As filed with the Securities and Exchange Commission on May 9, 1997
Registration No.333-25785
333-25785-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-4/A
AMENDMENT NO. 1 TO REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
UNITED NATIONAL BANCORP UNB CAPITAL TRUST I
(Exact name of Registrant (Exact name of Registrant as
as specified in its charter) specified in its trust agreement)
NEW JERSEY
(State or other jurisdiction of DELAWARE
incorporation or organization) (State or other jurisdiction of
_________ incorporation or organization)
---------
6712
(Primary Standard Industrial 6719
Classification Code Number) (Primary Standard Industrial
22-2894827 Classification Code Number)
(I.R.S. Employer 22-6719709
Identification No.) (I.R.S. Employer
Identification No.)
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1130 Route 22
P.O. Box 6000
Bridgewater, New Jersey 08807-0010
(908) 429-2200
(Address, including zip code, and telephone number, including area code,
of Registrants' principal executive offices)
---------------------
Thomas C. Gregor, Chairman,
President & CEO
1130 Route 22
P.O. Box 6000
Bridgewater, New Jersey 08807-0010
(908) 429-2200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
Ronald H. Janis, Esq. Mitchell Kleinman, Esq.
Pitney, Hardin, Kipp & Szuch Brown & Wood LLP
P.O. Box 1945 One World Trade Center
Morristown, New Jersey 07962-1945 New York, New York 10048
(201) 966-6300 (212) 839-5300
---------------------
Approximate Date of Commencement of
Proposed Sale to the Public: As soon as
practicable after this Registration Statement
becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Information contained herein is subject to completion or amendment. A
Registration Statement relating to these Securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these Securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
================================================================================
<PAGE>
PROSPECTUS
UNB CAPITAL TRUST I
OFFER TO EXCHANGE ITS
10.01% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
10.01% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
UNITED NATIONAL BANCORP
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON June 16, 1997, UNLESS EXTENDED
--------------------
UNB Capital Trust I, a trust formed under the laws of the State of Delaware
(the "Trust"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus (as the same may be amended or supplemented from time
to time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange up to $20,000,000
aggregate Liquidation Amount of its 10.01% Series B Capital Securities (the "New
Capital Securities") which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement
(as defined herein) of which this Prospectus constitutes a part, for a like
Liquidation Amount of its outstanding 10.01% Series A Capital Securities (the
"Old Capital Securities"), of which $20,000,000 aggregate Liquidation Amount is
outstanding. Pursuant to the Exchange Offer, United National Bancorp, a New
Jersey corporation ("United" or the "Corporation"), is also offering to exchange
(i) its guarantee of payments of cash distributions and payments on liquidation
of the Trust or redemption of the Old Capital Securities (the "Old Guarantee")
for a like guarantee in respect of the New Capital Securities (the "New
Guarantee") and (ii) all of its 10.01% Series A Junior Subordinated Deferrable
Interest Debentures due March 15, 2027 (the "Old Junior Subordinated
Debentures") for a like aggregate principal amount of its 10.01% Series B Junior
Subordinated Deferrable Interest Debentures due March 15, 2027 (the "New Junior
Subordinated Debentures"), which New Guarantee and New Junior Subordinated
Debentures also have been registered under the Securities Act. The Old Capital
Securities, the Old Guarantee and the Old Junior Subordinated Debentures are
collectively referred to herein as the "Old Securities" and the New Capital
Securities, the New Guarantee and the New Junior Subordinated Debentures are
collectively referred to herein as the "New Securities."
(i) The New Securities have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Securities, (ii) the New Capital Securities will contain the $100,000
minimum Liquidation Amount transfer restriction, (iii) the New Capital
Securities will not provide for any increase in the Distribution rate thereon,
(iv) the New Junior Subordinated Debentures will contain the $100,000 minimum
principal amount transfer restriction and (v) the New Junior Subordinated
Debentures will not provide for any increase in the interest rate thereon. See
"Description of New Securities" and "Description of Old Securities." The New
Capital Securities are being offered for exchange in order to satisfy certain
obligations of the Corporation and the Trust under the Registration Rights
Agreement dated as of March 21, 1997 (the "Registration Rights Agreement") among
the Corporation, the Trust and the Initial Purchasers (as defined herein). In
the event that the Exchange Offer is consummated, any Old Capital Securities
which remain outstanding after consummation of the Exchange Offer and the New
Capital Securities issued in the Exchange Offer will vote together as a single
class for purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Declaration.
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of Old Capital Securities on May 12, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE 17 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL SECURITIES IN
THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May __, 1997.
The New Capital Securities and the Old Capital Securities
(collectively, the "Capital Securities") represent beneficial interests in the
assets of the Trust. The Corporation is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities," and together with the Capital Securities, the "Trust Securities").
The Bank of New York is the Property Trustee of the Trust. The Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in the Junior Subordinated Debentures (as defined herein). The Junior
Subordinated Debentures will mature on March 15, 2027 (the "Stated Maturity
Date"). The Capital Securities will have a preference over the Common Securities
under certain circumstances with respect to cash distributions and amounts
payable on liquidation, redemption or otherwise. See "Description of New
Securities--Description of New Capital Securities--Subordination of Common
Securities."
As used herein, (i) the "Indenture" means the Indenture, dated as of
March 21, 1997, as amended and supplemented from time to time, between the
Corporation and The Bank of New York, as Debenture Trustee (the "Debenture
Trustee"), (ii) the "Declaration" means the Amended and Restated Declaration of
Trust, dated as of March 21, 1997, relating to the Trust among the Corporation,
as Sponsor, The Bank of New York as Property Trustee (the "Property Trustee"),
The Bank of New York (Delaware), as Delaware Trustee, (the "Delaware Trustee"),
and the Administrative Trustees named therein (collectively, with the Property
Trustee and Delaware Trustee, the "Issuer Trustees"). In addition, as the
context may require, unless otherwise expressly stated, (i) the term "Capital
Securities" includes the Old Capital Securities and the New Capital Securities,
(ii) the term "Trust Securities" includes the Capital Securities and the Common
Securities, (iii) the term "Junior Subordinated Debentures" includes the Old
Junior Subordinated Debentures and the New Junior Subordinated Debentures and
(iv) the term "Guarantee" includes the Old Guarantee and the New Guarantee.
Holders of the New Capital Securities will be entitled to receive
preferential cumulative cash distributions arising from the payment of interest
on the Junior Subordinated Debentures, accruing from March 21, 1997, and payable
semi-annually in arrears on March 15 and September 15 of each year, commencing
September 15, 1997, at the annual rate of 10.01% of the Liquidation Amount of
$1,000 per New Capital Security ("Distributions"). The Corporation will have the
right to defer payments of interest on the Junior Subordinated Debentures at any
time and from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity Date.
Upon the termination of any such Extension Period and the payment of all amounts
then due, the Corporation may elect to begin a new Extension Period, subject to
the requirements set forth in the Indenture. If and for so long as interest
payments on the Junior Subordinated Debentures are so deferred, Distributions on
the Trust Securities will also be deferred and the Corporation will not be
permitted, subject to certain exceptions described herein, to declare or pay any
cash distributions with respect to the Corporation's capital stock (which
includes common and preferred stock) or to make any payment with respect to debt
securities of the Corporation that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Trust Securities are entitled will accumulate) at the
rate of 10.01% per annum, compounded semi-annually, and holders of Trust
Securities will be required to accrue interest income for United States federal
income tax purposes. See "Description of New Securities--Description of New
Junior Subordinated Debentures--Option to Extend Interest Payment Date" and
"Certain United States Federal Income Tax Considerations--Interest Income and
Original Issue Discount."
Through the Guarantee, the guarantee agreement of the Corporation
relating to the Common Securities (the "Common Guarantee"), the Declaration, the
Junior Subordinated Debentures and the Indenture, taken together, the
Corporation has guaranteed or will guarantee, as the case may be, fully,
irrevocably and unconditionally, all of the Trust's obligations under the Trust
Securities. See "Relationship Among the New Capital Securities, the New Junior
Subordinated Debentures and the New Guarantee--Full and Unconditional
Guarantee." The Old Guarantee and the Common Guarantee guarantees, and the New
Guarantee will guarantee, payments of Distributions and payments on liquidation
or redemption of the Trust Securities, but in each case only to the extent that
the Trust holds funds on hand legally available therefor and has failed to make
such payments, as described herein. See "Description of New
Securities--Description of New Guarantee." If the Corporation fails to make a
required payment on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including Distributions, on the
Trust Securities. The Guarantee and the Common Guarantee will not cover any such
payment when the Trust does not have sufficient funds on hand legally available
therefor. In such event, a holder of Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights in respect of
such payment. See "Description of New Securities--Description of New Junior
Subordinated Debentures--Enforcement of Certain Rights By Holders of New Capital
Securities." The obligations of the Corporation under the Guarantee, the Common
Guarantee and the Junior Subordinated Debentures will be subordinate and junior
in right of payment to all Senior Indebtedness of the Corporation (as defined in
"Description of New Securities--Description of New Junior Subordinated
Debentures--Subordination") to the extent and in the manner set forth in the
Indenture and the Guarantees, respectively.
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein), (i) in whole but not in part, on the Stated Maturity
Date upon repayment of the Junior Subordinated Debentures at a redemption price
equal to the principal amount of, plus accrued interest on, the Junior
Subordinated Debentures (the "Maturity Redemption Price"), (ii) in whole but not
in part, at any time before March 15, 2007 (the "Initial Optional Prepayment
Date"), contemporaneously with the optional prepayment of the Junior
Subordinated Debentures, upon the occurrence and continuation of a Special Event
(as defined herein) at a redemption price equal to the Special Event Prepayment
Price (as defined below) (the "Special Event Redemption Price"), and (iii) in
whole or in part, on or after the Initial Optional Prepayment Date,
contemporaneously with the optional prepayment by the Corporation of the Junior
Subordinated Debentures, at a redemption price equal to the Optional Prepayment
Price (as defined below) (the "Optional Redemption Price"). Any of the Maturity
Redemption Price, the Special Event Redemption Price and the Optional Redemption
Price may be referred to herein as the "Redemption Price." See "Description of
New Securities--Description of New Capital Securities--Redemption."
Subject to the Corporation having received prior approval of the Board
of Governors of the Federal Reserve System (the "Federal Reserve") to do so if
then required under applicable capital guidelines or policies of the Federal
Reserve, the Junior Subordinated Debentures will be prepayable prior to the
Stated Maturity Date at the option of the Corporation (i) on or after the
Initial Optional Prepayment Date, in whole or in part, at a prepayment price
(the "Optional Prepayment Price") equal to 105.00% of the principal amount
thereof on the Initial Optional Prepayment Date, declining ratably on each March
15 thereafter to 100% on or after March 15, 2017, plus accrued interest thereon
to the date of prepayment, or (ii) at any time before the Initial Optional
Prepayment Date, in whole but not in part, upon the occurrence and continuation
of a Special Event, at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (a) 100% of the principal amount thereof or (b) the sum,
as determined by a Quotation Agent (as defined herein), of the present values of
the principal amount and premium payable as part of the Optional Prepayment
Price with respect to an optional redemption of such Junior Subordinated
Debentures on the Initial Optional Prepayment Date, together with scheduled
payments of interest from the prepayment date to the Initial Optional Prepayment
Date, in each case discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein) plus, in either case, accrued and unpaid
interest thereon to the date of prepayment. Either of the Optional Prepayment
Price or the Special Event Prepayment Price may be referred to herein as the
"Prepayment Price." See "Description of New Securities--Description of New
Junior Subordinated Debentures--Optional Prepayment" and "--Special Event
Prepayment."
The Corporation, as the holder of the outstanding Common Securities,
will have the right at any time to dissolve the Trust and cause a Like Amount of
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust, subject to (i) the Corporation having
received an opinion of counsel to the effect that such distribution will not be
a taxable event to holders of Capital Securities and (ii) the prior approval of
the Federal Reserve to do so if then required under applicable capital
guidelines or policies of the Federal Reserve. Unless the Junior Subordinated
Debentures are distributed to the holders of the Trust Securities, in the event
of a liquidation of the Trust as described herein, after satisfaction of
liabilities to creditors of the Trust as required by applicable law, the holders
of the Capital Securities generally will be entitled to receive a Liquidation
Amount of $1,000 per Capital Security plus accumulated Distributions thereon to
the date of payment. See "Description of New Securities--Description of New
Capital Securities--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures," and "Certain Federal Income Tax
Considerations--Receipt of Junior Subordinated Debentures or Cash upon
Liquidation of the Trust."
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
Neither the Corporation nor the Trust has sought its own interpretive letter and
there can be no assurance that the staff of the Division of Corporation Finance
of the Commission would make a similar determination with respect to the
Exchange Offer as it has in such interpretive letters to third parties. Based on
these interpretations by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences, the
Corporation and the Trust believe that New Capital Securities issued pursuant to
this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Corporation or the
Trust or who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Trust to resell pursuant to Rule 144A under the
Securities Act ("Rule 144A") or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for New Capital Securities,
then such broker-dealer must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Corporation or
the Trust, (ii) any New Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if such
holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such New Capital Securities. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility to participate
in the Exchange Offer, to furnish to the Corporation and the Trust (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
on behalf of whom such holder holds the Capital Securities to be exchanged in
the Exchange Offer. Each broker-dealer that receives New Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge that it acquired
the Old Capital Securities for its own account as the result of market-making
activities or other trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Capital Securities. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Corporation and the Trust believe that broker-dealers who acquired Old Capital
Securities for their own accounts, as a result of market-making activities or
other trading activities ("Participating Broker-Dealers"), may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending
90-days after the Expiration Date (as defined herein) (subject to extension
under certain limited circumstances described below) or, if earlier, when all
such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." However, a Participating
Broker-Dealer who intends to use this Prospectus in connection with the resale
of New Capital Securities received in exchange for Old Capital Securities
pursuant to the Exchange Offer must notify the Corporation or the Trust, or
cause the Corporation or the Trust to be notified, on or prior to the Expiration
Date, that it is a Participating Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or may be delivered
to the Exchange Agent at one of the addresses set forth herein under "The
Exchange Offer--Exchange Agent." Any Participating Broker-Dealer who is an
"affiliate" of the Corporation or the Trust may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
See "The Exchange Offer Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that, upon receipt of notice from the
Corporation or the Trust of the occurrence of any event or the discovery of any
fact which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Corporation or the Trust has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Corporation or the Trust has given notice that the sale of
the New Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) may be resumed, as the case may be. If the
Corporation or the Trust gives such notice to suspend the sale of the New
Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable), it shall extend the 90-day period referred to above
during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Capital Securities by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the New Capital Securities or to and including the date on which the Corporation
or the Trust has given notice that the sale of New Capital Securities (or the
New Guarantee or the New Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
market. Although the Initial Purchasers have informed the Corporation and the
Trust that they each currently intend to make a market in the New Capital
Securities, they are not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market for the New Capital Securities.
The Corporation and the Trust will not apply for listing of the New Capital
Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Declaration
(except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Corporation nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old Capital Securities
held by them. To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old
Capital Securities could be adversely affected. See "Risk Factors--Consequences
of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on June 16, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation or the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Trust and to the terms and provisions of
the Registration Rights Agreement. Old Capital Securities may be tendered in
whole or in part having an aggregate Liquidation Amount of not less than
$100,000 (100 Capital Securities) or any integral multiple of $1,000 Liquidation
Amount (one Capital Security) in excess thereof. The Corporation has agreed to
pay all expenses of the Exchange Offer. See "The Exchange Offer--Fees and
Expenses." Holders of the Old Capital Securities whose Old Capital Securities
are accepted for exchange will not receive Distributions on such Old Capital
Securities and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after March
21, 1997. See "The Exchange Offer--Distributions on New Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
Page
Available Information....................................................... 8
Incorporation of Certain Documents by Reference............................. 9
Summary.....................................................................10
Risk Factors................................................................17
United National Bancorp.....................................................21
Use of Proceeds.............................................................25
Ratios of Earnings to Fixed Charges.........................................25
Capitalization..............................................................26
Summary Financial Data......................................................26
The Trust...................................................................28
The Exchange Offer..........................................................28
Description of New Securities...............................................35
Description of Old Securities...............................................51
Relationship Among the New Capital Securities, the
New Junior Subordinated Debentures and the New Guarantee...................52
Certain United States Federal Income Tax Considerations.....................53
ERISA Considerations........................................................56
Plan of Distribution........................................................57
Validity of New Securities..................................................57
Experts.....................................................................57
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
information may also be accessed electronically by means of the Commission's
home page on the Internet (http://www.sec.gov). In addition, such reports, proxy
statements and other information concerning the Corporation can be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
No separate financial statements of the Trust have been included
herein. The Corporation and the Trust do not consider that such financial
statements would be material to holders of the Capital Securities because the
Trust is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Junior Subordinated
Debentures and issuing the Trust Securities. See "UNB Capital Trust I" and
"Description of New Securities." In addition, the Corporation does not expect
that the Trust will file reports under the Exchange Act with the Commission.
This Prospectus constitutes a part of a registration statement on Form
S-4 (the "Registration Statement") filed by the Corporation and the Trust with
the Commission under the Securities Act. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Corporation, the
Trust and the New Securities. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
are incorporated into this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1996;
and
2. Current Reports on Form 8-K filed with the Commission on March 10,
1997 and March 28, 1997.
All documents subsequently filed by the Corporation pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the offering of the New Securities offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document. The
Corporation will provide without charge to any person to whom this Prospectus is
delivered, on the written or oral request of such person, a copy of any or all
of the foregoing documents incorporated by reference herein (other than exhibits
not specifically incorporated by reference into the texts of such documents), as
well as a copy of the Declaration, the Indenture, the New Junior Subordinated
Debentures, the Guarantee and the other offering documents described herein.
Requests for such documents should be directed to: United National Bancorp, 1130
Route 22, P.O. Box 6000, Bridgewater, New Jersey 08807-0010, Attention: Ralph L.
Straw, Jr., Telephone (908) 429-2409.
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information and financial statements, including
the notes thereto, contained elsewhere in this Prospectus.
UNB Capital Trust I
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a Declaration executed by the Corporation, as Sponsor, The Bank
of New York as Property Trustee, The Bank of New York (Delaware) as Delaware
Trustee, and the Administrative Trustees named therein, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on February 21, 1997.
The Trust's affairs are conducted by the Issuer Trustees: the Property Trustee,
the Delaware Trustee, and the two individual Administrative Trustees who are
employees or officers of or affiliated with the Corporation. The Trust exists
for the exclusive purposes of (i) issuing and selling the Trust Securities, (ii)
using the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures issued by the Corporation, and (iii) engaging in only
those other activities necessary, advisable or incidental thereto (such as
registering the transfer of the Capital Securities). Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Trust, and payments under
the Junior Subordinated Debentures will be the sole revenue of the Trust. All of
the Common Securities will be owned by the Corporation.
United National Bancorp
United is a bank holding company organized under the laws of the State
of New Jersey and registered under the Bank Holding Company Act of 1956, as
amended (the "Bank Holding Company Act"). United has one banking subsidiary,
United National Bank ("UNB"), a national bank which operates 20 branches located
in central New Jersey. UNB is a member of the Federal Reserve System and its
deposits are insured by the Federal Deposit Insurance Corporation (the "FDIC").
At December 31, 1996, United had consolidated assets of approximately $1
billion. United's principal executive offices are located at 1130 Route 22, P.O.
Box 6000, Bridgewater, New Jersey 08807-0010. The telephone number of United is
(908) 429-2200.
For additional information, see "Available Information"; "Incorporation
of Certain Documents by Reference"; "United National Bancorp--General".
The Exchange Offer
The Exchange Offer........... Up to $20,000,000 aggregate Liquidation Amount
of New Capital Securities are being offered in
exchange for a like aggregate Liquidation
Amount of Old Capital Securities. Old Capital
Securities may be tendered for exchange in
whole or in part in a Liquidation Amount of
$100,000 (100 Capital Securities) or any
integral multiple of $1,000 (one Capital
Security) in excess thereof. The Corporation
and the Trust are making the Exchange Offer in
order to satisfy their obligations under the
Registration Rights Agreement relating to the
Old Capital Securities. For a description of
the procedures for tendering Old Capital
Securities, see "The Exchange
Offer--Procedures for Tendering Old Capital
Securities."
Expiration Date................ The Exchange Offer will expire at 5:00 p.m.,
New York City time, on June 16, 1997, unless
the Exchange Offer is extended by the
Corporation or the Trust (in which case the
Expiration Date will be the latest date and
time to which the Exchange Offer is extended).
See "The Exchange Offer--Terms of the Exchange
Offer."
Conditions to the Exchange
Offer......................... The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Trust in their sole
discretion. The Exchange Offer is not
conditioned upon any minimum Liquidation
Amount of Old Capital Securities being
tendered. See "The Exchange Offer--Conditions
to the Exchange Offer."
Offer.......................... The Corporation and the Trust reserve the
right in their sole and absolute discretion,
subject to applicable law, at any time and
from time to time, (i) to delay the acceptance
of the Old Capital Securities for exchange,
(ii) to terminate the Exchange Offer if
certain specified conditions have not been
satisfied, (iii) to extend the Expiration Date
of the Exchange Offer and retain all Old
Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right
of holders of Old Capital Securities to
withdraw their tendered Old Capital
Securities, or (iv) to waive any condition or
otherwise amend the terms of the Exchange
Offer in any respect. See "The Exchange
Offer--Terms of the Exchange Offer."
Withdrawal Rights.............. Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written notice
of such withdrawal to the Exchange Agent in
conformity with certain procedures set forth
below under "The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering Old
Capital Securities............ Tendering holders of Old Capital Securities
must complete and sign a Letter of Transmittal
in accordance with the instructions contained
therein and forward the same by mail,
facsimile or hand delivery, together with any
other required documents, to the Exchange
Agent, either with the Old Capital Securities
to be tendered or in compliance with the
specified procedures for guaranteed delivery
of Old Capital Securities. Certain brokers,
dealers, commercial banks, trust companies and
other nominees may also effect tenders by
book-entry transfer. Holders of Old Capital
Securities registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See
"The Exchange Offer--Procedures for Tendering
Old Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not
be sent to the Corporation or the Trust. Such
documents should only be sent to the Exchange
Agent.
Resales of New Capital
Securities.................... The Corporation and the Trust are making the
Exchange Offer in reliance on the position of
the staff of the Division of Corporation
Finance of the Commission as set forth in
certain interpretive letters addressed to
third parties in other transactions. However,
neither the Corporation nor the Trust has
sought its own interpretive letter and there
can be no assurance that the staff of the
Division of Corporation Finance of the
Commission would make a similar determination
with respect to the Exchange Offer as it has
in such interpretive letters to third parties.
Based on these interpretations by the staff of
the Division of Corporation Finance of the
Commission, and subject to the two immediately
following sentences, the Corporation and the
Trust believe that New Capital Securities
issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be
offered for resale, resold and otherwise
transferred by a holder thereof (other than a
holder who is a broker-dealer) without further
compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such New Capital
Securities are acquired in the ordinary course
of such holder's business and that such holder
is not participating, and has no arrangement
or understanding with any person to
participate, in a distribution (within the
meaning of the Securities Act) of such New
Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of
the Corporation or the Trust or who intends to
participate in the Exchange Offer for the
purpose of distributing the New Capital
Securities, or any broker-dealer who purchased
the Old Capital Securities from the Trust to
resell pursuant to Rule 144A or any other
available exemption under the Securities Act,
(a) will not be able to rely on the
interpretations of the staff of the Division
of Corporation Finance of the Commission set
forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled
to tender such Old Capital Securities in the
Exchange Offer and (c) must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any sale or other transfer of
such Old Capital Securities unless such sale
is made pursuant to an exemption from such
requirements. In addition, as described below,
if any broker-dealer holds Old Capital
Securities acquired for its own account as a
result of market-making or other trading
activities and exchanges such Old Capital
Securities for New Capital Securities, then
such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act
in connection with any resales of such New
Capital Securities.
Each holder of Old Capital Securities who
wishes to exchange Old Capital Securities for
New Capital Securities in the Exchange Offer
will be required to represent that (i) it is
not an "affiliate" of the Corporation or the
Trust, (ii) any New Capital Securities to be
received by it are being acquired in the
ordinary course of its business, (iii) it has
no arrangement or understanding with any
person to participate in a distribution
(within the meaning of the Securities Act) of
such New Capital Securities, and (iv) if such
holder is not a broker-dealer, such holder is
not engaged in, and does not intend to engage
in, a distribution (within the meaning of the
Securities Act) of such New Capital
Securities. Each broker-dealer that receives
New Capital Securities for its own account
pursuant to the Exchange Offer must
acknowledge that it acquired the Old Capital
Securities for its own account as the result
of market-making activities or other trading
activities and must agree that it will deliver
a prospectus meeting the requirements of the
Securities Act in connection with any resale
of such New Capital Securities. The Letter of
Transmittal states that, by so acknowledging
and by delivering a prospectus, a
broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of
the Securities Act. Based on the position
taken by the staff of the Division of
Corporation Finance of the Commission in the
interpretive letters referred to above, the
Corporation and the Trust believe that
Participating Broker-Dealers who acquired Old
Capital Securities for their own accounts as a
result of market-making activities or other
trading activities may fulfill their
prospectus delivery requirements with respect
to the New Capital Securities received upon
exchange of such Old Capital Securities (other
than Old Capital Securities which represent an
unsold allotment from the original sale of the
Old Capital Securities) with a prospectus
meeting the requirements of the Securities
Act, which may be the prospectus prepared for
an exchange offer so long as it contains a
description of the plan of distribution with
respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as
it may be amended or supplemented from time to
time, may be used by a Participating
Broker-Dealer in connection with resales of
New Capital Securities received in exchange
for Old Capital Securities where such Old
Capital Securities were acquired by such
Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain
provisions set forth in the Registration
Rights Agreement and to the limitations
described below under "The Exchange Offer
Resales of New Capital Securities," the
Corporation and the Trust have agreed that
this Prospectus, as it may be amended or
supplemented from time to time, may be used by
a Participating Broker-Dealer in connection
with resales of such New Capital Securities
for a period ending 90-days after the
Expiration Date (subject to extension under
certain limited circumstances) or, if earlier,
when all such New Capital Securities have been
disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any
Participating Broker-Dealer who is an
"affiliate" of the Corporation or the Trust
may not rely on such interpretive letters and
must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any resale
transaction. See "The Exchange Offer Resales
of New Capital Securities."
Exchange Agent................. The exchange agent with respect to the
Exchange Offer is The Bank of New York (the
"Exchange Agent"). The addresses, and
telephone and facsimile numbers, of the
Exchange Agent are set forth in "The Exchange
Offer--Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds................ Neither the Corporation nor the Trust will
receive any cash proceeds from the issuance of
the New Capital Securities offered hereby. See
"Use of Proceeds."
Certain United States Federal
Income Tax Considerations;
ERISA Considerations........... Holders of Old Capital Securities should
review the information set forth under
"Certain United States Federal Income Tax
Considerations" and "ERISA Considerations"
prior to tendering Old Capital Securities in
the Exchange Offer.
THE NEW CAPITAL SECURITIES
Securities Offered............. Up to $20,000,000 aggregate Liquidation Amount
of the Trust's New Capital Securities have
been registered under the Securities Act
(Liquidation Amount $1,000 per New Capital
Security). The New Capital Securities will be
issued, and the Old Capital Securities were
issued, under the Declaration. The New Capital
Securities and any Old Capital Securities
which remain outstanding after consummation of
the Exchange Offer will vote together as a
single class for purposes of determining
whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have
taken certain actions or exercised certain
rights under the Declaration. See "Description
of New Securities--Description of New Capital
Securities--Voting Rights; Amendment of the
Declaration." The terms of the New Capital
Securities are identical in all material
respects to the terms of the Old Capital
Securities, except that the New Capital
Securities have been registered under the
Securities Act and will not be subject to
certain restrictions on transfer applicable to
the Old Capital Securities (but will continue
to be subject to the $100,000 minimum
Liquidation Amount transfer restriction) and
will not provide for any increase in the
Distribution rate thereon. See "The Exchange
Offer--Purpose of the Exchange Offer,"
"Description of New Securities" and
"Description of Old Securities."
Distribution Dates............. March 15 and September 15 of each year,
commencing September 15, 1997.
Extension Periods.............. Distributions on the New Capital Securities
will be deferred for the duration of any
Extension Period elected by the Corporation
with respect to the payment of interest on the
New Junior Subordinated Debentures. No
Extension Period will exceed 10 consecutive
semi-annual periods or extend beyond the
Stated Maturity Date. See "Description of New
Securities--Description of New Junior
Subordinated Debentures--Option to Extend
Interest Payment Date" and "Certain United
States Federal Income Tax
Considerations--Interest Income and Original
Issue Discount."
Ranking........................ The New Capital Securities will rank pari
passu, and payments thereon will be made pro
rata, with the Old Capital Securities and the
Common Securities except as described under
"Description of New Securities--Description of
New Capital Securities--Subordination of
Common Securities." The New Junior
Subordinated Debentures will rank pari passu
with the Old Junior Subordinated Debentures,
and all other junior subordinated debentures
issued by the Corporation (the "Other
Debentures") and sold to other trusts
established or to be established by the
Corporation, in each case similar to the Trust
(the "Other Trusts"), and will be unsecured
and subordinate and junior in right of payment
to all Senior Indebtedness to the extent and
in the manner set forth in the Indenture. See
"Description of New Securities--Description of
New Junior Subordinated Debentures." The New
Guarantee will rank pari passu with the Old
Guarantee, and all other guarantees issued by
the Corporation with respect to capital
securities issued or to be issued by Other
Trusts (the "Other Guarantees") and will
constitute an unsecured obligation of the
Corporation and will rank subordinate and
junior in right of payment to all Senior
Indebtedness to the extent and in the manner
set forth in the Guarantee Agreement. See
"Description of New Securities--Description of
New Guarantee."
Redemption..................... The Trust Securities are subject to mandatory
redemption in a Like Amount, (i) in whole but
not in part, on the Stated Maturity Date upon
repayment of the Junior Subordinated
Debentures, (ii) in whole but not in part, at
any time contemporaneously with the optional
prepayment of the Junior Subordinated
Debentures by the Corporation upon the
occurrence and continuation of a Special Event
and (iii) in whole or in part, at any time on
or after the Initial Optional Prepayment Date
contemporaneously with the optional prepayment
by the Corporation of the Junior Subordinated
Debentures, in each case at the applicable
Redemption Price. See "Description of New
Securities--Description of New Capital
Securities--Redemption."
Rating......................... The Old Capital Securities were rated "BB+" by
Thompson BankWatch, Inc. and B+ by Standard &
Poor's Rating Services. A security rating is
not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning rating
organization.
Absence of Market for the New
Capital Securities............ The New Capital Securities will be a new issue
of securities for which there currently is no
market. Although Keefe, Bruyette & Woods, Inc.
and Ryan, Beck & Co., the initial purchasers
of the Old Capital Securities (the "Initial
Purchasers"), have informed the Corporation
and the Trust that they each currently intend
to make a market in the New Capital
Securities, they are not obligated to do so,
and any such market making may be discontinued
at any time without notice. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the New Capital
Securities. The Trust and the Corporation will
not apply for listing of the New Capital
Securities on any securities exchange or for
quotation through the National Association of
Securities Dealers Automated Quotation System
("NASDAQ"). See "Plan of Distribution."
<PAGE>
RISK FACTORS
Prospective investors should consider carefully, in addition to the
other information contained in this Prospectus, the following factors in
connection with the Exchange Offer and the New Capital Securities offered
hereby.
Ranking of Subordinated Obligations under the Guarantee and the Junior
Subordinated Debentures
The obligations of the Corporation under the Guarantee and under the
Junior Subordinated Debentures will be unsecured and subordinate and rank junior
in right of payment to all present and future Senior Indebtedness of the
Corporation to the extent and in the manner set forth in the Indenture and the
Guarantee, respectively. No payment may be made of the principal of, or premium,
if any, or interest on the Junior Subordinated Debentures, or in respect of any
redemption, retirement, purchase or other acquisition of any of the Junior
Subordinated Debentures, at any time when (i) there shall have occurred and be
continuing a default in any payment in respect of any Senior Indebtedness, or
there has been an acceleration of the maturity thereof because of a default or
(ii) in the event of the acceleration of the maturity of the Junior Subordinated
Debentures until payment has been made on all Senior Indebtedness. At December
31, 1996, the Corporation had no outstanding Senior Indebtedness. Because the
Corporation is a bank holding company, the right of the Corporation 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 Capital Securities to benefit indirectly from such distribution)
is subject to the prior claims of creditors of that subsidiary, except to the
extent that the Corporation may itself be recognized as a creditor of that
subsidiary. In addition, UNB is subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions with,
the Corporation and certain other affiliates, and on investments in stock or
other securities thereof. Such restrictions prevent the Corporation and such
other affiliates from borrowing from UNB unless the loans are secured by various
types of collateral. Further, such secured loans, other transactions and
investments by UNB are generally limited in amount as to the Corporation and as
to each of such other affiliates to 10% of UNB's capital and surplus and as to
the Corporation and all of such other affiliates to an aggregate of 20% of UNB's
capital and surplus. In addition, payment of dividends to the Corporation by UNB
is subject to ongoing review by banking regulators and is subject to various
statutory limitations and in certain circumstances requires approval by banking
regulatory authorities. None of the Indenture, the Guarantee, the Common
Guarantee or the Declaration places any limitation on the amount of secured or
unsecured debt, including Senior Indebtedness, that may be incurred by the
Corporation or any of its subsidiaries. See "Description of New
Securities--Description of New Guarantee--Status of New Guarantee" and
"Description of New Junior Subordinated Debentures--Subordination."
The ability of the Trust to pay amounts due on the Capital Securities
is dependent upon the Corporation making payments on the Junior Subordinated
Debentures as and when required.
Option to Extend Interest Payment Period; Tax Considerations
So long as no Debenture Event of Default (see "Description of New
Junior Subordinated Debentures -Debentures Events of Default") shall have
occurred and be continuing, the Corporation will have the right under the
Indenture to defer payments of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity Date. Upon any such
deferral, semi-annual Distributions on the Capital Securities by the Trust will
be deferred (and the amount of Distributions to which holders of the Capital
Securities are entitled will accumulate additional Distributions thereon at the
rate of 10.01% per annum, compounded semi-annually) from the relevant payment
date for such Distributions during any such Extension Period.
The Corporation may extend any existing Extension Period, provided that
such extension does not cause such Extension Period to exceed 10 consecutive
semi-annual periods or to extend beyond the Stated Maturity Date. Upon the
expiration of any Extension Period and the payment of all interest then accrued
and unpaid on the Junior Subordinated Debentures (together with interest thereon
at the annual rate of 10.01%, compounded semi-annually, to the extent permitted
by applicable law), the Corporation may elect to begin a new Extension Period,
subject to the above requirements. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See "Description of
New Securities--Description of New Capital Securities--Distributions" and
"--Description of New Junior Subordinated Debentures--Option to Extend Interest
Payment Period."
The Corporation has no current plan to exercise its right to defer
payments of interest on the Junior Subordinated Debentures. However, should the
Corporation exercise its right to defer payments of interest on the Junior
Subordinated Debentures, each holder of Capital Securities will be required to
accrue income (as original issue discount ("OID")) in respect of the deferred
stated interest allocable to its Capital Securities for United States federal
income tax purposes, which will be allocated but not distributed to holders of
Capital Securities. As a result, during an Extension Period, each holder of
Capital Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash related
to such income from the Trust if the holder disposes of the Capital Securities
prior to the record date for the payment of Distributions thereafter. See
"Certain United States Federal Income Tax Considerations--Interest Income and
Original Issue Discount" and "--Sales of Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures, the market price of the Capital
Securities is likely to be affected. A holder that disposes of its Capital
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Capital
Securities. In addition, the mere existence of the Corporation's right to defer
payments of interest on the Junior Subordinated Debentures may cause the market
price of the Capital Securities to be more volatile than the market prices of
other securities that are not subject to such deferrals.
Redemption or Distribution; Possible Tax Law Changes Affecting the Capital
Securities
Upon the occurrence and continuation of a Special Event (including a
Tax Event or a Regulatory Capital Event, in each case, as defined under
"Description of New Securities-Description of New Junior Subordinated
Debentures-Special Event Prepayment"), the Corporation will have the right to
prepay the Junior Subordinated Debentures before the Initial Optional Prepayment
Date, in whole (but not in part) at the Special Event Prepayment Price within 90
days following the occurrence of such Special Event and therefore cause a
mandatory redemption of the Trust Securities at the Special Event Redemption
Price. On or after the Initial Optional Prepayment Date, the Corporation may
prepay the Junior Subordinated Debentures in whole or in part for any reason and
thereby cause an optional redemption of the Capital Securities, in whole or in
part, at the Optional Redemption Price. Any such redemption is subject to the
Corporation having received prior approval of the Federal Reserve to do so if
then required under applicable guidelines or policies of the Federal Reserve.
See "Description of New Securities--Description of New Capital
Securities--Redemption" and "--Liquidation of the Trust and Distribution of New
Junior Subordinated Debentures".
The Corporation 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 Securities in liquidation of the Trust. Such right is subject to (i)
the Corporation having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital Securities and
(ii) prior approval of the Federal Reserve if then required. Under current
United States federal income tax law, a distribution of Junior Subordinated
Debentures upon the dissolution of the Trust would not be a taxable event to
holders of the Capital Securities. If, however, the Trust is characterized for
United States federal income tax purposes as an association taxable as a
corporation at the time of dissolution of the Trust, the distribution of the
Junior Subordinated Debentures may constitute a taxable event to holders of
Capital Securities. Moreover, upon the occurrence of a Special Event, a
dissolution of the Trust in which holders of the Capital Securities receive cash
would be a taxable event to such holders. See "Certain Federal Income Tax
Considerations--Receipt of Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust."
On February 6, 1997, President Clinton issued his revenue proposals for
Fiscal 1998. The proposals contain a provision which would generally deem an
issuer, for purposes of Section 385(c) of the Code, to have characterized an
instrument as equity if the instrument (i) has a maximum term of more than 15
years and (ii) is not shown as indebtedness on the separate balance sheet of the
issuer that is filed with the SEC (the "Proposed Legislation"). Accordingly, the
Proposed Legislation would, among other things, generally deny corporate issuers
a deduction for interest in respect of debt obligations such as the Junior
Subordinated Debentures. The Proposed Legislation is proposed to be effective
generally for instruments issued on or after the date of "first committee
action" (which is not defined). There can be no assurance, however, that the
effective date provision contained in the Proposed Legislation will remain in
the final enactment, if any, or that other legislation enacted after the date
hereof will not otherwise adversely affect the ability of the Corporation to
deduct the interest payable on the Junior Subordinated Debentures. Accordingly,
there can be no assurance that a Tax Event will not occur. The occurrence of a
Tax Event may result in the redemption of the Junior Subordinated Debentures for
cash, in which event the holders of the Capital Securities would receive cash in
redemption of their Capital Securities. See "Description of New Securities --
Description of New Capital securities -- Redemption" and "Description of New
Junior Subordinated Debentures -- Special Event Prepayment." See also "Certain
United States Federal Income Tax Considerations -- Proposed Tax Legislation."
Possible Adverse Effect on Market Prices
There can be no assurance as to the market prices for Capital
Securities or Junior Subordinated Debentures distributed to the holders of
Capital Securities if a termination of the Trust were to occur. Accordingly, the
Capital Securities or the Junior Subordinated Debentures may trade at a discount
from the price that the investor paid to purchase the Capital Securities offered
hereby. Because holders of Capital Securities may receive Junior Subordinated
Debentures in liquidation of the Trust and because Distributions are otherwise
limited to payments on the Junior Subordinated Debentures, prospective
purchasers of New Capital Securities are also making an investment decision with
regard to the New Junior Subordinated Debentures and should carefully review all
the information regarding the New Junior Subordinated Debentures contained
herein. See "Description of New Securities--Description of New Junior
Subordinated Debentures."
Rights under the Guarantee
The Bank of New York will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The Bank of
New York will also act as Property Trustee and as Debenture Trustee under the
Indenture. The Bank of New York (Delaware) will act as Delaware Trustee under
the Declaration. The Guarantee will guarantee to the holders of the Capital
Securities the following payments, to the extent not paid by the Trust: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has funds on hand legally available
therefor; (ii) the applicable Redemption Price with respect to any Capital
Securities called for redemption, to the extent that the Trust has funds on hand
legally available therefor; and (iii) upon a voluntary or involuntary
termination, winding up or liquidation of the Trust (unless the Junior
Subordinated Debentures are distributed to holders of the Capital Securities),
the lesser of (a) the aggregate of the Liquidation Amount and all accumulated
and unpaid Distributions to the date of payment, to the extent that the Trust
has funds on hand legally available therefor on such date and (b) the amount of
assets of the Trust remaining available for distribution to holders of the
Capital Securities on such date. The holders of a majority in Liquidation Amount
of the Capital Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee. Any holder of the Capital Securities may
institute a legal proceeding directly against the Corporation to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Trust, the Guarantee Trustee or any other person or entity. If the
Corporation defaults on its obligation to pay amounts payable under the Junior
Subordinated Debentures, the Trust will not have sufficient funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
will not be able to rely upon the Guarantee for payment of such amounts.
Instead, in the event a Debenture Event of Default shall have occurred and be
continuing and such event is attributable to the failure of the Corporation to
pay principal of or premium, if any, or interest on the Junior Subordinated
Debentures on the payment date on which such payment is due and payable, then a
holder of Capital Securities may institute a legal proceeding directly against
the Corporation for enforcement of payment to such holder of the principal of or
premium, if any, or interest on such Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Capital Securities of
such holder (a "Direct Action"). Notwithstanding any payments made to a holder
of Capital Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of and premium, if any,
and interest on the Junior Subordinated Debentures, and the Corporation shall be
subrogated to the rights of the holder of such Capital Securities with respect
to payments on the Capital Securities to the extent of any payments made by the
Corporation to such holder in any Direct Action. Except as described herein,
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures or to
assert directly any other rights in respect of the Junior Subordinated
Debentures. See "Description of New Securities--Description of New Junior
Subordinated Debentures--Enforcement of Certain Rights by Holders of Capital
Securities," "--Description of New Junior Subordinated Debentures--Debenture
Events of Default" and "--Description of New Guarantee." The Declaration
provides that each holder of Capital Securities by acceptance thereof agrees to
the provisions of the Indenture.
Limited Voting Rights
Holders of Capital Securities generally will have voting rights
relating only to the modification of the terms of the Capital Securities and the
exercise of the Trust's rights as holder of the Junior Subordinated Debentures.
Holders of Capital Securities will not be entitled to vote to appoint, remove or
replace, or to increase or decrease the number of, the Issuer Trustees, which
voting rights are vested exclusively in the holder of the Common Securities,
except as described under "Description of New Securities--Description of New
Capital Securities--Voting Rights; Amendment of the Declaration" and "--Removal
of Issuer Trustees."
Consequences of a Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions. Old
Capital Securities which remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting such restrictions on transfer.
In addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Corporation and the Trust do not intend to register
under the Securities Act any Old Capital Securities which remain outstanding
after consummation of the Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Old Capital Securities are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Declaration. See "Description of New
Securities--Description of New Capital Securities--Voting Rights; Amendment of
the Declaration."
The Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
August 18, 1997 and declared effective by September 17, 1997, the Distribution
rate borne by the Old Capital Securities commencing on September 18, 1997 will
increase by 0.25% per annum until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Old Capital Securities will not
be entitled to any increase in the Distribution rate thereon or any further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Description of Old Capital Securities."
Absence of Public Market
The Old Capital Securities were issued to, and the Corporation believes
such securities are currently owned by, a relatively small number of beneficial
owners. The Old Capital Securities have not been registered under the Securities
Act and will be subject to restrictions on transferability if they are not
exchanged for the New Capital Securities. Although the New Capital Securities
may be resold or otherwise transferred by the holders (who are not affiliates of
the Corporation or the Trust) without compliance with the registration
requirements under the Securities Act, they will constitute a new issue of
securities with no established trading market. Like the Old Capital Securities,
the New Capital Securities may be transferred by the holders thereof only in
blocks having a Liquidation Amount of not less than $100,000 (100 Old Capital
Securities). The Corporation and the Trust have been advised by the Initial
Purchasers that the Initial Purchasers presently intend to make a market in the
New Capital Securities. However, the Initial Purchasers are not obligated to do
so and any market-making activity with respect to the New Capital Securities may
be discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer. Accordingly, no
assurance can be given that an active public or other market will develop for
the New Capital Securities or the Old Capital Securities or as to the liquidity
of or the trading market for the New Capital Securities or the Old Capital
Securities. If an active public market does not develop, the market price and
liquidity of the New Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, the Corporation's results and the market for
similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Corporation, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Corporation or the Trust may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of Rule
144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. See
"Plan of Distribution."
Exchange Offer Procedures
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents. Therefore,
holders of the Old Capital Securities desiring to tender such Old Capital
Securities in exchange for New Capital Securities should allow sufficient time
to ensure timely delivery. Neither the Corporation nor the Trust is under any
duty to give notification of defects or irregularities with respect to the
tenders of Old Capital Securities for exchange.
UNITED NATIONAL BANCORP
General
United is a bank holding company registered under the Bank Holding
Company Act. United was organized under the laws of New Jersey on August 13,
1987 and commenced operations on August 1, 1988, as a bank holding company for
UNB. In addition to UNB, United indirectly owns additional subsidiaries through
UNB, including an investment subsidiary and a 50% interest in a financial
services corporation.
As of December 31, 1996, United had consolidated assets of
approximately $1 billion, deposits of $881.3 million and shareholders' equity of
$88.1 million.
United's principal executive offices are located at 1130 Route 22, P.O.
Box 6000, Bridgewater, New Jersey 08807-0010. The telephone number of United is
(908) 429-2200. See "Available Information" and "Incorporation of Certain
Documents by Reference".
United National Bank
UNB, a wholly owned subsidiary of United, is a commercial bank
established in 1902 under the laws of the United States of America. UNB is a
member of the Federal Reserve System and its deposits are insured by the FDIC.
UNB maintains its principal office in Bridgewater, New Jersey and operates 20
branches throughout Hunterdon, Middlesex, Somerset, Union and Warren Counties,
New Jersey. UNB also operates 23 automatic teller machines ("ATMs") affiliate
with the MAC System, an eight-state network with membership in the Plus
Nationwide Network and Honor, a Florida network.
UNB provides a full range of commercial and retail bank services,
including the acceptance of demand, savings and time deposits. Commercial and
retail lending, primarily residential mortgages, automobile loans, small
business loans and credit card loans, constitute a substantial part of UNB's
business. UNB also offers full personal, corporate and pension trust and other
fiduciary services.
Recent Developments
On February 28, 1997, United completed its acquisition of Farrington
Bank ("Farrington"), a single office bank headquartered in North Brunswick, New
Jersey. In connection with the acquisition of Farrington, United recorded a
one-time merger related charge of $1.1 million after tax, or $0.25 per share
($1.7 million excluding the tax effect).
With the exception of the unaudited first quarter financial data set
forth below, which reflects the acquisition of Farrington accounted for as a
pooling-of-interests, financial information about Farrington is not contained
herein; however such information is included in a Registration Statement on Form
S-4 (Registration No. 333-19227) filed by United with the Commission.
On April 15, 1997, United issued a press release reporting earnings for
the first quarter of 1997. Including the one-time charge related to the
acquisition of Farrington, consolidated net income for the first quarter of 1997
was $2,378,000, as compared to $3,043,000 for the corresponding 1996 period.
Earnings per share for the first three months of 1997 were $0.54 per share,
compared to $0.70 in the first quarter of 1996.
Consolidated net income for the first quarter of 1997, excluding the
one-time charge, was $3,450,000, up 13% from $3,043,000 for the corresponding
1996 period. Earnings per share for the first three months of 1997 increased to
$0.79 per share, compared with $0.70 in the first quarter of 1996.
The following unaudited interim financial statements were included in
United's first quarter earnings press release and reflect the acquisition of
Farrington accounted for as a pooling-of-interests. United has not yet filed a
Quarterly Report on Form 10-Q for the three months ended March 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
United National Bancorp
Consolidated Balance Sheets
(In Thousands, Except Per Share Data)
March 31,
--------------------------------------
1997 1996*
---- -----
<S> <C> <C>
ASSETS
Cash and Due From Banks $49,358 $42,518
Federal Funds Sold 36,500 2,406
Securities Available for Sale, at Market Value 302,746 364,172
Securities Held to Maturity 65,856 32,222
Trading Account Securities, at Market Value 527 452
Loans (Net of Unearned Income) 604,602 577,883
Less: Allowance for Possible Loan Losses 7,761 8,100
--------------- --------------
596,841 569,783
Premises and Equipment, Net 22,040 22,674
Investment in Joint Venture 3,151 3,151
Other Real Estate 1,444 2,738
Accrued Income Receivable 7,415 7,583
Other Assets 19,332 17,383
--------------- --------------
TOTAL ASSETS $1,105,210 $1,065,082
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Demand Deposits $152,633 $159,700
Savings Deposits 382,291 395,550
Time Deposits 397,438 354,543
--------------- --------------
Total Deposits 932,362 909,793
Short-Term Borrowings 32,498 43,301
Obligation under Capital Lease 9,696 9,683
Other Liabilities 13,813 11,820
--------------- --------------
TOTAL LIABILITIES 988,369 974,597
--------------- --------------
Trust Capital Securities 20,000 --
STOCKHOLDERS' EQUITY
Common Stock ($2.50 Par Value Per Share) 10,996 10,241
Additional Paid-In Capital 65,290 57,267
Retained Earnings 22,723 23,601
Treasury Stock (1,338) (1,399)
Restricted Stock (86) (186)
Net Unrealized (Loss) Gain on Securities Available for Sale, Net of Tax (744) 961
---------------- -------------
TOTAL STOCKHOLDERS' EQUITY 96,841 90,485
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,105,210 $1,065,082
=============== ==============
</TABLE>
- ------------------
* Restated to include the acquisition of Farrington Bank accounted for
as a pooling-of-interests.
<PAGE>
<TABLE>
<CAPTION>
United National Bancorp
Consolidated Statements of Income (In Thousands, Except Share Data)
Three Months Ended March 31,
--------------------------------------
1997 1996*
---- -----
<S> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $13,911 $13,077
Interest and Dividends on Securities Available for Sale:
Taxable 4,339 5,309
Tax Exempt 556 539
Interest on Securities Held to Maturity:
Taxable 918 427
Tax Exempt 152 62
Dividends on Trading Account Securities 3 3
Interest on Federal Funds Sold and Deposits
with Federal Home Loan Bank 226 74
---------- -----------
TOTAL INTEREST INCOME 20,105 19,491
---------- -----------
INTEREST EXPENSE
Interest on Savings Deposits 1,745 1,848
Interest on Time Deposits 5,180 4,764
Interest on Short-Term Borrowings 463 632
Interest on Obligation under Capital Lease 232 232
------------ -------------
TOTAL INTEREST EXPENSE 7,620 7,476
------------ -------------
Net Interest Income 12,485 12,015
Provision for Possible Loan Losses 900 475
------------ -------------
Net Interest Income After Provision for Possible Loan Losses 11,585 11,540
------------ -------------
NON-INTEREST INCOME
Trust Income 1,200 1,200
Service Charges on Deposit Accounts 1,066 951
Other Service Charges, Commissions and Fees 1,524 1,186
Net Gains from Securities Transactions 156 156
Other Income 437 432
------------ -------------
TOTAL NON-INTEREST INCOME 4,383 3,925
------------ -------------
NON-INTEREST EXPENSE
Salaries and Employee Benefits 5,141 5,469
Occupancy Expense, Net 823 915
Furniture and Equipment Expense 675 717
Data Processing Expense 1,113 960
Amortization of Intangible Assets 440 447
Merger related charge 1,665 --
Other Expenses 2,705 2,307
------------ -------------
TOTAL NON-INTEREST EXPENSE 12,562 10,815
------------ -------------
Income Before Provision for Income Taxes 3,406 4,650
Provision for Income Taxes 1,028 1,607
------------ -------------
NET INCOME $ 2,378 $ 3,043
=============== =============
NET INCOME PER COMMON SHARE $0.54 $0.70
=============== ==============
Weighted Average Shares Outstanding 4,367 4,344
</TABLE>
- -------------------
* Restated to include the acquisition of Farrington Bank accounted for
as a pooling-of-interests.
<PAGE>
<TABLE>
<CAPTION>
United National Bancorp
Consolidated Financial Highlights, March 31, 1997 (In Thousands, Except Share Data)
Three Months Ended March 31,
--------------------------------------
1997 1996*
---- -----
<S> <C> <C>
Results of Operations:
Net Income $ 2,378 $ 3,043
Net Income Before Merger Related Charge 3,450 3,043
Net Income per Common Share(1) $ 0.54 0.70
Net Income per Common Share Before Merger Related Charge(1) 0.79 0.70
Adjusted Financial Ratios(2):
Return on Average Assets(2) 1.28 % 1.15 %
Return on Average Stockholders' Equity(2) 14.23 % 13.22 %
Financial Ratios:
Return on Average Assets .88 % 1.15 %
Return on Average Stockholders' Equity 9.81 % 13.22 %
Net Interest Margin (Taxable Equivalent Basis) 5.15 % 5.09 %
Net Interest Income (Taxable Equivalent Basis) $ 12,861 $ 12,338
Non-Interest Income 4,383 3,925
Non-Interest Expense 12,562 10,815
Merger Related Charge (Pre-Tax) 1,665 -
Provision for Possible Loan Losses 900 475
Efficiency Ratio 60.53 % 63.84 %
Dividends Declared per Common Share(1) $ 0.30 $ 0.25
Financial Condition:
AVERAGE:
Securities, net $ 373,357 $ 393,106
Total Loans 610,088 575,110
Earnings Assets 998,692 969,057
Total Assets 1,090,821 1,060,805
Deposits 931,128 899,372
Total Stockholders' Equity 98,329 92,596
PERIOD END:
Securities, net $ 369,129 $ 396,846
Total Loans 604,602 577,883
Allowance for Possible Loan Losses 7,761 8,100
Total Assets 1,105,210 1,065,082
Deposits 932,362 909,793
Total Stockholders' Equity 96,841 90,485
Book Value Per Share(1) 22.16 20.82
Common Shares Outstanding(1) 4,369,268 4,346,654
ASSET QUALITY:
Impaired Loans $ 7,565 $ 5,614
Renegotiated Loans 64 79
Loans Past Due 90 Days but Still Accruing 2,492 4,046
Assets Acquired in Foreclosure 1,602 2,845
------------- -------------
Total Non-Performing Assets $ 11,723 $ 12,584
------------- -------------
Net Charge-Offs $ 1,297 $ 672
Foreclosed Property Expense 114 85
Allowance for Loan Losses to Total Loans 1.28 % 1.40 %
Allowance for Loan Losses to Non-Performing Loans 76.68 % 83.17 %
Non-Performing Assets to Total Loans and Assets Acquired in Foreclosure 1.93 % 2.17 %
CAPITAL ADEQUACY:
Tier I Leverage Ratio 9.93 % 7.41 %
Tier I Capital to Risk-Weighted Assets 15.39 % 11.43 %
Tier I & Tier II Capital to Risk-Weighted Assets 16.51 % 12.62 %
</TABLE>
- -----------------
(1) Adjusted for subsequent stock dividends
(2) Before merger related charge
* Restated to include the acquisition of Farrington Bank accounted for as a
pooling-of-interests.
<PAGE>
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. In consideration
for issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Trust will receive Old Capital Securities in
like Liquidation Amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and cancelled.
The proceeds to the Trust (without giving effect to expenses of the
offering payable by the Corporation) from the offering of the Old Capital
Securities was $20,000,000. All of the proceeds from the sale of Old Capital
Securities was invested by the Trust in the Junior Subordinated Debentures. The
Corporation intends that the net proceeds from the sale of the Old Junior
Subordinated Debentures (approximately $19,200,000) will be used for general
corporate purposes, including acquisition opportunities which may arise from
time to time. The precise amount and timing of the application of such net
proceeds used for such corporate purposes cannot be determined at this time.
Pending such application by the Corporation, such net proceeds may be
temporarily invested in short-term interest bearing securities.
The Capital Securities will be eligible to qualify as Tier I Capital
under the capital guidelines of the Federal Reserve, provided that under current
Federal Reserve Guidelines no more than 25% of the Corporation's Tier I Capital
may comprise Capital Securities and other capital securities and cumulative
preferred stock of the Corporation.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges
(excluding interest on deposits and including interest on deposits) for the
respective periods indicated.
<TABLE>
Year Ended December 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits................. 5.81x 6.33x 13.61x 18.99x 14.65x
Including interest on deposits................. 1.60x 1.41x 1.80x 1.61x 1.38x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, include gross
interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including gross interest on deposits, include all
interest expense and the proportion deemed representative of the interest factor
of rent expense, net of income from subleases.
<PAGE>
CAPITALIZATION
The following table sets forth the actual unaudited capitalization of
the Corporation at December 31, 1996, as adjusted to give effect to the
consummation of the offering of Capital Securities and the application of the
estimated net proceeds from the sale of the Capital Securities. See "Use of
Proceeds." The table below does not reflect United's acquisition of Farrington;
however, the unaudited first quarter financial data included under "United
National Bancorp -- Recent Developments" above, has been restated to include
the acquisition of Farrington. The table should be read in conjunction with the
Corporation's consolidated financial statements and notes thereto included in
the documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference."
<TABLE>
<CAPTION>
At December 31, 1996,
--------------------------------------
Actual As Adjusted
(in thousands)
<S> <C> <C>
Long-Term Debt $ -- $ --
Corporation obligated, mandatorily redeemable
preferred securities of subsidiary trust holding
solely subordinated debentures of the Corporation(1) -- 20,000
Stockholders' equity:
Preferred stock, authorized 300,000 shares;
none issued and outstanding -- --
Common stock, $2.50 par value, authorized 5,000,000
shares; issued 3,856,678 shares in 1996,
outstanding 9,642 9,642
3,812,682 in 1996
Additional paid-in capital 59,556 59,556
Retained earnings 19,422 19,422
Treasury Stock at cost (43,996 shares in 1996) (1,337 ) (1,337 )
Restricted Stock (176 ) (176 )
Unrealized gain on securities available
for sale, net of income taxes 982 982
------------ -------------
Total stockholders' equity 88,089 88,089
============ =============
Total capitalization $ 88,089 $ 108,089
============ =============
Pro Forma Capital Ratios:
Tier 1 Leverage Ratio 7.56 % 9.35 %
Tier 1 Risk-Based Capital Ratio 11.00 % 13.49 %
Total Risk-Based Capital Ratio 11.99 % 14.44 %
</TABLE>
(1) Reflects the Capital Securities. The Trust is a subsidiary of the
Corporation and will hold the Junior Subordinated Debentures as its sole
asset.
SUMMARY FINANCIAL DATA
The following table sets forth certain selected historical consolidated
financial data for United. The data is derived from, and should be read in
conjunction with, the consolidated financial statements of United, including the
notes thereto, included in the Corporation's 1996 Annual Report on Form 10-K,
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference." The financial statements include the consolidated accounts of New
Era Bank, which was acquired on June 30, 1995, for all periods presented. The
acquisition was accounted for under the pooling-of-interests method of
accounting. The data for the year ended December 31, 1996 does not reflect
United's acquisition of Farrington, which was completed on February 28, 1997 and
will be accounted for as a pooling-of-interests. United's financial data for the
first quarter of 1997, included under "United National Bancorp -- Recent
Developments," above, has been restated to include the acquisition of
Farrington. See "United National Bancorp -- First Quarter Results" and --
"Recent Developments."
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF UNITED
For Years Ended December 31,
-------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ----------- -------------- ---------------
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Interest income $ 73,262 $ 71,994 $ 59,754 $ 59,539 $ 61,333
Interest expense 28,855 29,128 17,979 18,959 24,791
------------ ------------ ---------- ------------ --------------
Net interest income 44,407 42,866 41,775 40,580 36,542
Provision for possible loan
losses 2,275 450 1,590 4,287 4,138
------------ ------------ ---------- ------------ --------------
Net interest income after
provision for possible loan
losses 42,132 42,416 40,185 36,293 32,404
Non-interest income 13,959 12,329 11,863 12,845 10,689
Non-interest expense 38,860 42,748 37,621 37,482 33,590
------------ ------------ ---------- ------------ --------------
Income before taxes, effect of
accounting change and
extraordinary item 17,231 11,997 14,427 11,656 9,503
Provision for income taxes 5,771 3,623 4,607 3,975 3,123
------------ ------------ ---------- ------------ --------------
Income before effect of
accounting change and
extraordinary item 11,460 8,374 9,820 7,681 6,380
Cumulative effect of change in
accounting for income taxes
extraordinary item - - - 973 -
Utilization of net operating
loss carry forward - - - - 275
-------------- -------------- ------------ -------------- --------------
Net income $ 11,460 $ 8,374 $ 9,820 $ 8,654 $ 6,655
============== ============== ============ =============== ===============
Income before merger and
restructuring charges, effect
of accounting change,
extraordinary item and SAIF
assessment $ 11,767 $ 10,463 $ 9,820 $ 7,681 $ 6,380
============ ============ ========== ============ ==============
PER COMMON SHARE DATA: (1)
Net income $ 3.01 $ 2.19 $ 2.62 $ 2.33 $ 1.80
Income before merger and
restructuring changes, effect
of accounting change
extraordinary item and SAIF
assessment 3.09 2.74 2.62 2.07 1.73
Book value 23.10 21.42 17.69 18.00 16.46
Cash dividends declared(2) 1.03 0.97 0.89 0.78 0.71
ADJUSTED FINANCIAL RATIOS:(3)
Return on average assets 1.17 % 1.08 % 1.15 % 0.93 % 0.81 %
Return on average stockholders'
equity 13.98 % 13.93 % 14.20 % 11.94 % 10.95 %
FINANCIAL RATIOS:
Return on average assets 1.14 % 0.86 % 1.15 % 1.04 % 0.85 %
Return on average stockholders'
equity 13.61 % 11.15 % 14.20 % 13.46 % 11.42 %
STATEMENT OF CONDITION DATA:
Total assets $ 1,037,549 $ 1,010,545 $ 884,541 $ 859,368 $ 822,959
Securities 350,660 359,411 320,651 404,955 394,045
Federal funds sold - 7,000 11,545 8,270 17,775
Loans (net of unearned income) 589,254 551,222 481,439 376,792 341,014
Allowance for possible loan
losses 6,852 7,412 9,597 10,812 9,239
Deposits 881,274 854,628 757,884 758,508 740,123
Short-term borrowings(4) 46,328 53,347 52,301 26,681 12,629
Other borrowings(5) 9,693 9,680 1,269 1,266 1,263
Stockholders' equity 88,089 81,399 65,802 66,727 60,742
</TABLE>
- ------------------
(1) The per share data has been restated to give retroactive effect to stock
dividends.
(2) Does not include the effect of dividends paid by New Era Bank.
(3) Before merger and restructuring charges, effect of accounting change,
extraordinary item and SAIF assessment.
(4) Includes Federal funds purchased, securities sold under agreements to
repurchase, Federal Home Loan Bank advances and demand notes - U.S.
Treasury.
(5) Includes obligation under capital lease and long-term debt.
<PAGE>
THE TRUST
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of February 21, 1997, executed
by the Corporation, as Sponsor, the Delaware Trustee and the Administrative
Trustees named therein (the "Initial Declaration"), and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
February 22, 1997. The Initial Declaration was replaced by the Declaration. The
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, which represent undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds from the sale of the Trust Securities
in the Junior Subordinated Debentures and (iii) engaging in only those other
activities necessary, advisable or incidental thereto. Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Trust and payments under
the Junior Subordinated Debentures will be the sole revenues of the Trust. All
of the Common Securities will be owned directly by the Corporation. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Capital Securities, except that upon the occurrence and during the
continuance of an Event of Default, the rights of the Corporation as holder of
the Common Securities to payments in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated and rank junior to the
rights of the holders of the Capital Securities. See "Description of Capital
Securities -- Subordination of Common Securities." The Corporation has acquired
Common Securities in a Liquidation Amount equal to at least 3% of the total
capital of the Trust. The Trust has a term of 31 years, but may terminate
earlier as provided in the Declaration. The Trust's business and affairs will be
conducted by trustees (the "Issuer Trustees") appointed by the Corporation as
the direct holder of the Common Securities. The Issuer Trustees 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 two
individual trustees (the "Administrative Trustees"). The Bank of New York, as
Property Trustee, will act as sole indenture trustee under the Declaration. The
Bank of New York will also act as indenture trustee under the Guarantee and the
Indenture. See "Description of the Guarantee" and "Description of Junior
Subordinated Debentures." The holder of the Common Securities or, if an Event of
Default under the Declaration has occurred and is continuing, the holders of a
majority in Liquidation Amount of the Capital 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 Capital Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights will
be vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the Declaration. The
Corporation will pay directly all fees, expenses, debts and obligations (other
than the Trust Securities) related to the Trust and the offering of the Capital
Securities, including all ongoing costs, expenses and liabilities of the Trust.
The principal executive office of the Trust is UNB Capital Trust I, c/o United
National Bancorp, 1130 Route 22, P.O. Box 6000, Bridgewater, New Jersey
08807-0010, Attention:
Ralph L. Straw, Jr.
THE EXCHANGE OFFER
Purpose of the Exchange Offer
In connection with the sale of the Old Capital Securities, the
Corporation and the Trust entered into the Registration Rights Agreement with
the Initial Purchasers, pursuant to which the Corporation and the Trust agreed
to file and to use their reasonable efforts to cause to become effective with
the Commission a registration statement with respect to the exchange of the Old
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Old Capital Securities. A copy of the Registration
Rights Agreement has been filed as an Exhibit to the Registration Statement of
which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations
of the Corporation and the Trust under the Registration Rights Agreement. The
form and terms of the New Capital Securities are the same as the form and terms
of the Old Capital Securities except that the New Capital Securities have been
registered under the Securities Act and will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities (but will
continue to be subject to the $100,000 minimum Liquidation Amount transfer
restriction) and will not provide for any increase in the Distribution rate
thereon. In that regard, the Old Capital Securities provide, among other things,
that, if a registration statement relating to the Exchange Offer has not been
filed by August 18, 1997 and declared effective by September 17, 1997, the
Distribution rate borne by the Old Capital Securities commencing on September
18, 1997 will increase by 0.25% per annum until the Exchange Offer is
consummated. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the Distribution rate thereon
or any further registration rights under the Registration Rights Agreement,
except under limited circumstances. See "Risk Factors--Consequences of a Failure
to Exchange Old Capital Securities" and "Description of Old Capital Securities."
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Old Capital Securities in any jurisdiction
in which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect
to the Exchange Offer means any person in whose name the Old Capital Securities
are registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company
("DTC") who desires to deliver such Old Capital Securities by book-entry
transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon
as practicable after the date hereof, the Old Guarantee for the New Guarantee
and the Old Junior Subordinated Debentures, in an amount corresponding to the
Old Capital Securities accepted for exchange, for a like aggregate principal
amount of the New Junior Subordinated Debentures. The New Guarantee and New
Junior Subordinated Debentures have been registered under the Securities Act.
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $20,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Trust will issue,
promptly after the Expiration Date, an aggregate Liquidation Amount of up to
$20,000,000 of New Capital Securities in exchange for a like principal amount of
outstanding Old Capital Securities tendered and accepted in connection with the
Exchange Offer. Holders may tender their Old Capital Securities in whole or in
part in a Liquidation Amount of not less than $100,000 (100 Capital Securities)
or any integral multiple of $1,000 Liquidation Amount (one Capital Security) in
excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation
Amount of Old Capital Securities being tendered. As of the date of this
Prospectus, $20,000,000 aggregate Liquidation Amount of the Old Capital
Securities is outstanding.
Holders of Old Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Old Capital Securities
which are not tendered for or are tendered but not accepted in connection with
the Exchange Offer will remain outstanding and be entitled to the benefits of
the Declaration, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors--Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Old Capital Securities in connection with the
Exchange Offer. The Corporation will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See "--Fees and Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION NOR
ANY ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD
CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY
PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
OLD CAPITAL SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT
TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES
TO TENDER BASED ON SUCH HOLDER'S OWN FINANCIAL POSITION AND REQUIREMENTS.
The term "Expiration Date" means 5:00 p.m., New York City time, on June
16, 1997 unless the Exchange Offer is extended by the Corporation or the Trust
(in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole
and absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Capital Securities for exchange,
(ii) to terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) if the Trust determines, in its
sole and absolute discretion, that any of the events or conditions referred to
under "--Conditions to the Exchange Offer" have occurred or exist or have not
been satisfied, (iii) to extend the Expiration Date of the Exchange Offer and
retain all Old Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Old Capital Securities to withdraw
their tendered Old Capital Securities as described under "--Withdrawal Rights,"
and (iv) to waive any condition or otherwise amend the terms of the Exchange
Offer in any respect. If the Exchange Offer is amended in a manner determined by
the Corporation and the Trust to constitute a material change, or if the
Corporation and the Trust waive a material condition of the Exchange Offer, the
Corporation and the Trust will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the holders of the Old Capital
Securities, and the Corporation and the Trust will extend the Exchange Offer to
the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will
be followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
Acceptance for Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC.
Subject to the terms and conditions of the Exchange Offer, the Trust
will be deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Trust's acceptance for exchange of
Old Capital Securities) or the Trust extends the Exchange Offer or is unable to
accept for exchange or exchange Old Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Trust's rights set forth herein,
the Exchange Agent may, nevertheless, on behalf of the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital Securities and such
Old Capital Securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "--Withdrawal
Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital
Securities will warrant and agree in the Letter of Transmittal that it has full
power and authority to tender, exchange, sell, assign and transfer Old Capital
Securities, that the Trust will acquire good, marketable and unencumbered title
to the tendered Old Capital Securities, free and clear of all liens,
restrictions, charges and encumbrances, and the Old Capital Securities tendered
for exchange are not subject to any adverse claims or proxies. The holder also
will warrant and agree that it will, upon request, execute and deliver any
additional documents deemed by the Trust or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment, and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
Procedures for Tendering Old Capital Securities
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under
"--Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation must be received by the Exchange Agent, in each case
on or prior to the Expiration Date, or (iii) the guaranteed delivery procedures
set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a
tendering holder should fill in the amount of Old Capital Securities being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Old Capital Securities delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth under "--Exchange
Agent" on or prior to the Expiration Date, or the guaranteed delivery procedure
set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for Old Capital Securities must be duly endorsed
or accompanied by a properly executed bond power, with the endorsement or
signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Old Capital Securities may nevertheless be tendered, provided that
all of the following guaranteed delivery procedures are complied with:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to the Expiration
Date; and
(c) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
New Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry confirmations
with respect to Old Capital Securities and other required documents are received
by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and subject
to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the opinion of counsel to the Corporation and the Trust,
be unlawful. The Corporation and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
as set forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the
Corporation and the Trust, proper evidence satisfactory to the Corporation and
the Trust, in their sole discretion, of such person's authority to so act must
be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
Resales of New Capital Securities
The Trust is making the Exchange Offer for the New Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Corporation nor the
Trust sought its own interpretive letter and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance of the Commission, and subject to
the two immediately following sentences, the Corporation and the Trust believe
that New Capital Securities issued pursuant to this Exchange Offer in exchange
for Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the Corporation or the Trust or who intends
to participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from the
Trust to resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for New Capital Securities,
then such broker-dealer must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Corporation or
the Trust, (ii) any New Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if such
holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such New Capital Securities. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility to participate
in the Exchange Offer, to furnish to the Corporation and the Trust (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Exchange Act) on behalf of whom such holder
holds the Capital Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives New Capital Securities for its own account pursuant
to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Corporation
and the Trust believe that Participating Broker-Dealers who acquired Old Capital
Securities for their own accounts as a result of market-making activities or
other trading activities may fulfill their prospectus delivery requirements with
respect to the New Capital Securities received upon exchange of such Old Capital
Securities (other than Old Capital Securities which represent an unsold
allotment from the original sale of the Old Capital Securities) with a
prospectus meeting the requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it contains a description
of the plan of distribution with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer during the
period referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities where such Old Capital
Securities were acquired by such Participating Broker-Dealer for its own account
as a result of market-making or other trading activities. Subject to certain
provisions set forth in the Registration Rights Agreement, the Corporation and
the Trust have agreed that this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer in connection
with resales of such New Capital Securities for a period ending 90-days after
the Expiration Date (subject to extension under certain limited circumstances
described below) or, if earlier, when all such New Capital Securities have been
disposed of by such Participating Broker-Dealer. See "Plan of Distribution."
However, a Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of New Capital Securities received in exchange for
Old Capital Securities pursuant to the Exchange Offer must notify the
Corporation or the Trust, or cause the Corporation or the Trust to be notified,
on or prior to the Expiration Date, that it is a Participating Broker-Dealer.
Such notice may be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at one of the addresses
set forth herein under "--Exchange Agent." Any Participating Broker-Dealer who
is an "affiliate" of the Corporation or the Trust may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that, upon receipt of notice from the
Corporation or the Trust of the occurrence of any event or the discovery of any
fact which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Corporation or the Trust has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Corporation or the Trust has given notice that the sale of
the New Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) may be resumed, as the case may be. If the
Corporation or the Trust gives such notice to suspend the sale of the New
Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable), it shall extend the 90-day period referred to above
during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Capital Securities by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the New Capital Securities or to and including the date on which the Corporation
or the Trust has given notice that the sale of New Capital Securities (or the
New Guarantee or the New Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth under "--Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
certificates for such Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Old Capital
Securities, if different from that of the person who tendered such Old Capital
Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "--Procedures for Tendering Old
Capital Securities," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described
above under "--Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Trust, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Corporation, the Trust, any affiliates or assigns of the Corporation
or the Trust, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or incur
any liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned to
the holder thereof promptly after withdrawal.
Distributions on New Capital Securities
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive Distributions on such Old Capital
Securities and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after March
21, 1997. Accordingly, holders of New Capital Securities as of the record date
for the payment of Distributions on September 15, 1997 will be entitled to
receive Distributions accumulated from and after March 21, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any New Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued pursuant
to the Exchange Offer in exchange for Old Capital Securities to be offered for
resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an "affiliate" of the Corporation or
the Trust within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New Capital Securities are acquired in the
ordinary course of such holders' business and such holders have no arrangement
or understanding with any person to participate in the distribution of such New
Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Corporation or the Trust, would reasonably
be expected to impair its ability to proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration Statement
or proceedings shall have been initiated or, to the knowledge of the Corporation
or the Trust, threatened for that purpose any governmental approval has not been
obtained, which approval the Corporation or the Trust shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby.
If the Corporation or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any such condition or otherwise amend the
terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Corporation or the
Trust will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities and will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent as follows:
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street - 7E 101 Barclay Street
Attn.: Reorganization Section Corporate Trust Services Window
Arwin Gibbons Ground Level
New York, New York 10286 New York, New York 10286
Attention: Reorganization Section
Arwin Gibbons
For Information Call:
(212) 815-5920
(Eligible Institutions Only)
Confirm By Telephone:
(212) 815-5920
Facsimile Transmissions:
(212) 815-6339
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW SECURITIES
Description of New Capital Securities
Pursuant to the terms of the Declaration, the Trust has issued the Old
Capital Securities and the Common Securities and will issue the New Capital
Securities. The New Capital Securities will represent preferred beneficial
interests in the Trust and the holders of the New Capital Securities and the Old
Capital Securities will be entitled to a preference over the Common Securities
in certain circumstances with respect to Distributions and amounts payable on
redemption of the Trust Securities or liquidation of the Trust. See
"--Subordination of Common Securities." The Declaration has been qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). This
summary of certain provisions of the New Capital Securities and the Declaration
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Declaration and the Trust
Indenture Act. Certain capitalized terms used herein are defined in the
Declaration.
General. The Capital Securities (including the Old Capital Securities
and the New Capital Securities) are limited to $20,000,000 aggregate Liquidation
Amount at any one time outstanding. The Capital Securities will rank pari passu,
and payments will be made thereon pro rata, with the Old Capital Securities and
the Common Securities except as described under "--Subordination of Common
Securities." Legal title to the Junior Subordinated Debentures will be held by
the Property Trustee in trust for the benefit of the holders of the Capital
Securities and Common Securities. The New Guarantee will be a guarantee on a
subordinated basis but will not guarantee payment of Distributions or amounts
payable on redemption of the New Capital Securities or on liquidation of the
Trust when the Trust does not have funds on hand legally available for such
payments. See "--Description of New Guarantee."
Distributions. Distributions on the New Capital Securities will be
cumulative, will accumulate from March 21, 1997 and will be payable
semi-annually in arrears on March 15 and September 15 of each year, commencing
September 15, 1997, at the annual rate of 10.01% of the Liquidation Amount to
the holders of the New Capital Securities on the relevant record dates. The
record dates will be the first day of the month in which the relevant
Distribution Date (as defined below) falls. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which Distributions are payable on the New
Capital Securities is not a Business Day (as defined below), payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect to any
such delay), 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 or a Sunday, or a day on which banking institutions in The City of New
York or Bridgewater, New Jersey, are authorized or required by law or executive
order to remain closed.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to defer the
payment of interest on the New Junior Subordinated Debentures at any time or
from time to time for a period not exceeding 10 consecutive semi-annual periods
with respect to each Extension Period, provided that no Extension Period may
extend beyond the Stated Maturity Date. Upon any such election, semi-annual
Distributions on the New Capital Securities will be deferred by the Trust during
any such Extension Period. Distributions to which holders of the New Capital
Securities are entitled during any such Extension Period will accumulate
additional Distributions thereon at the rate per annum of 10.01% thereof,
compounded semi-annually from the relevant Distribution Date, but not exceeding
the interest rate then accruing on the New Junior Subordinated Debentures. The
term "Distributions," as used herein, shall include any such additional
Distributions.
During any such Extension Period, the Corporation may extend such
Extension Period, provided that such extension does not cause such Extension
Period to exceed 10 consecutive semi-annual periods or to extend beyond the
Stated Maturity Date. Upon the termination of any such Extension Period and the
payment of all amounts then due, and subject to the foregoing limitations, the
Corporation may elect to begin a new Extension Period. The Corporation must give
the Property Trustee, the Administrative Trustees and the Debenture Trustee
notice of its election of any Extension Period or any extension thereof at least
five Business Days prior to the earlier of (i) the date the Distributions on the
New Capital Securities would have been payable except for the election to begin
such Extension Period or (ii) the date the Administrative Trustees are required
to give notice to any securities exchange or to holders of such New Capital
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 the Corporation may elect to begin an
Extension Period. See "--Description of New Junior Subordinated
Debentures--Option to Extend Interest Payment Period" and "Certain United States
Federal Income Tax Considerations--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock) or (ii) make any payment of
principal of or premium, if any, or interest on or repay, repurchase or redeem
any debt securities of the Corporation (including Other Debentures) that rank
pari passu with or junior in right of payment to the New Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Corporation of the debt securities of any subsidiary of the Corporation
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the New Junior Subordinated Debentures (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class, or
series of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans).
Although the Corporation may in the future exercise its option to defer
payments of interest on the New Junior Subordinated Debentures, the Corporation
has no such current intention.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the New Junior Subordinated
Debentures in which the Trust will invest the proceeds from the issuance and
sale of the Trust Securities. See "--Description of New Junior Subordinated
Debentures--General." If the Corporation does not make interest payments on the
New Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the New Capital 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 the
Corporation on a limited basis as set forth herein under "--Description of New
Guarantee."
Redemption. Upon the repayment on the Stated Maturity Date or
prepayment prior to the Stated Maturity Date of the New Junior Subordinated
Debentures, the proceeds from such repayment or prepayment shall 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 the applicable Redemption Price, which
shall be equal to (i) in the case of the repayment of the New Junior
Subordinated Debentures on the Stated Maturity Date, the Maturity Redemption
Price (equal to the principal of, and accrued and unpaid interest on, the New
Junior Subordinated Debentures), (ii) in the case of the optional prepayment of
the New Junior Subordinated Debentures before the Initial Optional Prepayment
Date upon the occurrence and continuation of a Special Event, the Special Event
Redemption Price (equal to the Special Event Prepayment Price in respect of the
New Junior Subordinated Debentures) and (iii) in the case of the optional
prepayment of the New Junior Subordinated Debentures other than as contemplated
in clause (ii) above, the Optional Redemption Price (equal to the Optional
Prepayment Price in respect of the New Junior Subordinated Debentures). See
"--Description of New Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment."
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Junior Subordinated Debentures to be paid in accordance with their
terms and (ii) with respect to a distribution of Junior Subordinated Debentures
upon the liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Junior Subordinated Debentures are distributed.
The Corporation will have the option to prepay the Junior Subordinated
Debentures, (i) in whole or in part, on or after the Initial Optional Prepayment
Date, at the applicable Optional Prepayment Price and (ii) in whole but not in
part, at any time before the Initial Optional Prepayment Date, upon the
occurrence of a Special Event, at the Special Event Prepayment Price, in each
case subject to receipt of prior approval by the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal Reserve.
Liquidation of the Trust and Distribution of New Junior Subordinated
Debentures. The Corporation will have the right at any time to dissolve the
Trust and cause the New Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust. Such right is
subject to (i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of New
Capital Securities and (ii) the prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal Reserve.
The Trust shall automatically dissolve upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation or
the Trust; (ii) upon receipt by the Property Trustee of written notice from the
Corporation, as Sponsor, directing the Property Trustee to dissolve the Trust
(which direction is optional and, except as described above, wholly within the
discretion of the Corporation, as Sponsor); (iii) redemption of all of the Trust
Securities as described under "--Redemption" above; (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.
If a dissolution occurs as described in clause (i), (ii), (iv), or (v)
of the preceding paragraph, the Trust shall be liquidated by the Administrative
Trustees as expeditiously as the Administrative Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to the holders of the Trust Securities a
Like Amount of the New Junior Subordinated Debentures, in which event such
holders will be entitled to receive out of the assets of the Trust legally
available for distribution to holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the Liquidation Amount plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If the 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 Capital Securities and the Common Securities shall be paid on a pro
rata basis, except that if a Debenture Event of Default has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities. See "--Subordination of Common Securities." If an early termination
occurs as described in clause (v) above, the New Junior Subordinated Debentures
will be subject to optional prepayment, in whole but not in part, on or after
the Initial Optional Prepayment Date.
If the Corporation elects not to prepay the Junior Subordinated
Debentures prior to maturity in accordance with their terms and either elects
not to or is 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.
After the liquidation 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) each registered
global certificate, if any, representing Trust Securities and held by DTC or its
nominee will receive 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 New Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of such
Trust Securities, and bearing accrued and unpaid interest in an amount 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 the Corporation will issue to such holder, and the
Debenture Trustee will authenticate, a certificate representing such Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the New Capital
Securities or the New 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 New Capital Securities that an investor may
purchase, or the New Junior Subordinated Debentures that the investor may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the New Capital Securities.
Redemption Procedures. If applicable, Trust Securities shall be
redeemed at the applicable Redemption Price with the proceeds from the
contemporaneous repayment or prepayment of the New Junior Subordinated
Debentures. Any redemption of Trust Securities shall be made and the applicable
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 applicable
Redemption Price. See also "--Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the New Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are legally available, with respect to the New Capital
Securities held by DTC or its nominees, the Property Trustee will pay or cause
the Paying Agent to pay the Redemption Price to DTC. See "--Form, Denomination,
Book-Entry Procedures and Transfer." With respect to the New Capital Securities
held in certificated form, the Property Trustee, to the extent funds are legally
available, will give irrevocable instructions and authority to the paying agent
and will irrevocably deposit with the paying agent for the New Capital
Securities funds sufficient to pay or cause the paying agent to pay the
applicable Redemption Price to the holders thereof upon surrender of their
certificates evidencing the New Capital Securities. See "--Payment and Paying
Agency." Distributions payable on or prior to the Redemption Date shall be
payable to the holders of such New Capital Securities on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited with the Property Trustee to pay the Redemption
Price for the New Capital Securities called for redemption, then all rights of
the holders of such New Capital Securities will cease, except the right of the
holders of the New Capital Securities to receive the applicable Redemption
Price, but without interest on such Redemption Price, and the New Capital
Securities will cease to be outstanding. In the event that any Redemption Date
of New Capital Securities is not a Business Day, then the applicable 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). In the event that payment of the applicable Redemption Price is
improperly withheld or refused and not paid either by the Trust or by the
Corporation pursuant to the New Guarantee as described under "--Description of
New Guarantee," (i) Distributions on New Capital Securities will continue to
accumulate on the Redemption Price at the then applicable rate, from the
Redemption Date originally established by the Trust to the date such applicable
Redemption Price is actually paid, and (ii) the actual payment date will be the
Redemption Date for purposes of calculating the applicable Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law and the regulations of the Federal Reserve), the
Corporation or its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by private
agreement.
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 the Corporation defaults in payment of the
applicable Prepayment 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 Capital Securities and Common Securities, as
applicable, shall be made pro rata based on the Liquidation Amount of the
Capital Securities and Common Securities; provided, however, that if on any
Distribution Date or Redemption Date a Debenture Event 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, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Capital Securities for all
Distribution periods terminating on or prior thereto, the full amount of the
Redemption Price therefor, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.
In the case of any Event of Default, the Corporation as holder of the
Common Securities 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 shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Capital Securities and not on behalf of the
Corporation as holder of the Common Securities, and only the holders of the
Capital Securities will have the right to direct the Property Trustee to act on
their behalf.
Events of Default; Notice. The occurrence of a Debenture Event of
Default (see "Description of New Junior Subordinated Debentures--Debenture
Events of Default") constitutes an "Event of Default" under the Declaration.
Within ten (10) Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the holders of the Capital
Securities, the Administrative Trustees and the Corporation, as Sponsor, unless
such Event of Default shall have been cured or waived. The Corporation, as
Sponsor, and the Administrative Trustees are required to file annually with the
Property Trustee a certificate as to whether or not they are in compliance with
all the conditions and covenants applicable to them under the Declaration.
If a Debenture Event of Default has occurred and is continuing, the
Capital Securities shall have a preference over the Common Securities as
described under "--Liquidation of the Trust and Distribution of New Junior
Subordinated Debentures" and "--Subordination of Common Securities."
Removal of Issuer Trustees. Unless a Debenture Event of Default shall
have occurred and be 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 at such time by the holders of a majority in Liquidation Amount of the
outstanding Capital Securities. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Corporation as the holder of the Common Securities. No resignation or removal of
an Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Declaration.
Merger or Consolidation of Issuer Trustees. Any corporation into which
the Property Trustee, the Delaware Trustee or any Administrative Trustee that is
not a natural person may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Issuer Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of such
Issuer Trustee, shall be the successor of such Issuer Trustee under the
Declaration, provided such corporation shall be otherwise qualified and
eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust.
The Trust may not merge or convert 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. The Trust may, at the request of the Corporation, as
Sponsor, with the consent of the Administrative Trustees but without the consent
of the holders of the Capital Securities, merge or convert 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 as such under the laws of any State; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Capital Securities or (b) substitutes for the Capital Securities
other securities having substantially the same terms as the Capital Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Capital Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Corporation
expressly appoints 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 Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Capital Securities are
then listed or quoted, if any, (iv) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
conversion, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect (other than any dilution of such holders' interests in the new
entity), (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Corporation has received an
opinion from independent counsel to the Trust experienced in such matters to the
effect that (a) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect (other than any dilution of
such holders' interests in the new entity), and (b) following such merger,
conversion, 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 of 1940, as amended
(the "Investment Company Act"), and (viii) the Corporation 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. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge or
convert 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 or
convert with or into, or replace it if such consolidation, amalgamation, merger,
conversion, 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. In addition, the Property Trustee will be required
pursuant to the Indenture to exchange, as a part of the Exchange Offer, the
Junior Subordinated Debentures for the Exchange Debentures, which will have
terms identical to the Junior Subordinated Debentures except for the transfer
restrictions under the Securities Act and the provision for an increase in the
interest rate thereon under certain circumstances. See "Exchange Offer;
Registration Rights."
Voting Rights; Amendment of the Declaration. Except as provided below
and under "--Mergers, Consolidations, Amalgamations or Replacements of the
Trust" and "--Description of New Guarantee--Amendments and Assignment" and as
otherwise required by law and the Declaration, the holders of the New Capital
Securities will have no voting rights.
The Declaration may be amended from time to time by the Corporation,
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 Declaration that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Declaration, which shall not be inconsistent with the other
provisions of the Declaration, or (ii) to modify, eliminate or add to any
provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified 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, or (iii) to modify, eliminate, or add
to any provision of the Declaration to such extent as shall be necessary to
enable the Trust and the Corporation to conduct an Exchange Offer in the manner
contemplated by the Registration Rights Agreement; provided, however, that in
the case of clause (i), such action shall not adversely affect in any material
respect the interests of the holders of the Trust Securities. Any amendments of
the Declaration pursuant to the foregoing shall become effective when notice
thereof is given to the holders of the Trust Securities. The Declaration may be
amended by the Issuer Trustees and the Corporation (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 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, provided that, without the consent of each
holder of Trust Securities, the Declaration may not be amended to (i) change the
amount or timing of any Distribution or other payment on the Trust Securities or
otherwise adversely affect the amount of any Distribution or other payment
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a holder of Trust Securities to institute suit for
the enforcement of any such payment on or after such date; it being understood
that the New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Declaration.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect to
the Junior Subordinated Debentures, (ii) waive certain past defaults under the
Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior approval
of each holder of the Capital Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of default
with respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall 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 New Capital Securities may be given
at a meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of New Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of New Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of New Capital Securities will be
required for the Trust to redeem and cancel the New Capital Securities in
accordance with the Declaration.
Notwithstanding that holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Corporation or any affiliate of the
Corporation, shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
Form, Denomination, Book-Entry Procedures and Transfer. The New Capital
Securities initially will be represented by one or more Capital Securities in
registered, global form (collectively, the "Global Capital Securities"). The
Global Capital Securities will be deposited upon issuance with the Property
Trustee as custodian for DTC, in New York, New York, and registered in the name
of DTC or its nominee, in each case for credit to an account of a direct or
indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below.
DTC has advised the Trust and the Corporation that DTC is a limited
purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants with portions of the Liquidation
Amount of the Global Capital Securities and (ii) ownership of such interests in
the Global Capital Securities will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Except as described below, owners of beneficial interests in the Global
Capital Securities will not have Capital Securities registered in their name,
will not receive physical delivery of Capital Securities in certificated form
and will not be considered the registered owners or holders thereof under the
Declaration for any purpose.
Payments in respect of the Global Capital Security registered in the
name of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Declaration. Under the terms of the
Declaration, the Property Trustee will treat the persons in whose names the
Capital Securities, including the Global Capital Securities, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial interests in the Global
Capital Securities, or for maintaining, supervising or reviewing any of DTC's
records or any Participant's or Indirect Participant's records relating to the
beneficial interests in the Global Capital Securities or (ii) any other matter
relating to the actions and practices of DTC or any of its Participants or
Indirect Participants. DTC has advised the Trust and the Corporation that its
current practice, upon receipt of any payment in respect of securities such as
the Capital Securities, is to credit the accounts of the relevant Participants
with the payment on the payment date, in amounts proportionate to their
respective holdings in Liquidation Amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of New
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Trust or the Corporation. Neither the Trust nor the Corporation or the
Property Trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the New Capital Securities, and the
Trust, the Corporation and the Property Trustee may conclusively rely on and
will be protected in relying on instructions from DTC or its nominee for all
purposes.
Beneficial interests in the Global Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds, subject in
all cases to the rules and procedures of DTC and its participants.
DTC has advised the Trust and the Corporation that it will take any
action permitted to be taken by a holder of New Capital Securities only at the
direction of one or more Participants to whose account with DTC interests in the
Global Capital Securities are credited and only in respect of such portion of
the Liquidation Amount of the New Capital Securities as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Declaration, DTC reserves the right to exchange
the Global Capital Securities for New Capital Securities in certificated form
and to distribute such New Capital Securities to its Participants.
The information in this section concerning DTC and its book-entry
system has been obtained from sources that the Trust and the Corporation believe
to be reliable, but neither the Trust nor the Corporation takes responsibility
for the accuracy thereof.
A Global Capital Security is exchangeable for New Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90-days
or (y) has ceased to be a clearing agency registered under the Exchange Act,
(ii) the Corporation in its sole discretion elects to cause the issuance of the
New Capital Securities in certificated form or (iii) there shall have occurred
and be continuing an Event of Default or any event which after notice or lapse
of time or both would be an Event of Default under the Declaration. In addition,
beneficial interests in a Global Capital Security may be exchanged for
certificated New Capital Securities upon request but only upon at least 20-days'
prior written notice given to the Property Trustee by or on behalf of DTC in
accordance with customary procedures. In all cases, certificated New Capital
Securities delivered in exchange for any Global Capital Security or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
its customary procedures), unless the Property Trustee determines otherwise in
compliance with applicable law.
Payment and Paying Agency. Payments in respect of the New Capital
Securities held in global form shall be made to the Depositary, which shall
credit the relevant accounts at the Depositary on the applicable Distribution
Dates or in respect of the New Capital Securities that are not held by the
Depositary, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the register. The paying
agent (the "Paying Agent") shall initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Corporation. In the event that the Property Trustee shall no longer be
the Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Corporation) to act as Paying Agent.
Registrar and Transfer Agent. The Property Trustee will act as
registrar and transfer agent for the New Capital Securities.
Registration of transfers of the New Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of the New Capital Securities (i) during the period
starting 15 days before the mailing of a notice of redemption and ending on the
date of such mailing and (ii) after they have been called for redemption.
Information Concerning the Property Trustee. The Property Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. 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 Declaration or is unsure of the
application of any provision of the Declaration, and the matter is not one on
which holders of the Capital Securities or the Common Securities are entitled
under the Declaration to vote, then the Property Trustee shall take such action
as is directed by the Corporation and if not so directed, shall take such 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.
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 an association taxable as a
corporation for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust or the
Declaration, that the Corporation and the Administrative Trustees determine in
their discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Trust Securities.
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.
Description of New Junior Subordinated Debentures
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures will be issued as a separate series under the Indenture.
The Indenture has been 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 where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, some of which are not otherwise defined herein,
are qualified in their 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.
General. Concurrently with the issuance of the Capital Securities, the
Trust invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in Old Junior Subordinated Debentures
issued by the Corporation. Pursuant to the Exchange Offer, the Corporation will
exchange the Old Junior Subordinated Debentures, in an amount corresponding to
the Old Capital Securities accepted for exchange, for a like aggregate principal
amount of the New Junior Subordinated Debentures as soon as practicable after
the date hereof.
The New Junior Subordinated Debentures will bear interest at the annual
rate of 10.01% of the principal amount thereof, payable semi-annually in arrears
on March 15 and September 15 of each year (each, an "Interest Payment Date"),
commencing September 15, 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the first day of the month in which the relevant payment
date falls. It is anticipated that, until the liquidation, if any, of the Trust,
each New Junior Subordinated Debenture will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Trust 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. In the event that any date on which
interest is payable on the New Junior Subordinated Debentures is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), in each case with the same force and effect as if
made 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 10.01% thereof, compounded
semi-annually. The term "interest", as used herein, shall include semi-annual
interest payments, interest on semi-annual interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The New Junior Subordinated Debentures will mature on March 15, 2027
(the "Stated Maturity Date"). The New Junior Subordinated Debentures will rank
pari passu with the Old Junior Subordinated Debentures and with all Other
Debentures and will be unsecured and subordinate and junior in right of payment
to the extent and in the manner set forth in the Indenture to all Senior
Indebtedness of the Corporation. See "--Subordination." The Corporation is a
non-operating holding company and almost all of the operating assets of the
Corporation and its consolidated subsidiaries are owned by such subsidiaries.
The Corporation relies primarily on dividends from such subsidiaries to meet its
obligations. The Corporation is a legal entity separate and distinct from its
banking and non-banking affiliates. The principal sources of the Corporation's
income are dividends, interest and fees from its banking and non-banking
affiliates. UNB is subject to certain restrictions imposed by federal law on any
extensions of credit to, and certain other transactions with, the Corporation
and certain other affiliates, and on investments in stock or other securities
thereof. Such restrictions prevent the Corporation and such other affiliates
from borrowing from UNB unless the loans are secured by various types of
collateral. Further, such secured loans, other transactions and investments by
UNB are generally limited in amount as to the Corporation and as to each of such
other affiliates to 10% of UNB's capital and surplus and as to the Corporation
and all of such other affiliates to an aggregate of 20% of UNB's capital and
surplus. In addition, payment of dividends to the Corporation by UNB is subject
to ongoing review by banking regulators and is subject to various statutory
limitations and in certain circumstances requires approval by banking regulatory
authorities. Because the Corporation is a holding company, the right of the
Corporation 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 the subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the New Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of New Junior Subordinated Debentures should look only
to the assets of the Corporation for payments on the New Junior Subordinated
Debentures. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Indebtedness. See
"--Subordination."
Form, Registration and Transfer. If the Junior Subordinated Debentures
are distributed to holders of the Trust Securities, such Junior Subordinated
Debentures may be represented by one or more global certificates registered in
the name of Cede & Co. as the nominee of DTC. The depositary arrangements for
such Junior Subordinated Debentures are expected to be substantially similar to
those in effect for the New Capital Securities. For a description of DTC and the
terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "--Description of
New Capital Securities--Form, Denomination, Book-Entry Procedures and Transfer."
Payment and Paying Agents. Payment of principal of and premium, if any
and any interest on New 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 the Corporation may designate from time to
time, except that at the option of the Corporation payment of any interest may
be made except in the case of New Junior Subordinated Debentures in global form,
(i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the register for New Junior Subordinated Debentures or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in such register, provided that proper transfer instructions have been
received by the relevant Record Date. The Corporation has initially designated
Trust Company as co-Paying Agent. Payment of any interest on any New Junior
Subordinated Debenture will be made to the Person in whose name such New Junior
Subordinated Debenture is registered at the close of business on the Record Date
for such interest, except in the case of defaulted interest. The Corporation may
at any time designate additional Paying Agents or rescind the designation of any
Paying Agent; however the Corporation will at all times be required to maintain
a Paying Agent in each Place of Payment for the New Junior Subordinated
Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of and
premium, if any or interest on any New Junior Subordinated Debenture and
remaining unclaimed for two years after such principal and premium, if any or
interest has become due and payable shall, at the request of the Corporation, be
repaid to the Corporation and the holder of such New Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to the
Corporation for payment thereof.
Option to Extend Interest Payment Date. So long as no Debenture Event
of Default has occurred and is continuing, the Corporation will have the right
under the Indenture at any time during the term of the New Junior Subordinated
Debentures to defer the payment of interest at any time or from time to time for
a period not exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity Date. At the end of such Extension Period, the Corporation must pay all
interest then accrued and unpaid (together with interest thereon at the annual
rate of 10.01%, compounded semi-annually, to the extent permitted by applicable
law). During an Extension Period, interest will continue to accrue and holders
of New Junior Subordinated Debentures (and holders of the Trust Securities while
Trust Securities are outstanding) will be required to accrue interest income for
United States federal income tax purposes prior to the receipt of cash
attributable to such income. See "Certain United States Federal Income Tax
Considerations--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock) or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including any Other Debentures) that rank
pari passu with or junior in right of payment to the New Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Corporation of the debt securities of any subsidiary of the Corporation
(including any Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the New Junior Subordinated Debentures (other than
(a) dividends or distributions in shares of or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or series
of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans).
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Corporation may elect to begin a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Corporation must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of any Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the Distributions on the
Trust Securities would have been payable except for the election to begin or
extend such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or to holders of New Capital
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. The
Debenture Trustee shall give notice of the Corporation's election to begin or
extend a new Extension Period to the holders of the Capital Securities. There is
no limitation on the number of times that the Corporation may elect to begin an
Extension Period.
Optional Prepayment. The New Junior Subordinated Debentures will be
prepayable, in whole or in part, at the option of the Corporation on or after
the Initial Optional Prepayment Date, subject to the Corporation having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, at a prepayment price (the
"Optional Prepayment Price") equal to the percentage of the outstanding
principal amount of the New Junior Subordinated Debentures specified below,
plus, in each case, accrued interest thereon to the date of prepayment if
redeemed during the 12-month period beginning March 15 of the years indicated
below:
Year Percentage
2007 105.00
2008 104.50
2009 104.00
2010 103.50
2011 103.00
2012 102.50
2013 102.00
2014 101.50
2015 101.00
2016 100.50
2017 and thereafter 100.00
Special Event Prepayment. If a Special Event shall occur and be
continuing, the Corporation may, at any time prior to the Initial Optional
Prepayment Date, within 90 days after the occurrence of the Special Event, at
its option and subject to receipt of prior approval of the Federal Reserve if
then required under applicable capital guidelines or policies of the Federal
Reserve, prepay the New Junior Subordinated Debentures in whole (but not in
part) at a prepayment price (the "Special Event Prepayment Price") equal to the
greater of (i) 100% of the principal amount of such Junior Subordinated
Debentures or (ii) the sum, as determined by a Quotation Agent, of the present
values of the principal amount and premium payable as part of the Optional
Prepayment Price with respect to an optional redemption of such Junior
Subordinated Debentures on the Initial Optional Prepayment Date, together with
scheduled payments of interest from the prepayment date to the Initial Optional
Prepayment Date, in each case discounted to the prepayment date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate, plus, in either case, accrued and unpaid interest
thereon to the date of prepayment.
A "Special Event" means a Tax Event or a Regulatory Capital Event (as
defined below), as the case may be.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of a nationally recognized tax 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 thereunder of the
United States or any political subdivision or taxing authority thereof or
therein, 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 Issue Date, there is more than an insubstantial risk that (i) the Trust is,
or will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Junior
Subordinated Debentures, (ii) interest payable by the Corporation on the Junior
Subordinated Debentures is not, or within 90 days of the date of such opinion
will not be, deductible by the Corporation, in whole or in part, for United
States federal income tax purposes, or (iii) the Trust is, or will be within 90
days of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Corporation shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or after
the Issue Date, the Capital Securities do not constitute, or within 90 days of
the date of such opinion, will not constitute, Tier 1 Capital (or its then
equivalent); provided, however, that a Regulatory Capital Event shall not occur
by reason of the use of the proceeds of the Junior Subordinated Debentures by
the Corporation contemplated herein.
"Adjusted Treasury Rate" means, with respect to any prepayment date,
the rate per annum equal to (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
established yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity date corresponding to the Initial Optional Prepayment Date (if no
maturity date is within three months before or after the Initial Optional
Prepayment Date, yields for the two published maturities most closely
corresponding to the Initial Optional Prepayment Date shall be interpolated and
the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month) or (ii) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, the rate per annum equal
to the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such prepayment date plus, in either case (A) 2.50% if such prepayment date
occurs on or prior to March 15, 1998 and (B) 1.75% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity date corresponding to the
Initial Optional Prepayment Date that would be utilized at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities with a maturity date corresponding to the Initial
Optional Prepayment Date. If no United States Treasury security has a maturity
date which is within three months before or after the Initial Optional
Prepayment Date, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the calculation
of the Adjusted Treasury Rate pursuant to clause (ii) of the definition thereof
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation. "Reference Treasury Dealer" means any U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer") selected by the
Corporation.
"Comparable Treasury Price" means, with respect to any prepayment date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of five Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
"Additional Sums" means such additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties or other governmental charges to which
the Trust has become subject as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of New Junior
Subordinated Debentures to be prepaid at its registered address. Unless the
Corporation defaults in payment of the prepayment price, on and after the
prepayment date interest ceases to accrue on such New Junior Subordinated
Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the New Junior Subordinated Debentures the Additional
Sums.
Certain Covenants of the Corporation. The Corporation will also
covenant that it will not, (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock (which includes common and preferred stock)
or (ii) make any payment of principal, interest or premium, if any, on or repay
or repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the New
Junior Subordinated Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of any securities of any subsidiary of the
Corporation (including Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the New Junior Subordinated Debentures (other than
(a) dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a direct result of, and only to the extent
required in order to avoid the issuance of fractional shares of capital stock
following a reclassification of the Corporation's capital stock or the exchange
or conversion of one class or series of the Corporation's capital stock for
another class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans) if at such time (1) a Debenture Event of Default occurs, (2)
there shall have occurred any event of which the Corporation has actual
knowledge that (a) 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 the
Corporation shall not have taken reasonable steps to cure, (3) the Corporation
shall be in default with respect to its payment of any obligations under the
Guarantee or (4) the Corporation shall have given notice of its election of an
Extension Period, or any extension thereof, as provided in the Indenture and
shall not have rescinded such notice, and such Extension Period, or any
extension thereof shall have commenced.
The Corporation will also covenant (i) to maintain 100 percent
ownership of the Common Securities; provided, however, that any permitted
successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of the Common Securities, (ii) to use its reasonable
efforts to cause the Trust (a) to remain a statutory 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 Declaration of the Trust, and (b) to
continue not to be classified as an association taxable as a corporation or a
partnership for United States federal income tax purposes and (iii) to use its
reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Junior Subordinated Debentures.
Modification of Indenture. From time to time the Corporation 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 or
enabling the Corporation and the Trust to conduct an Exchange Offer as
contemplated by the Registration Rights Agreement (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Corporation 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, or reduce the principal amount of the
Junior Subordinated Debentures or reduce the rate or extend the time of payment
of interest thereon or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture.
Debenture Events of Default. The Indenture provides that any one or
more of the following described events with respect to the New Junior
Subordinated Debentures constitutes a "Debenture Event of Default" (whatever the
reason for such Debenture Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) failure for 30-days to pay any interest on the New Junior
Subordinated Debentures or any Other Debentures when due (subject to the
deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the New Junior
Subordinated Debentures or any Other Debentures when due whether at maturity,
upon redemption, by declaration of acceleration of maturity or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90-days after written notice to
the Corporation from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such 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.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal or premium, if any, or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and premium, if any, 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.
The Indenture requires the annual filing by the Corporation with the
Debenture Trustee of a certificate as to the absence of certain defaults under
the Indenture.
The Indenture provides that the Debenture Trustee may withhold notice
of a Debenture Event of Default from the holders of the Junior Subordinated
Debentures (except a Debenture Event of Default in payment of principal of, or
of interest or premium on, the Junior Subordinated Debentures) if the Debenture
Trustee considers it in the interest of such holders to do so.
Enforcement of Certain Rights by Holders of New Capital Securities. If
a Debenture Event of Default shall have occurred and be continuing and shall be
attributable to the failure of the Corporation to pay interest or premium, if
any, on or principal of the New Junior Subordinated Debentures on the due date,
a holder of New Capital Securities may institute a Direct Action. The
Corporation may not amend the Indenture to remove the foregoing right to bring a
Direct Action without the prior written consent of the holders of all of the New
Capital Securities. Notwithstanding any payments made to a holder of New Capital
Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of or premium, if any,
or interest on the New Junior Subordinated Debentures, and the Corporation shall
be subrogated to the rights of the holder of such New Capital Securities with
respect to payments on the New Capital Securities to the extent of any payments
made by the Corporation to such holder in any Direct Action.
The holders of the New Capital Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the New Junior Subordinated Debentures unless there
shall have been an Event of Default under the Declaration. See "--Description of
New Capital Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions. The
Indenture provides that the Corporation shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to the
Corporation, unless: (i) in case the Corporation consolidates with or merges
into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any State or the District of Columbia,
and such successor Person expressly assumes the Corporation's obligations on the
Junior Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) 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 the Corporation that may adversely affect holders of
the New Junior Subordinated Debentures.
Satisfaction and Discharge. The Indenture provides that when, among
other things, all New 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 within one year, and the Corporation
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the New Junior Subordinated Debentures not previously delivered
to the Debenture Trustee for cancellation, for the principal (and premium, if
any) and interest to the date of the deposit or to the Stated Maturity Date, as
the case may be, then the Indenture will cease to be of further effect (except
as to the Corporation's obligations to pay all other sums due pursuant to the
Indenture and to provide the officers' certificates and opinions of counsel
described therein), and the Corporation will be deemed to have satisfied and
discharged the Indenture.
Subordination. In the Indenture, the Corporation has covenanted and
agreed that any Junior Subordinated Debentures will be subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Indebtedness
will first be entitled to receive payment in full in respect of such Senior
Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full in respect
of such Senior Indebtedness 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 premium, if any) or interest,
if any, in respect of the Junior Subordinated Debentures may be made if there
shall have occurred and be continuing a default in any payment with respect to
Senior Indebtedness, or an event of default with respect to any Senior
Indebtedness resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any such default.
"Indebtedness" shall mean (i) any obligation of, or any obligation
guaranteed by, the Corporation for the repayment of borrowed money, whether or
not evidenced by bonds, debentures, notes or other written instruments and any
deferred obligation for the payment of the purchase price of property or assets
acquired other than in the ordinary course of business and (ii) all indebtedness
of the Corporation for claims in respect of derivative products such as interest
and foreign exchange rate contracts, commodity contracts and similar
arrangements, whether outstanding on the date of execution of the Indenture or
thereafter created, assumed or incurred. For purposes of this definition "claim"
shall have the meaning assigned in Section 101(5) of the Bankruptcy Code of
1978, as amended and in effect on the date of the execution of the Indenture.
"Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures" shall mean Indebtedness, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, which
specifically by its terms ranks equally with and not prior to the Junior
Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation.
The securing of any Indebtedness, otherwise constituting Indebtedness Ranking on
a Parity with the Junior Subordinated Debentures, shall not be deemed to prevent
such Indebtedness from constituting Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures"
shall mean any Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, which specifically by its
terms ranks junior to and not equally with or prior to the Junior Subordinated
Debentures (and any other Indebtedness Ranking on a Parity with the Junior
Subordinated Debentures) in right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation.
The securing of any Indebtedness, otherwise constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures, shall not be deemed to prevent
such Indebtedness from constituting Indebtedness Ranking Junior to the Junior
Subordinated Debentures.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated Debentures,
and any deferrals, renewals or extensions of such Senior Indebtedness.
The Corporation is a non-operating holding company and almost all of
the operating assets of the Corporation are owned by the Corporation's
subsidiaries. The Corporation relies primarily on dividends from UNB to meet its
obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. The Corporation is a legal entity separate
and distinct from its banking and non-banking affiliates. The principal sources
of the Corporation's income are dividends, interest and fees from its banking
and non-banking affiliates. UNB is subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions with,
the Corporation and certain other affiliates, and on investments in stock or
other securities thereof. Such restrictions prevent the Corporation and such
other affiliates from borrowing from UNB unless the loans are secured by various
types of collateral. Further, such secured loans, other transactions and
investments by UNB are generally limited in amount as to the Corporation and as
to each of such other affiliates to 10% of UNB's capital and surplus and as to
the Corporation and all of such other affiliates to an aggregate of 20% of such
UNB's capital and surplus. In addition, payment of dividends to the Corporation
by UNB is subject to ongoing review by banking regulators and is subject to
various statutory limitations and in certain circumstances requires approval by
banking regulatory authorities. Accordingly, the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries. Holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments of interest and
principal and premium, if any.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior
Indebtedness.
Governing Law. The Indenture and the New 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. Following the Exchange
Offer and the qualification of the Indenture under the Trust Indenture Act, the
Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the 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 New 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.
Description of New Guarantee
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Old Capital Securities for
the benefit of the holders from time to time of the Old Capital Securities. As
soon as practicable after the date hereof, the Old Guarantee will be exchanged
by the Corporation for the New Guarantee for the benefit of the holders from
time to time of the New Capital Securities. The Guarantee Agreement has been
qualified under the Trust Indenture Act. This summary of certain provisions of
the Guarantee Agreement 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 Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities.
General. The Corporation will irrevocably agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the New Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the New Capital Securities, to the extent not paid by or on behalf of
the Trust (the "Guarantee Payments"), will be subject to the New Guarantee: (i)
any accumulated and unpaid Distributions required to be paid on New Capital
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 New
Capital Securities called for redemption, to the extent that the Trust has funds
on hand legally available therefor at such time, or (iii) upon a voluntary or
involuntary termination and liquidation of the Trust (unless the Junior
Subordinated Debentures are distributed to holders of the Capital Securities),
the lesser of (a) the Liquidation Distribution and (b) the amount of assets of
the Trust remaining available for distribution to holders of New Capital
Securities. The Corporation's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Corporation to the
holders of the New Capital Securities or by causing the Trust to pay such
amounts to such holders.
The New Guarantee will rank subordinate and junior in right of payment
to all Senior Indebtedness to the extent provided therein. See "--Status of New
Guarantee". Because the Corporation is a holding company, the right of the
Corporation 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 the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the New Guarantee will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and claimants should look only to the assets of the
Corporation for payments thereunder. See "--Description of New Junior
Subordinated Debentures--General." The New Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Indebtedness, whether under the Indenture, any other indenture
that the Corporation may enter into in the future or otherwise.
The Corporation will, through the New Guarantee, the Declaration, the
New Junior Subordinated Debentures and the Indenture, taken together, fully,
irrevocably and unconditionally guarantee all of the Trust's obligations under
the New Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the New Capital Securities. See "Relationship Among
the New Capital Securities, the New Junior Subordinated Debentures and the New
Guarantee."
Status of New Guarantee. The New Guarantee will constitute an unsecured
obligation of the Corporation and will rank subordinate and junior in right of
payment to all Senior Indebtedness in the same manner as New Junior Subordinated
Debentures, except in the case of a bankruptcy or insolvency proceeding in
respect of the Corporation, in which case the New Guarantee will rank
subordinate and junior in right of payment to all liabilities (other than Other
Guarantees) of the Corporation.
The New Guarantee will rank pari passu with the Old Guarantee and with
all Other Guarantees issued by the Corporation. The New Guarantee will
constitute a guarantee of payment and not of collection (i.e., the guaranteed
party may institute a legal proceeding directly against the Corporation to
enforce its rights under the New Guarantee without first instituting a legal
proceeding against any other person or entity). The New Guarantee will be held
for the benefit of the holders of the New Capital Securities. The New 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 New
Capital Securities of the New Junior Subordinated Debentures. The Guarantee does
not place a limitation on the amount of additional Senior Indebtedness that may
be incurred by the Corporation. The Corporation expects from time to time to
incur additional indebtedness constituting Senior Indebtedness.
Amendments and Assignment. Except with respect to any changes that do
not materially adversely affect the rights of holders of the New Capital
Securities (in which case no vote will be required), the New Guarantee may not
be amended without the prior approval of the holders of a majority of the
Liquidation Amount of such outstanding New Capital Securities. The manner of
obtaining any such approval will be as set forth under "--Description of New
Capital Securities--Voting Rights; Amendment of the Declaration." All guarantees
and agreements contained in the Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Corporation and shall
inure to the benefit of the holders of the New Capital Securities then
outstanding.
Events of Default. An event of default under the New Guarantee will
occur upon the failure of the Corporation to perform any of its payment or other
obligations thereunder. The holders of a majority in Liquidation Amount of the
New Capital 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 New Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the New Guarantee.
Any holder of the New Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the New
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, will be required to file annually with
the New Guarantee Trustee a certificate as to whether or not the Corporation is
in compliance with all the conditions and covenants applicable to it under the
New Guarantee.
Termination of the New Guarantee. The New Guarantee will terminate and
be of no further force and effect upon full payment of the applicable Redemption
Price of the New Capital Securities, upon full payment of the Liquidation Amount
payable upon liquidation of the Trust or upon distribution of New Junior
Subordinated Debentures to the holders of the New Capital Securities. The New
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the New Capital Securities must restore payment
of any sums paid under the New Capital Securities or the New Guarantee.
Governing Law. The New Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
Information Concerning the Guarantee Trustee. The Guarantee Trustee,
other than during the occurrence and continuance of a default by the Corporation
in performance of the New Guarantee, will undertake to perform only such duties
as are specifically set forth in the Guarantee and, after default with respect
to the New Guarantee, must exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the Guarantee Trustee will be under no obligation to
exercise any of the powers vested in it by the New Guarantee at the request of
any holder of the New Capital Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
DESCRIPTION OF OLD SECURITIES
The Old Securities have not been registered under the Securities Act,
are subject to certain restrictions on transfer and are entitled to certain
rights under the applicable Registration Rights Agreement (which rights will
terminate upon consummation of the Exchange Offer, except under limited
circumstances). The New Capital Securities will contain the $100,000 minimum
Liquidation Amount transfer restriction but will not contain certain other
restrictions on transfer applicable to the Old Capital Securities, and the New
Capital Securities will not provide for any increase in the Distribution rate
thereon. The New Junior Subordinated Debentures will contain the $100,000
minimum principal amount transfer restriction and the New Junior Subordinated
Debentures will not provide for any increase in the interest rate thereon. The
Old Securities provide that, in the event that a registration statement relating
to the Exchange Offer has not been filed by August 18, 1997 and been declared
effective by September 17, 1997, or, in certain limited circumstances, in the
event a shelf registration statement (the "Shelf Registration Statement") with
respect to the resale of the Old Capital Securities is not declared effective by
September 17, 1997, then interest will accrue (in addition to the stated
interest rate on the Old Junior Subordinated Debentures) at the rate of 0.25%
per annum on the principal amount of the Old Junior Subordinated Debentures and
Distributions will accrue (in addition to the stated Distribution rate on the
Old Capital Securities) at the rate of 0.25% per annum on the Liquidation Amount
of the Old Capital Securities, for the period from the occurrence of such event
until such time as such required Exchange Offer is consummated or any required
Shelf Registration Statement is effective. The New Securities are not, and upon
consummation of the Exchange Offer the Old Securities will not be, entitled to
any such additional interest or Distributions. Accordingly, holders of Old
Capital Securities should review the information set forth under "Risk
Factors--Certain Consequences of a Failure to Exchange Old Capital Securities"
and "Description of New Securities."
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES, THE
NEW JUNIOR SUBORDINATED DEBENTURES AND THE NEW GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the New Capital
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by the Corporation
as and to the extent set forth under "Description of New Securities--Description
of New Guarantee." Taken together, the Corporation's obligations under the New
Junior Subordinated Debentures, the Indenture, the Declaration and the New
Guarantee will provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of Distributions and other amounts due on the New Capital
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the New
Capital Securities. If and to the extent that the Corporation does not make the
required payments on the New Junior Subordinated Debentures, the Trust will not
have sufficient funds to make the related payments, including Distributions, on
the New Capital Securities. The New 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 New Capital Securities is to
institute a Direct Action. The obligations of the Corporation under the New
Guarantee will be subordinate and junior in right of payment to all Senior
Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on
the New Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the New Capital Securities,
primarily because: (i) the aggregate principal amount or Prepayment Price of the
New Junior Subordinated Debentures will be equal to the sum of the Liquidation
Amount or Redemption Price, as applicable, of the New Capital Securities and
Common Securities, (ii) the interest rate and interest and other payment dates
on the New Junior Subordinated Debentures will match the Distribution rate and
Distribution and other payment dates for the Trust Securities; (iii) the
Corporation shall pay for all and any costs, expenses and liabilities of the
Trust except the Trust's obligations to holders of Trust Securities under such
Trust Securities; and (iv) the Declaration provides 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 New Capital Securities
A holder of any New Capital Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Trust or any other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Declaration. However, in the
event of payment defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the New Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on New Junior Subordinated
Debentures would constitute an Event of Default under the Declaration.
Limited Purpose of the Trust
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 only those other activities
necessary, advisable or incidental thereto. The New Capital Securities will
represent preferred beneficial interests in the Trust. A principal difference
between the rights of a holder of a New Capital Security and a holder of a New
Junior Subordinated Debenture is that a holder of a New Junior Subordinated
Debenture will be entitled to receive from the Corporation the principal amount
of (and premium, if any) and interest on New Junior Subordinated Debentures
held, while a holder of New Capital Securities is entitled to receive
Distributions from the Trust (or, in certain circumstances, from the Corporation
under the New 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 termination and
liquidation of the Trust, the holders of the Trust Securities will be entitled
to receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of New Securities--Description of New Capital
Securities--Liquidation of the Trust and Distribution of New Junior Subordinated
Debentures." Upon any voluntary or involuntary liquidation or bankruptcy of the
Corporation, the Property Trustee, as holder of the New Junior Subordinated
Debentures, would be a subordinated creditor of the Corporation, subordinated in
right of payment to all Senior Indebtedness as set forth in the Indenture, but
entitled to receive payment in full of principal (and premium, if any) and
interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation will be the guarantor under the New
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 New Capital Securities and a holder of
New Junior Subordinated Debentures relative to stockholders of the Corporation
in the event of liquidation or bankruptcy of the Corporation are expected to be
substantially the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
General
In the opinion of Pitney, Hardin, Kipp & Szuch, counsel to the
Corporation and the Trust ("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 Capital Securities held as capital assets by a
holder. This summary only addresses the tax consequences to a holder that
acquired the Old Capital Securities upon initial issuance at their original
offering price. 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,
or persons that will hold the Capital 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 Capital 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 Capital Securities. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder, the administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change, possibly on a
retroactive basis. See " -- Proposed Tax Legislation."
Exchange of Capital Securities
The exchange of Old Capital Securities for New Capital Securities
should not be a taxable event to holders for United States federal income tax
purposes. The exchange of Old Capital Securities for New Capital Securities
pursuant to the Exchange Offer should not be treated as an "exchange" for United
States federal income tax purposes because the New Capital Securities should not
be considered to differ materially in kind or extent from the Old Capital
Securities and because the exchange will occur by operation of the terms of the
Old Capital Securities. If, however, the exchange of the Old Capital Securities
for the New Capital Securities were treated as an exchange for United States
federal income tax purposes, such exchange should constitute a recapitalization
for federal income tax purposes. Accordingly, the New Capital Securities should
have the same issue price as the Old Capital Securities, and a holder should
have the same adjusted tax basis and holding period in the New Capital
Securities as the holder had in the Old Capital Securities immediately before
the exchange.
Classification of the Junior Subordinated Debentures
In connection with the issuance of the Old 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 Old Junior Subordinated Debentures
will be classified for United States federal income tax purposes as indebtedness
of the Corporation. An opinion of Tax Counsel, however, is not binding on the
Internal Revenue Service (the "IRS") or the courts. Prospective investors should
note that no rulings have been or are expected to be sought from the IRS with
respect to any of these issues and no assurance can be given that the IRS will
not take contrary positions. Moreover, no assurance can be given that any of the
opinions expressed herein will not be challenged by the IRS or, if challenged,
that such a challenge would not be successful.
Classification of the Trust
In connection with the issuance of the Old Capital 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 Declaration 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 Capital Securities generally will be considered the
owner of an undivided interest in the Junior Subordinated Debentures, and each
holder will be required to include in its gross income any interest (or OID
accrued) with respect to its allocable share of those Junior Subordinated
Debentures.
Interest Income and Original Issue Discount
Under recently issued Treasury regulations (the "Regulations")
applicable to debt instruments issued on or after August 13, 1996, a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The Corporation
believes that the likelihood of its exercising its option to defer payments of
interest is "remote" since exercising that option would prevent the Corporation
from declaring dividends on any class of its equity securities. Accordingly, the
Corporation intends to take the position, based on the advice of Tax Counsel,
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 accounting.
Under the Regulations, if the Corporation were to exercise its option
to defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued 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
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though the
Corporation would not make actual cash payments during an Extension Period.
Moreover, under the Regulations, 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 such 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
such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income.
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 Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or
OID, corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust
The Corporation 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. Under current law, such a 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 such holder's aggregate tax basis in its
Capital Securities. A holder's holding period in the Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder. If, however, the
Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of its dissolution, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities and a holder's holding period in Junior
Subordinated Debentures would begin on the date such Junior Subordinated
Debentures were received.
Under certain circumstances described herein (see "Description of New
Securities--Description of New Capital Securities"), the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Capital Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Capital Securities, and a
holder could recognize gain or loss as if it sold such redeemed Capital
Securities for cash.
See "--Sales of Capital Securities."
Sales of Capital Securities
A holder that sells Capital Securities (including a redemption of the
Capital Securities either on the Stated Maturity Date or upon an optional
redemption of the Junior Subordinated Debentures by the Corporation) will
recognize gain or loss equal to the difference between its adjusted tax basis in
the Capital Securities and the amount realized on the sale of such Capital
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 Capital 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 Capital Securities in respect of OID. Such gain or loss
generally will be a capital gain or loss and generally will be a long-term
capital gain or loss if the Capital Securities have been held for more than one
year.
The Capital 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 Debentures are deemed to have been issued with OID) who disposes of
his Capital 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, possibly, OID), and to add such 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.
Proposed Tax Legislation
On February 6, 1997, President Clinton proposed the Proposed
Legislation which would deem an issuer, for purposes of Section 385(c) of the
Code, to have characterized an instrument as equity if the instrument (i) has a
maximum term of more than 15 years and (ii) is not shown as indebtedness on the
separate balance sheet of the issuer that is filed with the SEC. Accordingly,
the Proposed Legislation would, among other things, generally deny corporate
issuers a deduction for interest in respect of debt obligations such as the
Junior Subordinated Debentures. In the case of an instrument with a maximum term
of more than 15 years issued to a related party that is eliminated on the
consolidated balance sheet that includes the issuer and holder, the Proposed
Legislation treats the issuer as having characterized the instrument as equity
if the holder (or some other related party) issues a related instrument that is
not shown as indebtedness on the consolidated balance sheet filed with the SEC.
The Proposed Legislation applies only to corporations (like the Corporation)
that file annual financial statements with the SEC. The Proposed Legislation
precludes an instrument from being treated as indebtedness on a balance sheet
merely because the instrument is described as indebtedness in a footnote or some
other narrative disclosure.
The Proposed Legislation is proposed to be effective generally for
instruments issued on or after the date of "first committee action" (which is
not defined). There can be no assurance, however, that the effective date
provision contained in the Proposed Legislation will remain in the final
enactment, if any, or that other legislation enacted after the date hereof will
not otherwise adversely affect the ability of the Corporation to deduct the
interest payable on the Junior Subordinated Debentures. Accordingly, there can
be no assurance that a Tax Event will not occur. The occurrence of a Tax Event
may result in the redemption of the Junior Subordinated Debentures for cash, in
which event the holders of the Capital Securities would receive cash in
redemption of their Capital Securities. See "Description of New Securities --
Description of New Capital Securities -- Redemption" and "Description of Junior
Subordinated Debentures -- Special Event Prepayment."
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, and a "U.S. Holder" is a holder
of Capital Securities who or which is a citizen or individual resident (or is
treated as a citizen or individual resident) of the United States for federal
income tax purposes, a corporation or partnership created or organized (or
treated as created or organized for federal income tax purposes) in or under the
laws of the United States or any political subdivision thereof, or a trust or
estate the income of which is includible in its gross income for federal income
tax purposes without regard to its source. Notwithstanding the foregoing, for
taxable years beginning after December 31, 1996 (or for the immediately
preceding taxable year, if the trustee of a trust so elects), a trust is a U.S.
Holder for federal income tax purposes if, and only if, (i) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (ii) one or more United States trustees 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 Capital 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 Capital
Security does not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of the Corporation entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Corporation through stock ownership,
and (c) either (A) the beneficial owner of the Capital Security certifies to the
Trust or its agent, under penalties of perjury, that it is not a United States
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 Capital 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 Capital Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Capital Security.
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 the ability of the Corporation to deduct the interest
payable on the Junior Subordinated Debentures. Moreover, any such legislation
could, as the Proposed Legislation would have, 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.
A United States Alien Holder that holds Capital Securities in
connection with the active conduct of a United States trade or business will be
subject to income tax on all income and gains recognized with respect to its
proportionate share of the Junior Subordinated Debentures.
Information Reporting to Holders
Generally, income on the Capital Securities will be reported to holders
on Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the Capital Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE 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 CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Corporation, the obligor with respect to the Junior Subordinated
Debentures held by the Trust, and its affiliates and the Property Trustee may be
considered a "party in interest" (within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to many employee
benefit plans ("Plans") that are subject to ERISA. Any purchaser proposing to
acquire New Capital Securities with assets of any Plan should consult with its
counsel. The purchase and/or holding of New Capital Securities by a Plan that is
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including individual
retirement arrangements and other plans described in Section 4975(e)(1) of the
Code) and with respect to which the Corporation, the Property Trustee or any
affiliate is a service provider (or otherwise is a party in interest or a
disqualified person) may constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code, unless such New Capital Securities are
acquired pursuant to and in accordance with an applicable exemption, such as
Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 95-60 (an exemption for
transactions involving certain insurance company general accounts) or PTCE 96-23
(an exception for certain transactions determined by an in-house asset manager).
In addition, a Plan fiduciary considering the purchase of New Capital Securities
should be aware that the assets of the Trust may be considered "plan assets" for
ERISA purposes. In such event, service providers with respect to the assets of
the Trust may become parties in interest or disqualified persons with respect to
investing Plans, and any discretionary authority exercised with respect to the
Junior Subordinated Debentures by such persons could be deemed to constitute a
prohibited transaction under ERISA or the Code. In order to avoid such
prohibited transactions, each investing Plan, by purchasing the New Capital
Securities, will be deemed to have directed the Trust to invest in the Junior
Subordinated Debentures and to have appointed the Property Trustee.
A Plan fiduciary should consider whether the purchase of New Capital
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible under
the Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. BANK qualified to be an investment manager (within
the meaning of section 3(38) of ERISA) to which such delegation of authority
generally would be permissible under ERISA. Further, prior to an Event of
Default with respect to the Junior Subordinated Debentures, the Property Trustee
will have only limited custodial and ministerial authority with respect to Trust
assets.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers during the period referred to
below in connection with resales of New Capital Securities received in exchange
for Old Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such New Capital Securities for a period ending 90 days after the Expiration
Date (subject to extension under certain limited circumstances described herein)
or, if earlier, when all such New Capital Securities have been disposed of by
such Participating Broker-Dealer. However, a Participating Broker-Dealer who
intends to use this Prospectus in connection with the resale of New Capital
Securities received in exchange for Old Capital Securities pursuant to the
Exchange Offer must notify the Corporation or the Trust, or cause the
Corporation or the Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be given in the space
provided for that purpose in the Letter of Transmittal or may be delivered to
the Exchange Agent at one of the addresses set forth herein under "The Exchange
Offer--Exchange Agent." See "The Exchange Offer Resales of New Capital
Securities."
The Corporation or the Trust will not receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. New Capital
Securities received by broker-dealers for their own accounts in connection with
the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Capital Securities.
Any broker-dealer that resells New Capital Securities that were
received by it for its own account in connection with the Exchange Offer and any
broker or dealer that participates in a distribution of such New Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Capital Securities and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
VALIDITY OF NEW SECURITIES
The validity of the New Guarantee and the New Junior Subordinated
Debentures will be passed upon for the Corporation by Pitney, Hardin, Kipp &
Szuch, Morristown, New Jersey. Certain matters relating to United States federal
income tax considerations will be passed upon for the Corporation by Pitney,
Hardin, Kipp & Szuch, Morristown, New Jersey. Certain matters of Delaware law
relating to the validity of the New Capital Securities will be passed upon on
behalf of the Trust by Morris, Nichols, Arsht & Tunnell, special Delaware
counsel to the Corporation and the Trust.
EXPERTS
The consolidated financial statements of the Corporation as of and for
the year ended December 31, 1996, incorporated by reference herein and in the
Registration Statement of which this Prospectus forms a part in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing. The consolidated financial statements of the
Corporation as of December 31, 1995 and for each of the years in the two-year
period ended December 31, 1995, incorporated by reference herein and in the
Registration Statement of which this Prospectus forms a part, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(i) Limitation of Liability of Directors and Officers. Section
14A:2-7(3) of the New Jersey Business Corporation Act permits a corporation to
provide in its Certificate of Incorporation that a director or officer shall not
be personally liable to the corporation or its shareholders for breach of any
duty owed to the corporation or its shareholders, except that such provision
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (a) in breach of such persons' duty of loyalty to
the corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of any
improper personal benefit. United's Certificate of Incorporation includes
limitations on the liability of officers and directors to the full extent
permitted by New Jersey law.
(ii) Indemnification of Directors, Officers, Employees and Agents.
Under Article X of its Certificate of Incorporation, United must, to the full
extent permitted by law, indemnify its directors, officers, employees and
agents. Section 14A:3-5 of the New Jersey Business Corporation Act provides that
a corporation may indemnify its directors, officers, employees and agents
against judgments, fines, penalties, amounts paid in settlement, and expenses,
including attorney's fees, resulting from various types of legal actions or
proceedings if the actions of the party being indemnified meet the standards of
conduct specified therein. Determinations concerning whether or not the
applicable standard of conduct has been met can be made by (a) a disinterested
majority of the Board of Directors, (b) independent legal counsel, or (c) an
affirmative vote of a majority of shares held by the shareholders. No
indemnification is permitted to be made to or on behalf of a corporate director,
officer, employee or agent if a judgment or other final adjudication adverse to
such person establishes that his acts or omissions (a) were in breach of his
duty of loyalty in the corporation or its shareholders, (b) were not in good
faith or involved a knowing violation of law or (c) resulted in receipt by such
person of an improper personal benefit.
(iii) Insurance. United's directors and officers are insured against
losses arising from any claim against them such as wrongful acts or omissions,
subject to certain limitations.
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT
4.1 Indenture of United National Bancorp relating to the Junior
Subordinated Debentures*
4.2 Form of Certificate of New Junior Subordinated Debenture (included as
Exhibit A to Exhibit 4.1)*
4.3 Certificate of Trust of UNB Capital Trust I*
4.4 Declaration of Trust of UNB Capital Trust I*
4.5 Amended and Restated Declaration of Trust for UNB Capital Trust I*
4.6 Form of New Capital Security Certificate for UNB Capital Trust I
(included as Exhibit D to Exhibit 4.5)*
4.7 Form of New Guarantee of United National Bancorp relating to the New
Capital Securities
4.8 Registration Rights Agreement*
5.1 Opinion and consent of Pitney, Hardin, Kipp & Szuch to United National
Bancorp as to legality of the New Junior Subordinated Debentures and
the New Guarantee to be issued by United National Bancorp
5.2 Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware
counsel, as to legality of the New Capital Securities to be issued by
UNB Capital Trust I
8 Opinion of Pitney, Hardin, Kipp & Szuch, special tax counsel, as to
certain federal income tax matters
12 Computation of ratios of earnings to fixed charges**
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibit 5.1)
23.4 Consent of Morris, Nichols, Arsht & Tunnell (Delaware) (included in
Exhibit 5.2)
24 Power of Attorney of certain officers and directors of United National
Bancorp
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Indenture**
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Declaration of Trust of UNB
Capital Trust I**
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the New
Guarantee for the benefit of the holders of New Capital Securities of
UNB Capital Trust I**
99.1 Form of Letter of Transmittal**
99.2 Form of Notice of Guaranteed Delivery**
99.3 Form of Exchange Agent Agreement**
- --------
* Incorporated by reference from United National Bancorp's Current Report
on Form 8-K filed March 28, 1997.
** Previously filed.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against the public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes:
(1) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(2) Subject to appropriate interpretation, to supply by means
of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the
subject of and included in the registration statement when it became
effective.
(3) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof
.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the Undersigned, thereunto duly
authorized, in the Township of Bridgewater, State of New Jersey, on May 7,
1997.
UNITED NATIONAL BANCORP
By: /s/ THOMAS C. GREGOR
--------------------------
Thomas C. Gregor
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ THOMAS C. GREGOR Chairman, President, Chief May 7, 1997
- ------------------------------------------- Executive Officer and Director
(Thomas C. Gregor) (Principal Executive Officer)
/s/ DONALD W. MALWITZ* Vice-President and Treasurer May 7, 1997
- ------------------------------------------- (Principal Financial Officer)
(Donald W. Malwitz)
/s/ A. RICHARD ABRAHAMIAN* Senior Vice-President May 7, 1997
- -------------------------------------------
(A. Richard Abrahamian) (Principal Accounting Officer)
/s/ GEORGE W. BLANK* Director May 7, 1997
- -------------------------------------------
(George W. Blank)
/s/ DONALD A. BUCKLEY* Director May 7, 1997
- -------------------------------------------
(Donald A. Buckley)
/s/ C. DOUGLAS CHERRY* Director May 7, 1997
- -------------------------------------------
(C. Douglas Cherry)
/s/ CHARLES E. HANCE* Director May 7, 1997
- -------------------------------------------
(Charles E. Hance)
/s/ JOHN R. KOPICKI* Director May 7, 1997
- -------------------------------------------
(John R. Kopicki)
/s/ ANTONIO S. MAROTTA* Director May 7, 1997
- -------------------------------------------
(Antonio S. Marotta)
/s/ JOHN W. McGOWAN III* Director May 7, 1997
- -------------------------------------------
(John W. McGowan III)
/s/ PATRICIA A. McKIERNAN* Director May 7, 1997
- -------------------------------------------
(Patricia A. McKiernan)
/s/ CHARLES N. POND, JR.* Director May 7, 1997
- -------------------------------------------
(Charles N. Pond, Jr.)
/s/ KENNETH W. TURNBULL* Director May 7, 1997
- -------------------------------------------
(Kenneth W. Turnbull)
/s/ DAVID R. WALKER* Director May 7, 1997
- -------------------------------------------
(David R. Walker)
/s/ RONALD E. WEST* Director May 7, 1997
- -------------------------------------------
(Ronald E. West)
/s/ GEORGE J. WICKARD* Director May 7, 1997
- -------------------------------------------
(George J. Wickard)
</TABLE>
* /S/ THOMAS C. GREGOR
- ------------------------
By Thomas C. Gregor,
as Attorney-in-Fact
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, UNB Capital
Trust I certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Bridgewater and State of New Jersey, on May 7,
1997.
UNB CAPITAL TRUST I
By: /S/ THOMAS C. GREGOR
-------------------------
Thomas C. Gregor,
as Administrative Trustee
By: /S/ RALPH L. STRAW, JR.
------------------------
Ralph L. Straw, Jr.,
as Administrative Trustee
<PAGE>
EXHIBIT INDEX
PAGE EXHIBIT NO. DESCRIPTION
4.1 Indenture of United National Bancorp relating to the Junior
Subordinated Debentures*
4.2 Form of Certificate of New Junior Subordinated Debenture (included as
Exhibit A to Exhibit 4.1)*
4.3 Certificate of Trust of UNB Capital Trust I*
4.4 Declaration of Trust of UNB Capital Trust I*
4.5 Amended and Restated Declaration of Trust for UNB Capital Trust I*
4.6 Form of New Capital Security Certificate for UNB Capital Trust I
(included as Exhibit D to Exhibit 4.5)*
4.7 Form of New Guarantee of United National Bancorp relating to the New
Capital Securities
4.8 Registration Rights Agreement*
5.1 Opinion and consent of Pitney, Hardin, Kipp & Szuch to United National
Bancorp as to legality of the New Junior Subordinated Debentures and
the New Guarantee to be issued by United National Bancorp
5.2 Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware
counsel, as to legality of the New Capital Securities to be issued by
UNB Capital Trust I
8 Opinion of Pitney, Hardin, Kipp & Szuch, special tax counsel, as to
certain federal income tax matters
12 Computation of ratios of earnings to fixed charges**
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibit 5.1)
23.4 Consent of Morris, Nichols, Arsht & Tunnell (Delaware) (included in
Exhibit 5.2)
24 Power of Attorney of certain officers and directors of United National
Bancorp
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Indenture**
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Declaration of Trust of UNB
Capital Trust I**
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the New
Guarantee for the benefit of the holders of New Capital Securities of
UNB Capital Trust I**
99.1 Form of Letter of Transmittal**
99.2 Form of Notice of Guaranteed Delivery**
99.3 Form of Exchange Agent Agreement**
- --------
* Incorporated by reference from United National Bancorp's Current Report
on Form 8-K filed March 28, 1997.
** Previously filed.
====================================
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
UNITED NATIONAL BANCORP
Dated as of ________ __, 1997
====================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation............................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.......................... 5
SECTION 2.2 Lists of Holders of Securities............................ 5
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee....... 6
SECTION 2.4 Periodic Reports to Capital Securities Guarantee
Trustee................................................... 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......... 6
SECTION 2.6 Events of Default; Waiver................................. 6
SECTION 2.7 Events of Default; Notice................................. 7
SECTION 2.8 Conflicting Interests..................................... 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities
Guarantee Trustee.......................................... 7
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee..... 9
SECTION 3.3. Not Responsible for Recitals or Issuance of Series B
Capital Securities Guarantee............................... 11
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility.......... 11
SECTION 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee............................... 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.................................................. 13
SECTION 5.2 Waiver of Notice and Demand................................ 13
SECTION 5.3 Obligations Not Affected................................... 13
SECTION 5.4 Rights of Holders.......................................... 14
SECTION 5.5 Guarantee of Payment....................................... 15
SECTION 5.6 Subrogation................................................ 15
SECTION 5.7 Independent Obligations.................................... 15
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions................................. 15
SECTION 6.2 Ranking.................................................... 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination................................................ 16
ARTICLE VIII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
Compensation and Expenses of Capital Securities Guarantee Trustee......... 17
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation................................................ 17
SECTION 9.2 Indemnification............................................ 18
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns..................................... 18
SECTION 10.2 Amendments................................................. 18
SECTION 10.3 Notices.................................................... 19
SECTION 10.4 Benefit.................................................... 20
SECTION 10.5 Governing Law.............................................. 20
<PAGE>
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series B Capital Securities
Guarantee"), dated as of _____ __, 1997, is executed and delivered by United
National Bancorp, a New Jersey corporation (the "Guarantor"), and The Bank of
New York, a New York banking corporation, as trustee (the "Capital Securities
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Series B Capital Securities (as defined herein) of UNB
Capital Trust I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of March 21, 1997, among the trustees of the
Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof 20,000 capital securities, having an aggregate
liquidation amount of $20,000,000, such capital securities being designated the
10.01% Series B Capital Securities (collectively the "Series B Capital
Securities") and in connection with the consummation of the Exchange Offer (as
defined in the Declaration) has agreed to execute and deliver the Series B
Capital Securities Guarantee (as defined in the Declaration).
WHEREAS, as incentive for the Holders to exchange the Series A
Capital Securities (as defined in the Declaration) for the Series B Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Series B Capital Securities Guarantee, to pay to
the Holders the Guarantee Payments (as defined below). The Guarantor agrees to
make certain other payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor has executed and delivered a guarantee
agreement (the "Common Securities Guarantee"), for the benefit of the holders of
the Common Securities (as defined herein), the terms of which provide that if an
Event of Default (as defined in the Declaration) has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders of
Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under the Series A Capital Securities Guarantee and this
Series B Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the exchange of Series A
Capital Securities for Series B Capital Securities by each Holder, which
exchange the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series B Capital Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series B Capital Securities Guarantee, unless the
context otherwise requires:
Capitalized terms used in this Series B Capital
Securities Guarantee but not defined in the preamble
above have the respective meanings assigned to them in
this Section 1.1;
Terms defined in the Declaration as at the date of
execution of this Series B Capital Securities Guarantee
have the same meaning when used in this Series B Capital
Securities Guarantee unless otherwise defined in this
Series B Capital Securities Guarantee;
a term defined anywhere in this Series B Capital
Securities Guarantee has the same meaning throughout;
all references to "the Series B Capital Securities
Guarantee" or "this Series B Capital Securities
Guarantee" are to this Series B Capital Securities
Guarantee as modified, supplemented or amended from time
to time;
all references in this Series B Capital Securities
Guarantee to Articles and Sections are to Articles and
Sections of this Series B Capital Securities Guarantee,
unless otherwise specified;
a term defined in the Trust Indenture Act has the same
meaning when used in this Series A Capital Securities
Guarantee, unless otherwise defined in this Series A
Capital Securities Guarantee or unless the context
otherwise requires; and
a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in
Rule 405 under the Securities Act of --------- 1933, as amended, or any
successor rule thereunder.
"Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in The City of New York or
Bridgewater, New Jersey are authorized or required by law or executive order to
close.
"Capital Securities Guarantee Trustee" means The Bank of New
York, a New York banking corporation, until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Series B Capital Securities Guarantee and thereafter means
each such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at 101 Barclay Street, Floor 21 West, New York, New York
10286.
"Covered Person" means any Holder or beneficial owner of
Series B Capital Securities.
"Debentures" means the series of subordinated debt securities
of the Guarantor designated the 10.01% Series B Junior Subordinated Deferrable
Interest Debentures due March 15, 2027 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Series B Capital Securities
Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Series B Capital
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Declaration) that are required to be
paid on such Series B Capital Securities to the extent the Issuer has funds on
hand legally available therefor at such time, (ii) the redemption price,
including all accumulated and unpaid Distributions to the date of redemption
(the "Redemption Price") to the extent the Issuer has funds on hand legally
available therefor at such time, with respect to any Series B Capital Securities
called for redemption by the Issuer, and (iii) upon a voluntary or involuntary
termination and liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Series B Capital
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accumulated and unpaid Distributions on the
Series B Capital Securities to the date of payment, to the extent the Issuer has
funds on hand legally available therefor, and (b) the amount of assets of the
Issuer remaining available for distribution to Holders in liquidation of the
Issuer. If an Event of Default has occurred and is continuing, no Guarantee
Payments under the Common Securities Guarantee with respect to the Common
Securities or any guarantee payment under any Other Common Securities Guarantees
shall be made until the Holders shall be paid in full the Guarantee Payments to
which they are entitled under this Series B Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books
and records of the Issuer, of any Series B Capital Securities; provided,
however, that, in determining whether the holders of the requisite percentage of
Series B Capital Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor or any Affiliate of the
Guarantor.
"Indemnified Person" means the Capital Securities Guarantee
Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Securities
Guarantee Trustee.
"Indenture" means the Indenture dated as of March 21, 1997,
among the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee, pursuant to which the Debentures are to be issued to the Property
Trustee of the Issuer.
"Majority in liquidation amount of the Series B Capital
Securities" means, except as provided by the Trust Indenture Act, a vote by
Holder(s) of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all Series B Capital Securities.
"Officers' Certificate" means, with respect to any person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary, the Secretary or an Assistant Secretary of the Guarantor.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Series B Capital Securities Guarantee (other
than pursuant to Section 314(a)(4) of the Trust Indenture Act) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same
meaning as "Other Guarantees" in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures
issued by the Guarantor from time to time and sold to trusts to be established
by the Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to capital securities (if any) similar to the Series B
Capital Securities issued by other trusts to be established by the Guarantor (if
any), in each case similar to the Issuer.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Capital
Securities Guarantee Trustee, any officer within the Corporate Trust Office of
the Capital Securities Guarantee Trustee, including any vice president, any
assistant vice president, any assistant secretary, any assistant treasurer, any
trust officer, any senior trust officer or other officer in the Corporate Trust
Office of the Capital Securities Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Successor Capital Securities Guarantee Trustee" means a
successor Capital Securities Guarantee Trustee possessing the qualifications to
act as Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Securities" means the Common Securities and the Series
A Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series B Capital Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be part of this
Series B Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series B
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities
Guarantee Trustee (unless the Capital Securities Guarantee Trustee is otherwise
the registrar of the Capital Securities) with a list, in such form as the
Capital Securities Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such date, (i) within one
Business Day after July 1 and January 1 of each year, and (ii) at any other time
within 30 days of receipt by the Guarantor of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Capital Securities Guarantee Trustee provided, that the Guarantor shall
not be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Capital
Securities Guarantee Trustee by the Guarantor. The Capital Securities Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply
with its obligations under Sections 311(a), 311(b) and Section 312(b) of the
Trust Indenture Act.
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after May 15 of each year, commencing May 15,
1997, the Capital Securities Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313(a) of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Capital Securities Guarantee Trustee shall also comply with the other
requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act provided that such compliance certificate shall
be delivered on or before 120 days after the end of each fiscal year of the
Guarantor. Delivery of such reports, information and documents to the Capital
Securities Guarantee Trustee is for informational purposes only and the Capital
Securities Guarantee Trustee's receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information
contained therein, including the Guarantor's compliance with any of its
covenants hereunder (as to which the Capital Securities Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Series B Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series B
Capital Securities may, by vote, on behalf of all the Holders, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Series B Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Events of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of a default with respect to this Capital Securities
Guarantee, mail by first class postage prepaid, to all Holders, notices of all
defaults actually known to a Responsible Officer of the Capital Securities
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, except in the case of default in the payment of any
Guarantee Payment, the Capital Securities Guarantee Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or Responsible
Officers of the Capital Securities Guarantee Trustee in good faith determines
that the withholding of such notice is in the interests of the holders of the
Series B Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice from the Guarantor, or a
Responsible Officer of the Capital Securities Guarantee Trustee charged with the
administration of the Declaration shall have obtained actual knowledge, of such
Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Series B Capital Securities Guarantee for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series B Capital Securities Guarantee shall be held
by the Capital Securities Guarantee Trustee for the benefit of the Holders, and
the Capital Securities Guarantee Trustee shall not transfer this Series B
Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee has occurred and is
continuing, the Capital Securities Guarantee Trustee shall enforce this Series B
Capital Securities Guarantee for the benefit of the Holders of the Series B
Capital Securities.
(c) The Capital Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Series B Capital Securities Guarantee, and no
implied covenants shall be read into this Series B Capital Securities Guarantee
against the Capital Securities Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Series B Capital Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Series B Capital Securities
Guarantee shall be construed to relieve the Capital Securities Guarantee Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:
prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
the duties and obligations of the Capital Securities
Guarantee Trustee shall be determined solely by the express provisions
of this Series B Capital Securities Guarantee, and the Capital
Securities Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Series B Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this Series B Capital
Securities Guarantee against the Capital Securities Guarantee Trustee;
and
in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Capital Securities Guarantee Trustee and
conforming to the requirements of this Series B Capital Securities
Guarantee; but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be furnished to the
Capital Securities Guarantee Trustee, the Capital Securities Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Series B Capital
Securities Guarantee;
the Capital Securities Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the Capital Securities Guarantee Trustee, unless it shall be proved
that the Capital Securities Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
the Capital Securities Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of a Majority in
liquidation amount of the Series B Capital Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Capital Securities Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee; and
no provision of this Series B Capital Securities Guarantee
shall require the Capital Securities Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its
rights or powers, if the Capital Securities Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Series B Capital Securities Guarantee or indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Series B Capital Securities Guarantee may be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Series B
Capital Securities Guarantee, the Capital Securities Guarantee Trustee
shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Capital
Securities Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no
duty to see to any recording, filing or registration of any instrument
(or any rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel
with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Capital Securities
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Series B Capital Securities
Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by
this Series B Capital Securities Guarantee at the request or direction
of any Holder, unless such Holder shall have provided to the Capital
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Capital Securities Guarantee Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Capital Securities Guarantee
Trustee; provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Capital Securities Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Series B Capital
Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Capital Securities Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Capital Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Capital Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the
signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the
Capital Securities Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Series B Capital
Securities Guarantee, both of which shall be conclusively evidenced by
the Capital Securities Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Series B Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Series B Capital
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in
good faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Series B Capital Securities Guarantee.
(b) No provision of this Series B Capital Securities
Guarantee shall be deemed to impose any duty or obligation on the Capital
Securities Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in
which it shall be illegal, or in which the Capital Securities Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Capital Securities
Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of
Series B Capital Securities Guarantee
The recitals contained in this Series B Capital Securities
Guarantee shall be taken as the statements of the Guarantor, and the Capital
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Capital Securities Guarantee Trustee makes no representation as
to the validity or sufficiency of this Series B Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities
Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least 25 million U.S. dollars ($25,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act, subject to the penultimate paragraph thereof.
SECTION 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold
office until a Successor Capital Securities Guarantee Trustee shall have been
appointed or until its removal or resignation. The Capital Securities Guarantee
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Capital Securities Guarantee Trustee
and delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee
shall have been appointed and accepted appointment as provided in this Section
4.2 within 60 days after delivery of an instrument of removal or resignation,
the Capital Securities Guarantee Trustee resigning or being removed may petition
any court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Series B Capital Securities
Guarantee or removal or resignation of the Capital Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Capital Securities
Guarantee Trustee all amounts due to the Capital Securities Guarantee Trustee
accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Series B Capital Securities Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Series B Capital Securities Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Series B Capital
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Series B Capital
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Series B Capital Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension of
any interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series
B Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series B Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series B Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee provided, however,
that, subject to Section 3.1, the Capital Securities Guarantee Trustee shall
have the right to decline to follow any such direction if the Capital Securities
Guarantee Trustee shall determine that the action so directed would be unjustly
prejudicial to the holders not taking part in such direction or if the Capital
Securities Guarantee Trustee being advised by counsel determines that the action
or proceeding so directed may not lawfully be taken or if the Capital Securities
Guarantee Trustee in good faith by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Capital Securities Guarantee Trustee in personal liability.
(b) If the Capital Securities Guarantee Trustee fails to
enforce such Series B Capital Securities Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce the Capital
Securities Guarantee Trustee's rights under this Series B Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Capital Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought first
against the Issuer or any other person or entity before proceeding directly
against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series B Capital Securities Guarantee creates a
guarantee of payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Series B Capital Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Series B Capital
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Series B Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Series B Capital Securities Guarantee. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series B
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this Series
B Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock (which includes common and preferred stock) or
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Guarantor (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of any securities of any subsidiary of the Guarantor (including
Other Guarantees) if such guarantee ranks pari passu or junior in right of
payment to the Debentures (other than (a) dividends or distributions in shares
of, or options, warrants, rights to subscribe for or purchase shares of, common
stock of the Guarantor, (b) any declaration of a dividend in connection with the
implementation of a stockholder's rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Capital Securities Guarantee, (d) as a
direct result of, and only to the extent required in order to avoid the issuance
of fractional shares of capital stock following, a reclassification of the
Guarantor's capital stock or the exchange or the conversion of one class or
series of the Guarantor's capital stock for another class or series of the
Guarantor's capital stock, (e) the purchase of fractional interests in shares of
the Guarantor's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, and (f)
purchases of common stock related to the issuance of common stock or rights
under any of the Guarantor's benefit plans for its directors, officers or
employees or any of the Guarantor's dividend reinvestment plans) if at such time
(i) an Event of Default (as defined in the Indenture) shall have occurred and be
continuing, (ii) there shall have occurred any event of which the Guarantor has
actual knowledge that (a) is, or with the giving of notice or the lapse of time,
or both, would be an Event of Default (as defined in the Indenture) and (b) in
respect of which the Guarantor shall not have taken reasonable steps to cure,
(iii) if such Debentures are held by the Property Trustee, the Guarantor shall
be in default with respect to its payment of any obligations under this Series B
Capital Securities Guarantee or (iv) the Guarantor shall have given notice of
its election of the exercise of its right to extend the interest payment period
pursuant to Section 16.01 of the Indenture and any such extension shall be
continuing.
SECTION 6.2 Ranking
This Series B Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to the
same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture, it being understood that the
terms of Article XV of the Indenture shall apply to the obligations of the
Guarantor under this Series B Capital Securities Guarantee as if (x) such
Article XV were set forth herein in full and (y) such obligations were
substituted for the term "Securities" appearing in such Article XV, (ii) pari
passu with the Debentures, the Other Debentures and with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any Other Guarantee (as defined herein) and any Other Common Securities
Guarantee and any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor,
and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series B Capital Securities Guarantee shall terminate
(i) upon full payment of the Redemption Price (as defined in the Declaration) of
all Series B Capital Securities or (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to the Holders of all of the Series B Capital
Securities. Notwithstanding the foregoing, this Series B Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid under the
Series B Capital Securities or under this Series B Capital Securities Guarantee.
ARTICLE VIII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
The Guarantor covenants and agrees to pay to the Capital
Securities Guarantee Trustee from time to time, and the Capital Securities
Guarantee Trustee shall be entitled to, such compensation as shall be agreed to
in writing between the Guarantor and the Capital Securities Guarantee Trustee
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Guarantor will pay or
reimburse the Capital Securities Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Capital
Securities Guarantee Trustee in accordance with any of the provisions of this
Capital Securities Guarantee (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Guarantor also covenants to indemnify each of
the Capital Securities Guarantee Trustee (and its officers, agents, directors
and employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the Capital Securities Guarantee Trustee) incurred without negligence
or bad faith on the part of the Capital Securities Guarantee Trustee and arising
out of or in connection with the acceptance or administration of this guarantee,
including the costs and expenses of defending itself against any claim of
liability in the premises. The obligations of the Guarantor under this Article
VIII to compensate and indemnify the Capital Securities Guarantee Trustee and to
pay or reimburse the Capital Securities Guarantee Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the
Series B Capital Securities upon all property and funds held or collected by the
Capital Securities Guarantee Trustee as such, except funds held in trust for the
benefit of the holders of particular Series B Capital Securities.
The provisions of this Article shall survive the termination
of this Capital Securities Guarantee.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Series
B Capital Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Series B Capital Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of the Series B Capital Securities
might properly be paid.
SECTION 9.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 9.2 shall survive the termination of this
Series B Capital Securities Guarantee.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns
All guarantees and agreements contained in this Series B
Capital Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders of the Series B Capital Securities then outstanding.
SECTION 10.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Series B Capital Securities Guarantee may only be amended
with the prior approval of the Holders of a Majority in liquidation amount of
the Securities (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined). The provisions of the Declaration
with respect to consents to amendments thereof (whether at a meeting or
otherwise) shall apply to the giving of such approval.
SECTION 10.3 Notices
All notices provided for in this Series B Capital Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other address
as the Issuer may give notice of to the Holders and the Capital Securities
Guarantee Trustee):
UNB Capital Trust I
c/o United National Bancorp
1130 Route 22 East
P.O. Box 6000
Bridgewater, New Jersey 08807
Attention: Chief Executive Officer
Telecopy: (908) 429-0357
(b) If given to the Capital Securities Guarantee Trustee, at
the Capital Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Capital Securities Guarantee Trustee may give notice
of to the Holders and the Issuer):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust
Administration Department
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Series B Capital Securities and the Capital Securities
Guarantee Trustee):
United National Bancorp
1130 Route 22 East
P.O. Box 6000
Bridgewater, New Jersey 08807
Attention: Chief Executive Officer
Telecopy: (908) 429-0357
(d) If given to any Holder of Series B Capital Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 10.4 Benefit
This Series B Capital Securities Guarantee is solely for the
benefit of the Holders and, subject to Section 3.1(a), is not separately
transferable from the Series B Capital Securities.
SECTION 10.5 Governing Law
THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
THIS SERIES B CAPITAL SECURITIES GUARANTEE is executed as of
the day and year first above written.
UNITED NATIONAL BANCORP, as Guarantor
By: ______________________________________
Name:
Title:
The Bank of New York, as Capital
Securities Guarantee Trustee
By: ______________________________________
Name:
Title:
PITNEY, HARDIN, KIPP & SZUCH
(MAIL TO)
P.O. BOX 1945
MORRISTOWN, NEW JERSEY 07962-1945
----
(DELIVERY TO)
200 CAMPUS DRIVE
FLORHAM PARK, NEW JERSEY 07932-0950
(201) 966-6300
May 7, 1997
United National Bancorp
1130 Route 22 East
P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Dear Sirs:
In connection with the registration under the Securities Act
of 1933 (the "Act") of $20,000,000 aggregate principal amount of Series B Junior
Subordinated Deferrable Interest Debentures (the "Debt Securities") of United
National Bancorp, a New Jersey corporation (the "Corporation"), $20,000,000
aggregate liquidation amount of Series B Capital Securities (the "Capital
Securities") of UNB Capital Trust I, a business trust created under the laws of
the State of Delaware (the "Issuer"), and the Series B Guarantee with respect to
the Capital Securities (the "Guarantee") to be executed and delivered by the
Corporation for the benefit of the holders from time to time of the Capital
Securities, we, as your counsel, have examined such corporate records,
certificates and other documents, and such questions of law, a we have
considered necessary or appropriate for the purpose of this opinion. Capitalized
terms used herein and not otherwise defined herein shall have the meaning
assigned to them in the Prospectus included in the Registration Statement (File
No. 333-25785 and 333-25785-01) filed by the Corporation and the Issuer.
Upon the basis of such examination, we advise you that, when:
(i) the Registration Statement relating to the Debt
Securities, the Capital Securities and the Guarantee has become effective under
the Act;
(ii) the Guarantee Agreement relating to the Guarantee with
respect to the Capital Securities of the Issuer has been duly executed and
delivered;
(iii) the Debt Securities have been duly executed and
authenticated in accordance with the Indenture and issued and delivered as
contemplated in the Registration Statement; and
(iv) The Capital Securities have been duly executed in
accordance with the Amended and Restated Trust Agreement of the Issuer and
issued and delivered as contemplated in the Registration Statement,
the Debt Securities and the Guarantee relating to the Capital Securities of the
Issuer will constitute valid and legally binding obligations of the Corporation,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
The foregoing opinion is limited to the Federal laws of the
United States, the laws of the State of New York and the laws of the State of
New Jersey, and we are expressing no opinion as to the effect of the laws of any
other jurisdiction.
We understand that you have received an opinion regarding the
Capital Securities from Morris, Nichols, Arsht & Tunnell, special Delaware
counsel for the Corporation and the Issuer. We are expressing no opinion with
respect to the matters contained in such opinion.
Also, we have relied as to certain matters on information
obtained from public officials, officers of the Corporation and other sources
believed by us to be responsible.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the references to us under the heading
"Validity of New Securities" in the Prospectus. In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act.
Very truly yours,
/S/ PITNEY, HARDIN, KIPP & SZUCH
Morris, Nichols, Arsht & Tunnell
1201 North Market Streeet
P.O. Box 1347
Wilmington, Delaware 19899-1347
May 8, 1997
UNB Capital Trust I
c/o United National Bancorp
1130 Route 22
P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Re: UNB Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel to UNB Capital Trust
I, a Delaware statutory business trust (the "Trust"), in connection with certain
matters relating to the creation of the Trust and the proposed issuance of
Series B Capital Securities to beneficial owners pursuant to and as described in
Registration Statement No. 333-25785 (and the Prospectus forming a part thereof)
on Form S-4 filed with the Securities and Exchange Commission on April 24, 1997,
as amended by Pre-Effective Amendment No. 1 thereto (as so amended, the
"Registration Statement"). Capitalized terms used herein and not otherwise
herein defined are used as defined in the Amended and Restated Declaration of
Trust of the Trust dated as of March 21, 1997 (the "Governing Instrument").
In rendering this opinion, we have examined and relied upon
copies of the following documents in the forms provided to us: the Certificate
of Trust of the Trust as filed in the Office of the Secretary of State of the
State of Delaware (the "State Office") on February 21, 1997 (the "Certificate of
Trust"); a Declaration of Trust of the Trust dated as of February 21, 1997 (the
"Original Governing Instrument"); the Governing Instrument; the Indenture dated
as of March 21, 1997 between United National Bancorp ("UNB") and The Bank of New
York, as Trustee; the Guarantee Agreement to be entered into between UNB and The
Bank of New York, as Trustee, relating to the Series B Capital Securities; the
Registration Rights Agreement dated March 21, 1997 among the Trust, UNB and the
"Initial Purchasers" (as defined therein) (the "Registration Rights Agreement");
the Registration Statement; and a certification of good standing of the Trust
obtained as of a recent date from the State Office. In such examinations, we
have assumed the genuineness of all signatures, the conformity to original
documents of all documents submitted to us as drafts or copies or forms of
documents to be executed and the legal capacity of natural persons to complete
the execution of documents. We have further assumed for purposes of this
opinion: (i) the due formation or organization, valid existence and good
standing of each entity (other than the Trust) that is a party to any of the
documents reviewed by us under the laws of the jurisdiction of its respective
formation or organization; (ii) the due authorization, execution and delivery
by, or on behalf of, each of the parties thereto of the above-referenced
documents (including, without limitation, the due authorization, execution and
delivery of the Governing Instrument and the Registration Rights Agreement prior
to the first issuance of Series B Capital Securities); (iii) that no event has
occurred subsequent to the filing of the Certificate of Trust that would cause a
dissolution or liquidation of the Trust under the Original Governing Instrument
or the Governing Instrument, as applicable; (iv) that the activities of the
Trust have been and will be conducted in accordance with the Original Governing
Instrument or the Governing Instrument, as applicable, and the Delaware Business
Trust Act, 12 Del. C. ss.ss. 3801 et seq. (the "Delaware Act"); (v) that each
Person that will acquire Series B Capital Securities in the "Exchange Offer" (as
defined in the Registration Statement and as used herein, the "Exchange Offer")
will validly tender Series A Capital Securities in exchange therefor, that such
Series A Capital Securities will be duly accepted, and that such Person will
duly receive Series B Capital Securities in consideration thereof, all in
accordance with the terms and conditions of the Governing Instrument, the
Registration Statement and the Registration Rights Agreement and that the Series
B Capital Securities are otherwise issued and sold to the Series B Capital
Securities Holders in accordance with the terms, conditions, requirements and
procedures set forth in the Governing Instrument, the Registration Statement and
the Registration Rights Agreement; and (vi) that the documents examined by us
are in full force and effect, express the entire understanding of the parties
thereto with respect to the subject matter thereof and have not been modified,
supplemented or otherwise amended, except as herein referenced. We have not
reviewed any documents other than those identified above in connection with this
opinion, and we have assumed that there are no other documents that are contrary
to or inconsistent with the opinions expressed herein. Further, we express no
opinion with respect to, and assume no responsibility for the contents of, the
Registration Statement or any other offering material relating to the Series B
Capital Securities. No opinion is expressed herein with respect to the
requirements of, or compliance with, federal or state securities or blue sky
laws. As to any fact material to our opinion, other than those assumed, we have
relied without independent investigation on the above-referenced documents and
on the accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all
respects to matters of Delaware law, it is our opinion that:
1. The Trust is a duly created and validly existing business
trust in good standing under the laws of the State of Delaware.
2. The Series B Capital Securities, upon issuance pursuant to
the Exchange Offer, will constitute validly issued and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
beneficial interests in the assets of the Trust.
3. Under the Delaware Act and the terms of the Governing
Instrument, each Series B Capital Security Holder of the Trust, in such
capacity, will be entitled to the same limitation of personal liability as that
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware; provided, however, we express
no opinion with respect to the liability of any Series B Capital Security Holder
who is, was or may become a named Trustee of the Trust. Notwithstanding the
foregoing, we note that pursuant to Section 11.4 of the Governing Instrument,
the Trust may withhold amounts otherwise distributable to a Holder and pay over
such amounts to the applicable jurisdictions in accordance with federal, state
and local law and any amount withheld will be deemed to have been distributed to
such Holder and that, pursuant to the Governing Instrument, Series B Capital
Security Holders may be obligated to make payments or provide indemnity or
security under the circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name and reference to our
opinion under the heading "VALIDITY OF NEW SECURITIES" in the Prospectus forming
a part thereof. In giving this consent, we do not thereby admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. This opinion speaks only as of
the date hereof and is based on our understandings and assumptions as to present
facts, and on our review of the above-referenced documents and the application
of Delaware law as the same exist as of the date hereof, and we undertake no
obligation to update or supplement this opinion after the date hereof for the
benefit of any person or entity with respect to any facts or circumstances that
may hereafter come to our attention or any changes in facts or law that may
hereafter occur or take effect. This opinion is intended solely for the benefit
of the addressee hereof in connection with the matters contemplated hereby and
may not be relied on by any other person or entity or for any other purpose
without our prior written consent.
Very truly yours,
/S/ MORRIS, NICHOLS, ARSHT & TUNNELL
PITNEY, HARDIN, KIPP & SZUCH
(MAIL TO)
P.O. BOX 1945
MORRISTOWN, NEW JERSEY 07962-1945
------
(DELIVERY TO)
200 CAMPUS DRIVE 26 EAST 64TH STREET
FLORHAM PARK, NEW JERSEY 07932-0950
(201) 966-6300
FACSIMILE (201) 966-1550
May 7, 1997
United National Bancorp
UNB Capital Trust I
1130 Route 22
P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Ladies and Gentlemen:
As special tax counsel to UNB Capital Trust I (the "Trust")
and United National Bancorp. in connection with the issuance of $20,000,000
aggregate liquidation amount of Series B Capital Securities of the Trust,
assuming (i) the holder of the Common Securities of each Trust will have
"substantial assets" (other than the Common Securities) within the meaning of
Treasury Regulations Section 301.7701-2(d)(2) and (ii) the operative documents
for the Series B Capital Securities described in the Prospectus constituting a
part of the Registration Statement on Form S-4 (the "Registration Statement"),
to which this opinion is filed as an exhibit, will be performed in accordance
with the terms described therein, we hereby confirm to you our opinion as set
forth under the heading "Certain Federal Income Tax Consequences" in the
Registration Statement, subject to the limitations set forth therein.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and the reference to us under the headings
"Certain United States Federal Income Tax Consequences" in the Registration
Statement. By giving the foregoing consent, we do not admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/S/ PITNEY, HARDIN, KIPP & SZUCH
Exhibit 23.1
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
United National Bancorp:
We consent to incorporation by reference in the Registration Statement filed on
Form S-4/A, pertaining to UNB Capital Trust I 10.01% Series B Capital
Securities, of our report dated January 14, 1997, relating to the consolidated
balance sheet of United National Bancorp and subsidiary as of December 31, 1996
and the related consolidated statements of income, changes in stockholders'
equity, and cash flows for the year then ended, which report is included in the
December 31, 1996 Annual Report on Form 10-K of United National Bancorp,
incorporated by reference in the Registration Statement and to the reference to
our firm under the heading "Experts" in the prospectus.
/S/ KPMG Peat Marwick LLP
Short Hills, New Jersey
May 6, 1997
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To United National Bancorp:
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-4 of our report dated January 12, 1996 and to all
references to our firm included in this Registration Statement.
/S/ ARTHUR ANDERSEN LLP
Roseland, New Jersey
May 6, 1997
Exhibit 24
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed by the following persons in the capacities and on
the dates indicated. By so signing, each of the undersigned, in his or her
capacity as a director or officer, or both, as the case may be, of United
National Bancorp (the "Corporation"), does hereby appoint Thomas C. Gregor his
or her true and lawful attorney to execute in his or her name, place and stead,
in his or her capacity as a director or officer or both, as the case may be, of
the Corporation, the Registration Statement on Form S-4 to be filed with the
Securities and Exchange Commission (the "Commission"), and any and all
amendments to said Registration Statement and all instruments necessary or
incidental in connection therewith, and to file the same with the Commission.
Said attorney shall have full power and authority to do and perform in the name
and on behalf of each of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as fully and to all
intents and purposes as each of the undersigned might or could do in person,
hereby ratifying and approving the acts of said attorney.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/S/ THOMAS C. GREGOR Chairman, President, Chief April 15, 1997
- ------------------------------------------- Executive Officer and Director
(Thomas C. Gregor) (Principal Executive Officer)
/S/ DONALD W. MALWITZ Vice-President and Treasurer April 17, 1997
- ------------------------------------------- (Principal Financial Officer)
(Donald W. Malwitz)
/S/ A. RICHARD ABRAHAMIAN Senior Vice-President April 15, 1997
- ------------------------------------------- (Principal Accounting Officer)
(A. Richard Abrahamian)
/S/ GEORGE W. BLANK Director April 15, 1997
- -------------------------------------------
(George W. Blank)
/S/ DONALD A. BUCKLEY Director April 15, 1997
- -------------------------------------------
(Donald A. Buckley)
/S/ C. DOUGLAS CHERRY
- -------------------------------------------- Director April 15, 1997
(C. Douglas Cherry)
/S/ CHARLES E. HANCE Director April 15, 1997
- -------------------------------------------
(Charles E. Hance)
/S/ JOHN R. KOPICKI Director April 15, 1997
- -------------------------------------------
(John R. Kopicki)
/S/ ANTONIO S. MAROTTA Director April 15, 1997
- -------------------------------------------
(Antonio S. Marotta)
/S/ JOHN W. McGOWAN III Director April 15, 1997
- -------------------------------------------
(John W. McGowan III)
/S/ PATRICIA A. McKIERNAN Director April 15, 1997
- -------------------------------------------
(Patricia A. McKiernan)
/S/ CHARLES N. POND, JR. Director April 15, 1997
- -------------------------------------------
(Charles N. Pond, Jr.)
/S/ KENNETH W. TURNBULL Director April 15, 1997
- -------------------------------------------
(Kenneth W. Turnbull)
/S/ DAVID R. WALKER Director April 15, 1997
- -------------------------------------------
(David R. Walker)
/S/ RONALD E. WEST Director April 15, 1997
(Ronald E. West)
/S/ GEORGE J. WICKARD Director April 15, 1997
- -------------------------------------------
(George J. Wickard)
</TABLE>
