcy, the Property Trustee, as holder of the
Junior Subordinated Debentures, would be a subordinated creditor of ours,
subordinated in right of payment to all Senior and Subordinated Indebtedness as
set forth in the Indenture, but entitled to receive payment in full of principal
and interest, before any of our stockholders receive payments or distributions.
Since we will be the guarantor under the Guarantee and will agree to pay for all
costs, expenses and liabilities of the Trust (other than the Trust's obligations
to the holders of its Trust Securities), the positions of a holder of Trust
Preferred Securities and a holder of Junior Subordinated Debentures relative to
other creditors and to our stockholders in the event of our liquidation or
bankruptcy will be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Elias, Matz, Tiernan & Herrick L.L.P., special federal
income tax counsel to the Trust and us ("Tax Counsel"), the following is a
summary of certain of the material United States federal income tax consequences
of the purchase, ownership and disposition of Trust Preferred Securities held as
capital assets by a holder who purchases such Trust Preferred Securities upon
initial issuance. It does not deal with special classes of holders such as
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
United States Alien Holders (as defined below) engaged in a U.S. trade or
business or persons that will hold the Trust Preferred Securities as a position
in a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Trust
Preferred Securities. Further, it does not include any description of any
alternative minimum tax consequences or the tax laws of any state or local
government or of any foreign government that may be applicable to the Trust
Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and the
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis. An opinion of
Tax Counsel is not binding on the Internal Revenue Service ("IRS") or the
courts. No rulings have been or are expected to be sought from the IRS with
respect to any of the transactions described herein and no assurance can be
given that the IRS will not take contrary positions. Moreover, no assurance can
be given that the opinions expressed herein will not be challenged by the IRS
or, if challenged, that a challenge would not be successful.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
TRUST PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures, Tax
Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Junior Subordinated Debentures will be classified for
United States federal income tax purposes as our indebtedness. We, the Trust and
the holders of the Trust Preferred Securities (by acceptance of a beneficial
interest in a Trust Preferred Security) will agree to treat the Junior
Subordinated Debentures as our indebtedness for all United States federal income
tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Preferred Securities, Tax
Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Trust Agreement
and the Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Trust Preferred Securities generally will be considered
the owner of an undivided interest in the Junior Subordinated Debentures, and
each
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holder will be required to include in its gross income a pro rata share of any
interest (or original issue discount ("OID") accrued) with respect to its
allocable share of those Junior Subordinated Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable Treasury regulations (the "Regulations"), if the terms and
conditions of a debt instrument make the likelihood that stated interest will
not be timely paid a "remote" contingency, such contingency will be ignored in
determining whether a debt instrument is issued with OID. We believe that the
likelihood of our exercising our option to defer payments of interest is remote,
because exercising the option would, among other things, prevent us from
declaring dividends on any class of our equity securities. Based on this
conclusion by us, our Tax Counsel has rendered its opinion that the Junior
Subordinated Debentures will not be considered to be issued with OID and,
accordingly, stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder as ordinary income at the time it is paid or accrued
in accordance with such holder's method of tax accounting.
Under the Regulations, if we were to exercise our option to defer payments
of stated interest, the Junior Subordinated Debentures would, at such time, be
treated as redeemed and reissued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
related thereto would not be reported as taxable income. Consequently, a holder
of Trust Preferred Securities would be required to include in gross income OID
even though we would not make actual cash payments during a Deferral Period.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation described herein. If the option to defer
the payment of interest was determined not to be "remote," the Junior
Subordinated Debentures would be treated as having been originally issued with
OID. In that event, all of a holder's taxable interest income with respect to
the Junior Subordinated Debentures would be accounted for on an economic accrual
basis regardless of the holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income.
CHARACTERIZATION OF INCOME
Because income on the Trust Preferred Securities will constitute interest or
OID, corporate holders of the Trust Preferred Securities will not be entitled to
a dividends-received deduction with respect to any income recognized with
respect to the Trust Preferred Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
TRUST
We will have the right at any time to liquidate the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. The distribution, for United States federal income tax purposes,
would be treated as a nontaxable event to each holder, and each holder would
receive an aggregate tax basis in the Junior Subordinated Debentures equal to
the holder's aggregate tax basis in its Trust Preferred Securities. For United
States federal income tax purposes, a holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Trust Preferred Securities were held by the holder.
Under certain circumstances described herein, the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Trust Preferred Securities. Such a
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Trust Preferred Securities, and a holder
could recognize gain or loss as if it sold such redeemed Trust Preferred
Securities for cash.
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SALES OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities (including a redemption of
the Trust Preferred Securities by the Trust) will recognize gain or loss equal
to the difference between its adjusted tax basis in the Trust Preferred
Securities and the amount realized on the sale of such Trust Preferred
Securities (other than with respect to accrued and unpaid interest which has not
yet been included in income, which will be treated as ordinary income). A
holder's adjusted tax basis in the Trust Preferred Securities generally will be
its initial purchase price increased by OID (if any) previously includable in
such holder's gross income to the date of disposition and decreased by payments
(if any) received on the Trust Preferred Securities in respect of OID. The gain
or loss generally will be a capital gain or loss and generally will be a
long-term capital gain or loss if the Trust Preferred Securities have been held
for more than one year.
A holder who disposes of the Trust Preferred Securities between record dates
for payments of distributions thereon will be required to include in income (to
the extent not previously included in income) as ordinary income amounts
attributable to accrued and unpaid interest on the Junior Subordinated
Debentures through the date of disposition. A holder will recognize gain on a
disposition in an amount equal to the excess of the amount realized on
disposition (excluding the portion of the sales price treated as interest) over
the holder's adjusted basis in the Trust Preferred Securities. To the extent the
selling price is less than the holder's adjusted tax basis, a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
The Trust 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. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debenture are deemed to have been issued with OID) who disposes of
his Trust Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Junior Subordinated Debentures through the date of disposition in income as
ordinary income (i.e., interest or, if applicable, OID), and to add the amount
to his adjusted tax basis in his pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include all accrued but
unpaid interest) a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Trust Preferred Securities who or which is
(i) a citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for federal income tax purposes, (ii) a
corporation or partnership created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includable in its gross income for federal income tax purposes
without regard to its source or (iv) a trust over which (A) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (B) one or more United States persons have the authority to
control all substantial decisions of the trust.
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Trust Preferred Security
who or which is a United States Alien Holder will not be subject to United
States federal withholding tax; provided that, (a) the beneficial owner of the
Trust Preferred Security does not actually or constructively own 10 percent or
more of the total combined voting power of all of our classes of stock entitled
to vote, (b) the beneficial owner of the
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Trust Preferred Security is not a controlled foreign corporation that is related
to us through stock ownership, (c) the beneficial owner is not a bank whose
receipt of interest is described in Section 881(c)(3)(A) of the Code, and
(d) either (A) the beneficial owner of the Trust Preferred Security certifies to
the Trust or its agent, under penalties of perjury, that it is not a U.S. Holder
and provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution"), and holds
the Trust Preferred Security in such capacity, certifies to the Trust or its
agent, under penalties of perjury, that such statement has been received from
the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Holder of a Trust Preferred Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Trust Preferred Security. Under Treasury
regulations finalized in 1997, the certification requirement referred to in
clause (i)(d) above may be satisfied with other documentary evidence for
interest paid after December 31, 2000 with respect to offshore accounts or
through certain foreign intermediaries.
POTENTIAL TAX LAW CHANGES
As discussed above, changes in legislation affecting the United States
federal income tax treatment of the Junior Subordinated Debentures are possible,
and could adversely affect our ability to deduct the interest payable on the
Junior Subordinated Debentures. Moreover, any such legislation could adversely
affect United States Alien Holders by characterizing income derived from the
Junior Subordinated Debentures as dividends, generally subject to a 30% income
tax (on a withholding basis) when paid to a United States Alien Holder, rather
than as interest which, as discussed above, is generally exempt from income tax
in the hands of a United States Alien Holder.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Trust Preferred Securities will be reported to
holders on Internal Revenue Form 1099, which forms should be mailed to holders
of Trust Preferred Securities by January 31 following each calendar year.
BACKUP WITHHOLDING
Backup withholding of United States federal income tax at a rate of 31% may
apply to payments made in respect of the Trust Preferred Securities to
registered owners who are not "exempt recipients" and who fail to provide
certain identifying information (such as the registered owner's taxpayer
identification number) in the required manner. Generally, individuals are not
exempt recipients, whereas corporations and certain other entities generally are
exempt recipients. Payments made in respect of the Trust Preferred Securities to
a U.S. Holder must be reported to the IRS, unless the U.S. Holder is an exempt
recipient or establishes an exemption. Compliance with the identification
procedures described in the "United States Alien Holders" section would
establish an exemption from backup withholding for those United States Alien
Holders who are not exempt recipients.
In addition, upon the sale of the Trust Preferred Securities to (or through)
a broker, the broker must withhold 31% of the entire purchase price, unless
either (i) the broker determines that the seller is a corporation or other
exempt recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a United States Alien Holder,
certifies that such seller is a United States Alien Holder (and certain other
conditions are met). Such a sale must also be reported by the broker to the IRS,
unless either (i) the broker determines that the seller is an exempt recipient
or (ii) the seller certifies its United States Alien Holder status (and certain
other conditions are met). Certification of the registered owner's United States
Alien Holder status would be made normally on an Internal Revenue Service
Form W-8 under penalties of perjury, although in certain cases it may be
possible to submit other documentary evidence.
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ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans") generally may purchase Trust Preferred Securities, subject to the
investing fiduciary's determination that the investment in Trust Preferred
Securities satisfies ERISA's fiduciary standards and other requirements
applicable to investments by the Plan.
In any case, we or any of our affiliates may be considered a "party in
interest" (within the meaning of ERISA) or a "disqualified person" (or within
the meaning of Section 4975 of the Code) with respect to certain Plans
(generally, Plans maintained or sponsored by, or contributed to by, any such
persons with respect to which we or an affiliate is a fiduciary, or Plans for
which we or an affiliate provides services). The acquisition and ownership of
Trust Preferred Securities by a Plan (or by an individual retirement arrangement
or other Plans described in Section 4975(e)(1) of the Code) with respect to
which we or any of our affiliates is considered 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 such Trust Preferred Securities are
acquired pursuant to and in accordance with an applicable exemption.
As a result, Plans with respect to which we or any of our affiliates is a
party in interest or a disqualified person should not acquire Trust Preferred
Securities unless the Trust Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption. Any other Plans or other entities whose
assets include Plan assets subject to ERISA or Section 4975 of the Code
proposing to acquire Trust Preferred Securities should consult with their own
counsel.
The sale of Trust Preferred Securities to Plans is in no respect a
representation by the Trust, us, the Property Trustee, the underwriter or any
other person associated with the sale of the Trust Preferred Securities that
such securities meet all relevant legal requirements with respect to investments
by Plans generally or any particular Plan, or that such securities are otherwise
appropriate for Plans generally or any particular Plan. Any purchaser proposing
to acquire Trust Preferred Securities with assets of any Plan should consult
with its counsel.
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UNDERWRITING
Legg Mason Wood Walker, Incorporated, as underwriter, has agreed, subject to
the terms and conditions of its underwriting agreement with Independent and the
Trust, to purchase from the Trust 1,000,000 Trust Preferred Securities at the
initial 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
are subject to certain conditions, and that if any of the foregoing Trust
Preferred Securities are purchased by the underwriter pursuant to the
underwriting agreement, all such securities must be so purchased. The
underwriter may reject orders in whole or in part and withdraw, cancel, or
modify the offer without notice. Each of Independent and the Trust has agreed to
indemnify the underwriter and their controlling persons against certain
liabilities, including liabilities under the Securities Act of 1933 or to
contribute to payments the underwriter may be required to make in respect
thereof.
The underwriter may also impose a penalty bid on certain selling group
members. This means that if the underwriter purchases Trust Preferred Securities
in the open market to reduce the underwriter's short position or to stabilize
the price of the Trust Preferred Securities, it may reclaim the amount of the
selling concession from the selling group members who sold those Trust Preferred
Securities as part of the offering.
The underwriter may create a "short position" in the Trust Preferred
Securities in connection with the offering, which means that they may over-allot
or sell more shares than are set forth on the cover page of this prospectus. If
the underwriter creates a short position by such over-allotment, then the
underwriter may reduce that short position by purchasing Trust Preferred
Securities in the open market. The underwriter also may elect to reduce any
short position by exercising all or part of the over-allotment option. In
general, purchases of a security for the purpose of stabilization or to reduce a
short position could cause the price of security to be higher than it might
otherwise be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
The underwriter has advised us and the Trust that it proposes to offer the
Trust Preferred Securities directly to the public initially 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 $0.50 per Trust
Preferred Security. The underwriter may allow and such dealers may reallow a
concession not in excess of $0.45 per Trust Preferred Security to certain other
brokers and dealers. After the public offering, the public offering price,
concession and reallowance, and other selling terms may be changed by the
underwriter.
In view of the fact that the proceeds from the sale of the Trust Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
us, the underwriting agreement provides that we will pay as compensation for the
underwriter's arranging the investment therein of such proceeds an amount of
$0.875 per Trust Preferred Security. In addition, we have agreed to pay the
underwriter a financial advisory fee of $50,000.
The Trust has granted to the underwriter an option, exercisable for 30 days
from the date of this prospectus, to purchase up to an additional 150,000 Trust
Preferred Securities at the public offering price set forth on the cover page
hereof less underwriting discounts. The underwriter may exercise such option to
purchase additional Trust Preferred Securities solely for the purpose of
covering over-allotments, if any, incurred in the sale of the Trust Preferred
Securities.
To the extent that the underwriter exercises its option to purchase
additional Trust Preferred Securities, the Trust will issue and sell to us
additional Common Securities and the we will issue and sell to the Trust Junior
Subordinated Debentures in an aggregate principal amount equal to the total
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aggregate Liquidation Amount of the additional Trust Preferred Securities being
purchased pursuant to the option and the additional Common Securities.
Both the Trust and us have agreed in the underwriting agreement that,
subject to certain conditions, prior to 90 days following the date of issuance
of the Trust Preferred Securities, neither of us will, directly or indirectly,
issue, sell, offer or agree to sell, grant any option for the sale of, or
otherwise dispose of, Trust Preferred securities, any securities convertible
into, exchangeable or exercisable for Trust Preferred Securities or the Junior
Subordinated Debentures or any debt securities substantially similar to the
Junior Subordinated Debentures or any equity security substantially similar to
the Trust Preferred Securities, except with the prior written consent of the
underwriter, and except for any disposal of Junior Subordinated Debentures
following a liquidation of the Trust.
Each of the Trust and us has agreed to indemnify the underwriter and their
controlling persons against certain liabilities, including liabilities under the
Securities Act or to contribute to payments the underwriter may be required to
made in respect thereof.
Because the National Association of Securities Dealers, Inc. (the "NASD") is
expected to view the Trust Preferred Securities as interests in a direct
participation program, the offering of the Trust Preferred Securities is being
made in compliance with the applicable provisions of Rule 2810 of the NASD's
Conduct Rules. In this regard, there will be no sales to discretionary accounts
without the prior specific written approval of the customer.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Elias, Matz, Tiernan &
Herrick L.L.P., Washington, D.C., and for the underwriter by Thacher Proffitt &
Wood. Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities will be passed upon on behalf of the Trust by Richards,
Layton & Finger, P.A., special Delaware counsel to the Trust and us.
EXPERTS
The consolidated financial statements of Independent Bank Corp. and
subsidiary incorporated by reference in our Annual Report on Form 10-K for the
year ended December 31, 1998 and incorporated by reference in this prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
stated in their report appearing therein.
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1,000,000 TRUST PREFERRED SECURITIES
INDEPENDENT CAPITAL TRUST II
11% CUMULATIVE TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
[LOGO]
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PROSPECTUS
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LEGG MASON WOOD WALKER
INCORPORATED
JANUARY 26, 2000
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