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PROSPECTUS
OFFER TO EXCHANGE ALL
9.875% ORIGINAL CAPITAL SECURITIES FOR 9.875% EXCHANGE CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OF
BFOH CAPITAL TRUST I
UNCONDITIONALLY GUARANTEED, AS DESCRIBED IN THIS PROSPECTUS, BY
BANCFIRST OHIO CORP.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM
NEW YORK CITY TIME, ON MAY 15, 2000, UNLESS EXTENDED
TERMS OF THE EXCHANGE OFFER:
We will exchange all outstanding original capital securities that are
validly tendered and not validly withdrawn prior to the expiration of the
exchange offer. Our outstanding original capital securities were originally
issued on October 18, 1999.
The exchange capital securities will be substantially identical to the
original capital securities, except for transfer restrictions and registration
rights relating to the original capital securities.
You may withdraw tendered outstanding original capital securities at
any time prior to the expiration of the exchange offer.
The exchange of outstanding original capital securities will not be a
taxable exchange for U.S. federal income tax purposes.
We will not receive any proceeds from the exchange offer.
There is no existing market for the exchange capital securities to be
issued, and we do not intend to apply for their listing on any securities
exchange.
See the section entitled "Description of Capital Securities" that
begins on page 39 for more information about the capital securities and
guarantee to be issued in this exchange offer.
THIS INVESTMENT INVOLVES RISKS. SEE THE SECTION ENTITLED "RISK FACTORS"
THAT BEGINS ON PAGE 14 FOR A DISCUSSION OF THE RISKS THAT YOU SHOULD CONSIDER
PRIOR TO TENDERING YOUR OUTSTANDING ORIGINAL CAPITAL SECURITIES FOR EXCHANGE.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated April 11, 2000.
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TABLE OF CONTENTS
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AVAILABLE INFORMATION.............................................................................................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................................................3
FORWARD LOOKING STATEMENTS........................................................................................4
SUMMARY...........................................................................................................5
CONSEQUENCES OF NOT EXCHANGING YOUR...............................................................................7
OUTSTANDING CAPITAL SECURITIES....................................................................................7
CONSEQUENCES OF EXCHANGING YOUR...................................................................................8
OUTSTANDING CAPITAL SECURITIES....................................................................................8
SUMMARY DESCRIPTION OF THE NEW SECURITIES.........................................................................8
SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA.....................................................................12
RISK FACTORS.....................................................................................................14
USE OF PROCEEDS..................................................................................................23
ACCOUNTING TREATMENT.............................................................................................23
CAPITALIZATION...................................................................................................24
PRO FORMA REGULATORY CAPITAL.....................................................................................24
BANCFIRST OHIO CORP..............................................................................................26
REGULATION AND SUPERVISION.......................................................................................28
BFOH CAPITAL TRUST I.............................................................................................29
THE EXCHANGE OFFER...............................................................................................30
DESCRIPTION OF CAPITAL SECURITIES................................................................................39
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES....................................................................50
DESCRIPTION OF GUARANTEE.........................................................................................64
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE...................................................................67
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE.................................................................67
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..........................................................................69
ERISA CONSIDERATIONS.............................................................................................74
EXCHANGE OFFER; REGISTRATION RIGHTS..............................................................................76
PLAN OF DISTRIBUTION.............................................................................................80
LEGAL MATTERS....................................................................................................81
INDEPENDENT ACCOUNTANTS..........................................................................................81
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AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, we file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. You may also obtain copies of such material by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. If available, you may also
access such information through the Commission's electronic data gathering,
analysis and retrieval system, commonly referred to as EDGAR, via electronic
means, including the Commission's home page on the Internet
(http://www.sec.gov). Our common stock is traded on the Nasdaq National Market
under the symbol "BFOH." You may inspect the reports, proxy statements and other
information concerning us 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 in
this prospectus and no separate financial statements will be prepared in the
future. We do not consider that such financial statements would be material to
holders of the securities offered by this prospectus because the Trust is a
newly-formed special purpose entity, has no operating history or independent
operations, is not engaged in and does not propose to engage in any activity
other than holding as trust assets our junior subordinated debentures, issuing
the capital and common securities and engaging in incidental activities. The
obligations of the Trust under the capital securities are fully and
unconditionally guaranteed by us to the extent the Trust has funds available to
meet such obligations. We do not expect that the Trust will file reports, proxy
statements and other information under the Exchange Act with the Commission.
This prospectus constitutes a part of a registration statement on Form
S-4 filed by us 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. We are referring you to the registration
statement and to the exhibits for further information with respect to us, the
Trust and the exchange securities. The statements contained in this prospectus
concerning the provisions of any document are not necessarily complete, and, in
each instance, we refer you 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents that we have filed with the Commission are
incorporated into this prospectus by reference:
- BancFirst Ohio's Annual Report on Form 10-K for the year ended
December 31, 1999.
All documents subsequently filed by BancFirst Ohio pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and prior to the termination of the offering of the capital securities offered
by this prospectus 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 in this prospectus 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 in this prospectus or in any other subsequently filed
document which also is or is
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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. You may
obtain a copy of our filings with the Commission at no cost, by writing or
telephoning us at the following address:
BancFirst Ohio Corp.
Attention: Secretary
422 Main Street
Zanesville, Ohio 43702
(740) 452-8444
When we refer to this prospectus, we mean not only this prospectus but
also any documents which are incorporated or deemed to be incorporated in this
prospectus by reference. You should rely only on the information incorporated by
reference or provided in this prospectus or any supplement. We have not
authorized anyone else to provide you with different information. This
prospectus is used to offer and sell the capital securities referred to in this
prospectus, and only under circumstances and in jurisdictions where it is lawful
to do so. The information contained in this prospectus is current only as of the
date of this prospectus.
As used in this prospectus, "we" and "us" and "our" refer to BancFirst
Ohio Corp., or BancFirst Ohio Corp. and its consolidated subsidiaries, including
The First National Bank of Zanesville, depending on the context.
FORWARD LOOKING STATEMENTS
Some of the information presented or incorporated by reference into
this prospectus contains "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Sentences containing words
such as "may," "will," "expect," "anticipate," "believe," "estimate," "should,"
"projected" or "contemplates" or similar words may constitute forward-looking
statements. Although we believe that the expectations expressed in these
forward-looking statements are based on reasonable assumptions within the bounds
of our knowledge of our business and operations, it is possible that actual
results may differ materially from these expectations. We have used these
statements to describe our expectations and estimates in various areas,
including:
- changes in the economy of the markets in which we operate;
- interest-rate movements;
- timely development of technology enhancements for our products and
Year 2000 operating systems;
- changes in the Small Business Administration's ("SBA") lending
program;
- the impact of competitive products, services and pricing; and
- legislative, regulatory and accounting changes affecting the banking
and financial services industry.
Our actual results could vary materially from the future results
covered in our forward-looking statements. The statements in the "Risk Factors"
section are cautionary statements identifying important factors, including
certain risks and uncertainties, that could cause our results to vary materially
from the future results covered in such forward-looking statements. Other
factors, such as the general state of the United States economy, could also
cause actual results to vary materially from the future results covered in such
forward-looking statements. We disclaim any obligation to announce publicly
future events or developments that affect the forward-looking statements in this
prospectus.
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SUMMARY
The following summary contains the basic information about this exchange offer.
It does not contain all of the information that may be important to you in
deciding whether to exchange your old securities for new securities. We
encourage you to read the prospectus in its entirety.
BANCFIRST OHIO CORP.
We are a registered bank holding company, organized under the laws of
the State of Ohio. We conduct a full-service commercial and retail banking
business through our wholly-owned subsidiary, The First National Bank of
Zanesville. Effective May 16, 1998, we merged our two other banking
subsidiaries, Bellbrook Community Bank and County Savings Bank, with First
National under its national bank charter. In April 1999, we also acquired
Chornyak & Associates, Inc., a full service financial planning company.
We are headquartered in Zanesville, Ohio, the county seat of Muskingum
County. Through First National, we operate 22 full-service banking facilities
which serve Muskingum, Licking, Franklin and Greene Counties of Ohio. Our
primary market extends along Interstate 70 in central Ohio and includes the
areas of Zanesville, Newark, Columbus, and Dayton. Our principal executive
office is located at 422 Main Street, Zanesville, Ohio 43702. Our telephone
number is (740) 452-8444.
Our focus is on providing personalized, high quality and comprehensive
banking services in order to develop and maintain long-term relationships with
our customers. We offer a range of banking services, including:
- commercial and commercial real estate loans;
- SBA loans;
- residential real estate loans;
- consumer loans;
- personal and business checking accounts;
- savings accounts;
- demand and time deposits;
- safe deposit services; and
- trust, private banking, financial planning and investment services.
At December 31, 1999, on a consolidated basis, we had total assets of
$1.3 billion, total liabilities of $1.2 billion, which included total deposits
of $799.2 million, total loans of $849.8 million, and total stockholders' equity
of $80.1 million.
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BFOH CAPITAL TRUST I
BFOH Capital Trust I is a statutory business trust created under
Delaware law upon the filing of a certificate of trust with the Delaware
Secretary of State. The Trust's business and affairs are conducted by the
property trustee, the Delaware trustee and the three individual administrative
trustees, who are officers of BancFirst Ohio. The Trust exists for the exclusive
purposes of:
- issuing and selling the capital securities discussed below;
- using the proceeds from the sale of the original capital securities
to acquire the junior subordinated debentures issued by BancFirst
Ohio; and
- engaging in only those other activities necessary, advisable or
incidental to the above.
Accordingly, the junior subordinated debentures are 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 of the Trust are owned by BancFirst Ohio.
THE EXCHANGE OFFERING
On October 18, 1999, we privately placed $20.0 million aggregate
liquidation amount of 9.875% Capital Securities, Series A, of BFOH Capital Trust
I. We provided a guarantee for the capital securities, as described in this
prospectus. In connection with the offering, we entered into a registration
rights agreement on October 18, 1999 with the initial purchaser.
Under that registration rights agreement, we must use our reasonable
best efforts to complete this exchange offer within 30 days after the effective
date of the registration statement of which this prospectus is a part, which
effective date must occur on or prior to April 15, 2000. If we do not complete
this exchange offer before that date, we must pay liquidated damages until the
exchange offer is completed. In this exchange offer, you may exchange your
outstanding capital securities for our 9.875% Capital Securities, Series B, to
be issued in the exchange offer which have substantially the same terms. You
should read the discussion under the heading "The Exchange Offer" and
"Description of the Securities" for further information regarding the exchange
capital securities to be issued in the exchange offer.
SECURITIES OFFERED.............. $20.0 million in aggregate liquidation
amount of new 9.875% Capital Securities,
Series B, of BFOH Capital Trust I, which
have been registered under the Securities
Act of 1933.
The terms of the exchange capital securities
offered in the exchange offer are
substantially identical to those of the
outstanding capital securities, except that
certain transfer restrictions, registration
rights and liquidated damages provisions
relating to the outstanding capital
securities do not apply to the new
registered capital securities.
THE EXCHANGE OFFER.............. We are offering to issue registered exchange
capital securities for a like amount of our
outstanding capital securities. We are
offering to issue these registered exchange
capital securities and to satisfy our
obligations under the registration rights
agreement with the initial purchaser. You
may tender your outstanding capital
securities for exchange by following the
procedures described under the heading "The
Exchange Offer."
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TENDERS; EXPIRATION
DATE; WITHDRAWAL.................... The exchange offer will expire at 5:00
p.m., New York City time, on May 15, 2000
unless we extend it. If you decide to
exchange your old securities for new
securities, you must acknowledge that you
are not engaging in, and do not intend to
engage in, a distribution of the new
securities. You may withdraw your tender
of old securities at any time before May
15, 2000. If we decide for any reason not
to accept your capital securities for
exchange, we will return them to you
promptly and without expense after the
exchange offer expires or terminates.
CONDITIONS TO THE
EXCHANGE OFFER...................... We are not required to accept any old
securities in exchange for new securities.
We may terminate or amend the exchange
offer if we determine that the exchange
offer violates applicable law or any
applicable SEC interpretation.
FEDERAL TAX
CONSEQUENCES........................ The exchange of outstanding capital
securities for new capital securities
under the exchange offer will not result
in any gain or loss to you for federal
income tax purposes.
USE OF PROCEEDS..................... We will not receive any proceeds from the
exchange offer.
ACCRUED INTEREST.................... The new securities will bear interest from
October 18, 1999, the date the old
securities were originally issued. No
interest will be paid on the old
securities following their acceptance for
exchange. See "Description of the
Securities."
EXCHANGE AGENT...................... Wilmington Trust Company, as property
trustee, is the exchange agent for the
exchange offer. The address and telephone
number of the exchange agent are set forth
under the heading "The Exchange Offer - -
Exchange Agent."
CONSEQUENCES OF NOT EXCHANGING YOUR
OUTSTANDING CAPITAL SECURITIES
If you do not exchange your outstanding capital securities in the
exchange offer, they will continue to be subject to the restrictions on transfer
that are described in the legend on the capital securities. In general, you may
offer or sell your outstanding capital securities only if they are registered
under, or offered or sold under an exemption from, the Securities Act of 1933,
and applicable state securities laws.
If outstanding capital securities are tendered and accepted in the
exchange offer, it may become more difficult for you to sell or transfer your
unexchanged capital securities. In addition, if you do not exchange your
outstanding capital securities in the exchange offer, you will no longer be
entitled to have those capital securities registered under the Securities Act,
except in limited circumstances with respect to specific types of holders of
outstanding capital securities. See "The Exchange Offer - - Consequences of
Failure to Exchange Outstanding Securities."
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CONSEQUENCES OF EXCHANGING YOUR
OUTSTANDING CAPITAL SECURITIES
Based on interpretations of the staff of the SEC, we believe that you
may offer for resale, resell or otherwise transfer the new securities that we
issue in the exchange offer without complying with the registration and
prospectus delivery requirements of the Securities Act if:
- you acquire the new securities issued in the exchange offer in the
ordinary course of business;
- you are not participating, do not intend to participate, and have no
arrangement or undertaking with anyone to participate, in the
distribution of the new securities issued to you in the exchange
offer; and
- you are not an "affiliate" of BancFirst Ohio Corp., as defined in
Rule 405 of the Securities Act.
If any of these conditions are not satisfied and you transfer any new
securities issued to you in the exchange offer without delivering a proper
prospectus or without qualifying for a registration exemption, you may incur
liability under the Securities Act. We will not be responsible for or indemnify
you against any liability you may incur.
Any broker-dealer that acquires new securities in the exchange offer
for its own account in exchange for old securities, which it acquired through
market-making or other trading activities, must acknowledge that it will deliver
a prospectus when it resells or transfer any new securities issued in the
exchange offer. See "Plan of Distribution."
SUMMARY DESCRIPTION OF THE NEW SECURITIES
The form and terms of the new securities to be issued in the exchange
are the same as the form and terms of the old securities except that the new
securities to be issued in the exchange offer have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
and will not contain the registration rights and liquidated damages provisions
contained in the old securities. The new securities will evidence the same
beneficial ownership interests as the old securities and both the new capital
securities and the old capital securities are governed by the same Trust
Agreement.
The following is a brief summary of select terms of the new securities.
For a more complete description of the terms of the new securities, see
"Description of the Capital Securities."
OUTSTANDING SECURITIES.............. $20,000,000 of 9.875% Capital Securities,
Series A (liquidation amount $1,000 per
capital security).
DISTRIBUTIONS....................... You are entitled to receive cumulative
cash distributions at the annual rate of
9.875% of the liquidation amount of $1,000
per capital security. Distributions
accumulate from October 18, 1999 and will
be paid semi-annually in arrears on April
15 and October 15 of each year beginning
on April 15, 2000. The amount of each
distribution will include amounts accrued
up to the date the distribution is due.
DEFERRAL PERIODS.................... So long as no event of default under the
junior subordinated debentures has
occurred and is continuing, we have the
right, at one or more
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times, to defer interest payments on the
junior subordinated debentures for up to
10 consecutive semi-annual periods, which
deferral will end on an interest payment
date, but not beyond October 15, 2029, the
stated maturity date of the junior
subordinated debentures.
If we defer interest payments on the
junior subordinated debentures, the Trust
will also defer distributions on the
capital securities. During this deferral
period, the junior subordinated debentures
will continue to accrue interest and the
capital securities will continue to
accumulate distributions. During a
deferral period you will also accumulate
additional distributions at the annual
rate of 9.875% on any accrued and unpaid
distributions, to the extent permitted by
law. If the Trust defers your
distributions, you will still be required
to accrue interest income and include it
in your gross income for U.S. federal
income tax purposes, even if you are a
cash basis taxpayer.
RANKING............................. Our obligations under the junior
subordinated debentures are unsecured and
subordinated to payment of our senior and
subordinated debt, to the extent and in
the manner set forth in the indenture, and
will be effectively subordinated to all of
the existing and future liabilities and
obligations of our subsidiaries, including
First National's deposit liabilities. At
December 31, 1999, we had senior debt
outstanding totaling $6.25 million.
GUARANTEE........................... We have, on a subordinated basis, fully,
irrevocably and unconditionally
guaranteed:
- payment of distributions on the
capital securities;
- payments on liquidation of the Trust;
and
- payments on maturity or earlier
redemption of the capital securities.
If we do not make a payment on the junior
subordinated debentures, the Trust will
not have sufficient funds to make payments
on the capital securities. Our guarantee
does not assure the payment of
distributions when the Trust does not have
sufficient funds to pay the distributions.
Our obligations under the guarantee are
unsecured and are subordinated and junior
to the payment of our senior and
subordinated debt and will be effectively
subordinated to all of the existing and
future liabilities and obligations of our
subsidiaries.
DISTRIBUTION OF JUNIOR
SUBORDINATED DEBENTURES.......... At any time, we have the right, subject
to receipt of any required regulatory
approval, to liquidate the Trust and cause
the junior subordinated debentures to be
distributed to holders of capital
securities and common securities in
liquidation of the Trust. The junior
subordinated debentures will have the
identical terms and conditions as the
capital securities.
If we elect to liquidate the Trust and
thereby cause the junior subordinated
debentures to be distributed to holders of
the capital
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securities, we will have the same rights,
subject to the receipt of any required
regulatory approval, to redeem such junior
subordinated debentures as if the junior
subordinated debentures were held by the
Trust.
In the event of the involuntary or
voluntary liquidation, dissolution,
winding up or termination of the Trust in
which the junior subordinated debentures
are not distributed to you, then you, as
the holders of the capital securities,
will be entitled to receive for each
capital security a liquidation amount of
$1,000 plus accrued and unpaid
distributions thereon (including interest
thereon) to the date of payment. The Trust
will be able to make this distribution in
cash only if the junior subordinated
debentures are redeemed by us. For more
information, please refer to "Description
of Capital Securities - Liquidation of
Trust and Distribution of Junior
Subordinated Debentures."
MATURITY AND REDEMPTION............. The junior subordinated debentures mature
on October 15, 2029, which date may be
shortened to a date not earlier than
October 15, 2009 if certain conditions are
met. The Trust will redeem the capital
securities when we pay the junior
subordinated debentures at maturity or
redeem the capital securities at a
distribution date on or after October 15,
2009.
Our ability to redeem some or all of the
junior subordinated debentures on or after
October 15, 2009, is subject to certain
conditions. In addition, we may redeem the
junior subordinated debentures at our
option, in whole but not in part:
- if certain tax events occur;
- if there is a change in the way the
junior subordinated debentures are
treated for regulatory capital
purposes; or
- if there is a change in the Investment
Company Act of 1940 that requires the
Trust to register under that law.
We may have to obtain regulatory
approvals, including the approval of the
Federal Reserve Board, before we redeem
any junior subordinated debentures prior
to maturity. If we redeem the junior
subordinated debentures, you will receive
the liquidation amount of $1,000 per
capital security plus any accrued and
unpaid distributions to the date of
redemption.
ABSENCE OF MARKET FOR THE
CAPITAL SECURITIES.............. The capital securities are a new issue of
securities for which currently there is no
market. Although the initial purchaser
intends to make a market in the capital
securities and the exchange capital
securities, the initial purchaser is not
obligated to do so, and any such market
making may be discontinued at any time
without notice. We do not intend to seek a
listing of the capital securities or the
exchange capital securities, on any
national securities exchange or on the
Nasdaq Stock Market. The capital
securities are eligible for quotation on
the Private Offering, Resales and Trading
through Automated Linkages ("PORTAL")
System of the National Association of
Securities Dealers, Inc.
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USE OF PROCEEDS..................... All of the proceeds from the sale by the
Trust of its original capital securities
and common securities were invested by the
Trust in our junior subordinated
debentures. We currently intend to use the
net proceeds from the sale of the junior
subordinated debentures, which was
approximately $19.2 million, net of
commissions and other offering expenses,
for general corporate purposes, such as
the repurchase of our common stock and the
purchase of securities by our banking
subsidiary, which may include long-term
securities. We have initially invested the
net proceeds in short-term investment
grade financial securities. We will not
receive any proceeds from the exchange
offer.
ERISA CONSIDERATIONS................ For a discussion of certain prohibited
transactions and fiduciary duty issues
pertaining to purchases by or on behalf of
an employee benefit plan, you should see
"ERISA Considerations."
VOTING RIGHTS....................... As a holder of the capital securities, you
have no voting rights, except in limited
circumstances. You should read
"Description of Capital Securities --
Voting Rights; Amendment of the Trust
Agreement" for more information.
RISK FACTORS........................ For a discussion of considerations
relevant to an investment in the capital
securities which should be carefully
considered by you, please read "Risk
Factors."
RECENT DEVELOPMENTS
On January 13, 2000, we entered into an agreement to acquire Milton
Federal Financial Corporation, by merging Milton into us. Under the terms of the
agreement, we will exchange .444 shares of our common stock and $6.80 for each
of the 2,099,995 outstanding shares of Milton. We will redeem Milton's
outstanding stock options for cash equal to the acquisition price per share less
the exercise price of the options prior to closing. Based on our closing price
of $20.375 on January 12, 2000, the transaction would be valued at $33.3
million. We will account for the merger as a purchase. We expect to consummate
the merger in the second quarter of 2000, pending approval by Milton's
shareholders, regulatory approval and other customary conditions of closing.
Milton has granted us an option to purchase up to 19.9% of Milton's outstanding
shares upon the occurrence of certain events.
At December 31, 1999, Milton had total assets of $260.0 million,
deposits of $166.3 million and shareholders' equity of $25.3 million. For its
fiscal year ended September 30, 1999 and the quarter ended December 31, 1999,
Milton reported net income of $1.6 million and $449,000, respectively.
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SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
The following summary information presents selected consolidated
financial data of BancFirst Ohio and our subsidiaries. Certain financial data
has been derived from our audited consolidated financial statements. The
following information is only a summary and you should read it in conjunction
with our consolidated financial statements and related notes included in our
Form 10-K for the year ended December 31, 1999, which is incorporated in this
prospectus by reference.
<TABLE>
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AT OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1999 1998 1997 1996 (10) 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Interest income $ 88,114 $ 86,657 $ 84,692 $ 53,177 $ 34,063 $ 27,652
Interest expense 49,647 50,150 48,256 28,630 16,357 11,259
----------- ----------- ----------- ----------- ----------- -----------
Net interest income 38,467 36,507 36,436 24,547 17,706 16,393
Provision for possible 1,580 1,225 1,221 1,257 967 338
loan losses
Non-interest income 10,753 9,948 7,768 6,258 4,984 3,801
Non-interest expense 29,651 29,827 26,677 21,235 12,805 11,410
----------- ----------- ----------- ----------- ----------- -----------
Income before income
taxes and
extraordinary item 17,989 15,403 16,306 8,313 8,918 8,446
Provision for federal
income tax 5,685 4,835 5,536 2,354 2,706 2,572
----------- ----------- ----------- ----------- ----------- -----------
Income before
extraordinary item 12,304 10,568 10,770 5,959 6,212 5,874
Extraordinary
item-prepayment
charges on early
repayment of
Federal Home Loan
Bank Advances, net
of tax -- 400 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income 12,304 $ 10,168 $ 10,770 $ 5,959 $ 6,212 $ 5,874
=========== =========== =========== =========== =========== ===========
PER SHARE DATA: (1)
Income before
extraordinary item $ 1.58 $ 1.33 $ 1.35 $ 0.89 $ 1.04 $ 0.99
Net income, basic and
diluted 1.58 1.28 1.35 0.89 1.04 0.99
Dividends 0.57 0.55 0.53 0.51 0.47 0.45
Book value 10.55 11.09 10.72 9.79 8.42 7.38
Tangible book value 8.89 9.58 9.13 8.01 8.40 7.36
BALANCE SHEET DATA:
Total assets $ 1,274,206 $ 1,181,011 $ 1,081,618 $ 1,056,920 $ 476,429 $ 429,384
Loans 849,767 777,063 761,027 721,855 268,818 247,943
Allowance for possible
loan losses 7,431 6,643 6,617 6,599 3,307 3,095
Securities 331,235 327,615 271,521 284,576 178,252 153,595
Deposits 799,176 789,622 747,047 732,689 348,545 320,836
Borrowings 385,498 296,750 239,449 236,609 74,135 63,525
Shareholders' equity 80,108 87,535 85,333 77,894 50,010 43,844
PERFORMANCE RATIOS:
Return on average
assets (2) 1.02% 0.89% 0.98% 0.85% 1.38% 1.48%
Return on average
equity (3) 14.29 11.55 13.20 10.05 13.05 13.28
Net interest
margin (4) 3.47 3.48 3.55 3.78 4.27 4.49
Interest rate
spread (4) 3.12 3.05 3.08 3.22 3.55 3.89
</TABLE>
(continued on following page)
12
<PAGE> 13
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1999 1998 1997 1996 (10) 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Non-interest income to
average assets 0.89 0.88 0.71 0.90 1.11 0.95
Non-interest expense to
average assets (5) 2.33 2.36 2.30 2.59 2.84 2.87
Efficiency ratio (6) 56.56 56.81 56.67 57.33 56.63 56.10
ASSET QUALITY RATIOS: (7)
Non-performing loans
total loans to 0.42% 0.48% 0.29% 0.35% 0.38% 0.21%
Non-performing assets
total assets to 0.30 0.37 0.28 0.29 0.22 0.12
Allowance for possible
loan losses to total
loans 0.87 0.85 0.87 0.91 1.23 1.25
Allowance for possible
loan losses to
non-performing loans 209.0 178.3 298.3 258.0 322.9 608.1
Net charge-offs to
average loans 0.10 0.16 0.16 0.19 0.29 0.11
CAPITAL RATIOS: (8)
Shareholders' equity to 6.29% 7.41% 7.89% 7.37% 10.50% 10.21%
total assets
Tier 1 capital to
average total
assets 7.77% 6.52% 6.52% 6.06% 10.49% 10.18%
Tier 1 capital to
risk-weighted
assets 11.37 10.34 10.37 10.08 17.70 20.32
RATIO OF EARNINGS TO FIXED
CHARGES: (9)
Including interest on
deposits 1.36x 1.31x 1.34x 1.29x 1.55x 1.75x
Excluding interest on
deposits 3.83x 4.03x 4.33x 4.80x 6.43x 10.51x
- ---------
</TABLE>
(1) Per share data has been restated to reflect all stock dividends and
stock splits.
(2) Excluding the effects of non-recurring charges and income (including
the extraordinary item in 1998), the return on average assets was
1.02%, 1.02%, .95%, 1.10%, 1.38% and 1.48% for the years ended December
31, 1999, 1998, 1997, 1996, 1995 and 1994, respectively.
(3) Excluding the affects of non-recurring charges and income (including
the extraordinary item in 1998), the return on average equity was
14.29%, 13.21%, 12.80%, 12.98%, 13.05% and 13.28% for the years ended
December 31, 1999, 1998, 1997, 1996, 1995 and 1994, respectively.
(4) Interest rate spread represents the difference between the weighted
average yield on interest earning assets and the weighted average cost
of interest-bearing liabilities, and net interest margin represents net
interest income as a percentage of average interest-earning assets.
(5) Excludes amortization of intangibles and non-recurring charges totaling
$1,629 the year ended December 31, 1998 for merger, restructuring and
branch closing costs and $2,632 in 1996 related to the special one-time
SAIF assessment and restructuring costs.
(6) The efficiency ratio is equal to non-interest expense (excluding
non-recurring charges and amortization of intangible assets) divided by
net interest income determined on a fully tax equivalent basis plus
non-interest income less gains or losses on securities transactions and
non-recurring income.
(7) At December 31, 1999, the Company had one restructured loan with an
aggregate principal amount of $2,986 that was considered impaired
though on accrual status, and had a specific reserve assigned to it in
the amount of $448. Including restructured loans, the Company's asset
quality ratios at December 31, 1999 would be as follows:
non-performing loans plus restructured loans to total loans, 0.77%;
non-performing assets plus restructured loans to total assets, 0.53%;
allowance for possible loan losses to non-performing loans plus
restructured loans, 113.6%.
(8) For definitions and information relating to our regulatory capital
requirements, see "Regulation and Supervision."
(9) For purposes of computing the ratios of earnings to fixed charges,
earnings represent net income from continuing operations plus total
taxes based on income and fixed charges. Fixed charges, excluding
interest on deposits, include interest expense (other than on
deposits), one-third (the proportion deemed representative of the
interest factor) of rents, net of income from subleases and capitalized
interest. Fixed charges, including interest on deposits, include all
interest expense, one-third (the proportion deemed representative of
the interest factor) of rents, net of income from subleases, and
capitalized interest.
(10) Our acquisition of County Savings in August 1996 significantly affects
the comparability of our results of operations for prior years.
13
<PAGE> 14
RISK FACTORS
You should carefully read the following risk factors and other sections
of this prospectus before exchanging your capital securities. You should
carefully consider all of these risk factors to be important.
RISKS RELATED TO THE EXCHANGE OFFER AND YOUR INVESTMENT IN THE CAPITAL
SECURITIES
YOU MAY HAVE DIFFICULTY SELLING THE OLD SECURITIES WHICH YOU DO NOT EXCHANGE
If you do not exchange your old securities for the new securities
offered in this exchange offer, you will continue to be subject to the
restrictions on the transfer of your old securities. Those transfer restrictions
are described in the trust agreement and in the legend contained on the old
securities, and arose because the old securities were originally issued under
exemptions from, and in transactions not subject to, the registration
requirements of the Securities Act. Except in limited circumstances with respect
to specific types of holders of old securities, we will have no further
obligation to provide for registration under the Securities Act of the old
securities upon completion of the exchange offer.
In general, you may offer or sell your old securities only if they are
registered under the Securities Act and applicable state securities laws, or if
they are offered and sold under an exemption from those requirements. We do not
intend to register the old securities under the Securities Act.
If a large number of old securities are exchanged for new securities
issued in the exchange offer, it may be more difficult for you to sell your
unexchanged capital securities. See "The Exchange Offer -- Consequences of
Failure to Exchange Outstanding Securities" for a discussion of the possible
consequences of failing to exchange your old securities.
BANCFIRSTOHIO CANNOT MAKE PAYMENTS UNDER THE GUARANTEE OR THE JUNIOR
SUBORDINATED DEBENTURES IF BANCFIRST OHIO WOULD DEFAULT ON ITS OTHER
OBLIGATIONS THAT ARE MORE SENIOR.
Our obligations under the guarantee issued for your benefit are
unsecured and rank
- junior to all of our other borrowings, except those borrowings
that by their terms are equal or junior;
- junior to all of First National's deposit accounts; and
- senior to our common stock.
This means that we cannot pay under the guarantee if we default on
payments of any of our other borrowings, unless, by their terms, those
borrowings are equal or junior to the guarantee. If we liquidate, go bankrupt or
dissolve, we would be able to pay under the guarantee only after we have paid
all our other liabilities that are senior to the guarantee.
Our obligations under the junior subordinated debentures are unsecured
and rank junior in priority to all of our senior indebtedness, which includes
our borrowings that are not by their terms equal or junior to the junior
subordinated debentures. If we default on a payment on our senior indebtedness,
we cannot pay principal or interest on the junior subordinated debentures. If we
liquidate, go bankrupt or dissolve, we would be able to pay the Trust under the
junior subordinated debentures only after we have made all payments on our
senior indebtedness. As of December 31, 1999, we had approximately $6.25
million in senior indebtedness, excluding insured deposits.
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<PAGE> 15
If we default on our obligations to pay principal, premium or interest
on the junior subordinated debentures, the Trust will not have sufficient funds
to make distribution payments or liquidation payments on the capital securities.
As a result, you will not be able to rely upon our guarantee for payment of
these amounts. Instead, you or the property trustee may enforce the rights of
the Trust under the junior subordinated debentures against us. For more
information, please refer to "Description of Subordinated Debentures -
Enforcement of Certain Rights by Holders."
The capital securities, guarantee, the junior subordinated debentures
and the indenture do not limit our ability to incur additional debt, including
debt that is senior in priority of payment.
For more information on payments under the guarantee and the junior
subordinated debentures, you should refer to "Description of Guarantee -- Status
of the Guarantee" and "Description of Junior Subordinated Debentures -
Subordination."
BANKING LAWS AND REGULATIONS LIMIT BANCFIRST OHIO'S ACCESS TO FUNDS, WHICH MAY
PREVENT BANCFIRST OHIO FROM MAKING PAYMENTS UNDER THE SUBORDINATED
DEBENTURES.
We are a banking holding company regulated by the Federal Reserve
Board, or FRB, and almost all of our operating assets are owned by First
National. We rely primarily on dividends from First National to meet our
obligations for payment of principal and interest on our outstanding debt
obligations and corporate expenses. Dividend payments from First National are
subject to regulatory limitations, generally based on current and retained
earnings, imposed by the various regulatory agencies with authority over First
National. Payment of dividends is also subject to regulatory restrictions if
such dividends would impair the capital of First National. Payment of dividends
by First National is also subject to First National's profitability, financial
condition and capital expenditures and other cash flow requirements. Bank
regulatory agencies have authority to prohibit First National or us from
engaging in an unsafe or unsound practice in conducting their business. The
payment of dividends, depending upon the financial condition of First National
or us, could be deemed to constitute such an unsafe or unsound practice. The FRB
has stated that, as a matter of prudent banking, a bank or bank holding company
should not maintain its existing rate of cash dividends on common stock unless:
- the organization's net income available to common shareholders
over the past year has been sufficient to fund fully the
dividends; and
- the prospective rate of earnings retention appears consistent
with the organization's capital needs, asset quality, and
overall financial condition.
No assurance can be given that First National will be able to pay
dividends at past levels, or at all, in the future. See the section entitled
"Regulation and Supervision" in our Annual Report on Form 10-K for the year
ended December 31, 1999, which is incorporated herein by reference.
In addition to regulatory restrictions on the payment of dividends,
First National is subject to certain restrictions imposed by federal law on any
extensions of credit it makes to its affiliates and on investments in stock or
other securities of its affiliates. We are considered an affiliate of First
National. These restrictions prevent affiliates of First National, including us,
from borrowing from First National, unless various types of collateral secure
the loans. Federal law limits the aggregate amount of loans to and investments
in any single affiliate to 10% of the bank's capital and surplus and also limits
the aggregate amount of loans to and investments in all affiliates to 20% of the
bank's capital and surplus. As of December 31, 1999, approximately $9.1 million
of credit was available to us under this limitation.
15
<PAGE> 16
Under the prompt corrective action provisions of the Federal Deposit
Insurance Act, First National is prohibited from making capital distributions,
including the payment of dividends, if, after making any capital distribution,
First National would become undercapitalized as defined under the Federal
Deposit Insurance Act. Based on First National's current financial condition, we
do not expect that this provision will have any impact on our ability to obtain
dividends from First National; however, we cannot be sure that First National
will be able to pay dividends in the future. At December 31, 1999, First
National had the capital to pay us $2.0 million in dividends without requiring
regulatory approval.
If we do not receive sufficient cash dividends from First National,
then it is unlikely that we will have sufficient funds to make payments on the
junior subordinated debentures, thereby leaving insufficient funds for the Trust
to make payments to you on the capital securities.
BANCFIRSTOHIO CAN DEFER INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES,
CAUSING YOUR PAYMENTS UNDER THE CAPITAL SECURITIES TO STOP, WHICH WILL
HAVE TAX CONSEQUENCES TO YOU AND MAY AFFECT THE MARKET PRICE OF THE
CAPITAL SECURITIES.
We have the right, at one or more times, unless an event of default
exists under the junior subordinated debentures, to defer interest payments on
the junior subordinated debentures for up to 10 consecutive semi-annual periods,
but not beyond October 15, 2029. If we defer interest payments, the Trust will
defer paying distributions to you on your capital securities during the deferral
period. Additionally, during this period, any unpaid distributions on the
capital securities will accumulate additional distributions at the rate of
9.875% per year, compounded semi-annually, to the extent permitted by law. We
also will be prohibited from declaring or paying cash dividends on our common
stock. For more information, please refer to "Description of Capital Securities
- - Distributions."
When any deferral period ends and we pay all interest then accrued and
unpaid on the junior subordinated debentures, we may elect to begin a new
deferral period. There is no limitation on the number of times that we may elect
to begin a deferral period. See "Description of Capital Securities -
Distributions" and "Description of Junior Subordinated Debentures - Options to
Extend Interest Payment Date."
If we exercise our right to defer payments of interest on the junior
subordinated debentures, you will be required to accrue income (as original
issue discount) in respect of the deferred stated interest allocable to your
capital securities for U.S. federal income tax purposes, which will be allocated
but not distributed to you. As a result, you will be required to recognize
income for U.S. federal income tax purposes before you receive any cash and will
not receive the cash related to this interest income from the Trust if you
dispose of your capital securities prior to the record date for the distribution
payment.
We do not currently intend to exercise our right to defer interest
payments on the junior subordinated debentures. However, if we exercise this
right in the future, the market price of the capital securities will probably be
affected. The capital securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest on the junior subordinated
debentures. If you sell your capital securities during a deferral period, you
may not receive the same return on your investment as someone else who continues
to hold the capital securities. As a result of our right to defer interest
payments, the market price of the capital securities, which represent preferred
beneficial interests in the Trust, may be more volatile than the market prices
of other securities that are not subject to such deferral options.
16
<PAGE> 17
THE TRUST MAY REDEEM THE CAPITAL SECURITIES IF A SPECIAL EVENT OCCURS.
If there are changes in the bank regulatory, investment company or tax
laws prior to October 15, 2009, that would adversely affect the status of the
Trust, the capital securities or the junior subordinated debentures, we have the
right to redeem the junior subordinated debentures, in whole but not in part.
Our redemption of the junior subordinated debentures will cause the Trust to
redeem the capital securities prior to maturity.
Our ability to cause the redemption of the capital securities under
these circumstances is subject to us receiving the necessary regulatory
approval, if required. For more information concerning events which may cause
the redemption of the junior subordinated debentures and prepayment of the
capital securities, see "Description of the capital securities - Redemption."
IF WE DISTRIBUTE THE JUNIOR SUBORDINATED DEBENTURES, THERE MAY BE AN ADVERSE
EFFECT ON THE TRADING MARKET AND TRADING PRICE OF YOUR INVESTMENT, AND
THERE MAY BE ADVERSE TAX EFFECTS.
Your investment in the capital securities may decrease in value if the
junior subordinated debentures are distributed to you in liquidation of the
Trust. We cannot predict the liquidity of the market price or market prices for
the junior subordinated debentures that may be distributed. Accordingly, the
junior subordinated debentures that you receive upon a distribution, or the
capital securities you hold pending such distribution, may trade at a discount
to the price that you paid to purchase the capital securities.
Because you may receive the junior subordinated debentures, you must
also make an investment decision with regard to the junior subordinated
debentures. You should carefully review all of the information regarding the
junior subordinated debentures contained in this prospectus. Under "Certain
Federal Income Tax Consequences - Receipt of Junior Subordinated Debentures or
Cash Upon Liquidation of the Trust," we discuss applicable federal income tax
consequences of a distribution of the junior subordinated debentures.
YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of capital securities, you will have limited voting rights.
You can vote only to modify the capital securities or on the removal of the
property and Delaware trustees of the Trust upon a limited number of events. We,
along with the property trustee and the administrative trustees, may amend the
trust agreement without your consent even if these actions adversely affect your
interests, to ensure that the Trust:
- will not be classified as an association taxable as a
corporation for U.S. federal income tax purposes; and
- will not be required to register as an "investment company"
under the Investment Company Act of 1940.
You will not have any voting rights regarding the administrative
trustees or any matters submitted to a vote of our stockholders. See
"Description of Capital Securities - Voting Rights; Amendment of the Trust
Agreement" and "-Removal of Trustees" for more information on your limited
voting rights.
17
<PAGE> 18
THE LIMITED COVENANTS RELATING TO THE CAPITAL SECURITIES AND THE JUNIOR
SUBORDINATED DEBENTURES DO NOT PROTECT YOU.
The covenants in the governing documents relating to the capital
securities and the junior subordinated debentures are limited. As a result, the
governing documents do not protect you in the event of an adverse change in our
financial condition or results of operations. In addition, the governing
documents do not limit our ability, or the ability of our subsidiaries, to incur
additional debt. You should not consider the terms of the governing documents to
be a significant factor in evaluating whether we will be able to comply with our
obligations under the junior subordinated debentures or the guarantee.
TRADING CHARACTERISTICS OF THE CAPITAL SECURITIES MAY CREATE ADVERSE TAX
CONSEQUENCES FOR YOU.
The capital securities may trade at a price that does not reflect the
value of the accrued but unpaid interest on the underlying junior subordinated
debentures. If you dispose of your capital securities between the record date
for payments on the capital securities, you may have adverse tax consequences.
Under these circumstances, you will be required to include accrued but unpaid
interest on the junior subordinated debentures allocable to the capital
securities through the date of disposition in your income. If interest on the
junior subordinated debentures is included in income under the original issue
discount provisions, you would add this amount to your adjusted tax basis in
your share of the underlying junior subordinated debentures deemed disposed. If
your selling price is less than your adjusted tax basis, which will include all
accrued but unpaid original issue discount interest included in your income, you
could recognize capital loss which cannot be applied to offset ordinary income
for federal income tax purposes, subject to exceptions. See "Certain Federal
Income Tax Consequences - Interest Income and Original Issue Discount" and " -
Sales of capital securities" for more information on possible adverse tax
consequences to you.
ABSENCE OF RATINGS AND PUBLIC MARKET; RESTRICTIONS ON RESALE.
The capital securities have not been rated by any rating agency. There
is no existing market for the capital securities and there can be no assurance
as to:
- the liquidity of any markets that may develop for the capital
securities or the exchange capital securities; or
- the ability of the holders to sell the capital securities or
the exchange capital securities; or
- at what price holders of the capital securities or the
exchange capital securities, will be able to sell their
capital securities or the exchange capital securities, as the
case may be.
Future trading prices of the capital securities will depend on many
factors including, among others, prevailing interest rates, our operating
results and the market for similar securities. The initial purchaser has
informed the Trust and us that it intends to make a market in the capital
securities and the exchange capital securities. However, the initial purchaser
is not obligated to do so and any such activity may be terminated at any time
without notice to the holders of the capital securities or the exchange
capital securities, as applicable. In addition, such market making activity
will be subject to the limits of the Securities Act and may be limited during
the pendency of the exchange offer or during the period the shelf registration
statement is required to be kept effective.
18
<PAGE> 19
RISKS RELATING TO BANCFIRST OHIO AND FIRST NATIONAL
OUR ASSETS, SPECIFICALLY OUR SUBSIDIARY'S STOCK, COULD BE FORECLOSED UPON IF A
DEFAULT OCCURS UNDER OUR LOAN AGREEMENT.
We have pledged 67% of all issued and outstanding capital stock of
First National as collateral under our loan agreement with a third-party lender.
At December 31, 1999, our outstanding borrowings under this loan agreement were
$6.25 million. As a bank holding company, our primary asset is the issued and
outstanding stock of First National. We do not generate operating income, but
rely on the dividends from First National. If we fail to pay principal or
interest on the loan, the lender may take the capital stock of First National
serving as collateral for the loan in satisfaction of our obligations. Any such
actions could have a material adverse effect upon our ability to receive
dividends from First National. If we do not receive dividends from First
National, we will not have the funds to pay principal and interest on the junior
subordinated debentures and the Trust will not have the funds to pay
distributions to you on the capital securities.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH.
Our general strategy for growth has been to acquire banks and related
businesses that we believe are compatible with our business. We completed the
acquisition of County Savings Bank in 1996. At that time, County had total
assets approximately equal to our total assets. Since the completion of the
acquisition, we have worked to integrate County's operations and personnel with
First National. Because we did not have the systems and infrastructure in place
at the time of the acquisition to accommodate the resulting doubling of our
size, a significantly greater amount of time than initially anticipated has been
spent developing systems to accommodate the growth that resulted from this
acquisition. At present, we believe that our infrastructure is now in place to
accommodate additional growth from acquisitions. To the extent that we continue
to grow, we cannot assure you that we will be able to adequately and efficiently
manage such growth, including our ability to successfully complete the
acquisition of Milton and integrate its operations and personnel with ours.
Moreover, we may not be able to obtain regulatory approval for any acquisitions
we may want to make. Acquiring other banks and businesses will involve risks,
including:
- potential exposure to liabilities of banks and businesses we
acquire;
- difficulty and expense of integrating the operations and
personnel of banks and businesses;
- potential disruption of our businesses;
- inability to hire and train a sufficient number of skilled
employees;
- impairment of relationships with customers of the bank and
businesses we acquire; and
- incurrence of amortization expense for any acquisition
accounted for as a purchase.
If we fail to manage our growth effectively, our business, financial
condition and results of operations could be materially and adversely affected.
OUR ALLOWANCE FOR LOAN LOSSES MAY NOT BE ADEQUATE TO COVER ACTUAL LOAN LOSSES.
Increases in the allowance for loan losses could adversely affect our
results of operations. As a lender, we are exposed to the risk that our
customers will be unable to repay their loans according to their terms and that
any collateral securing the payment of their loans may not be sufficient to
cover
19
<PAGE> 20
repayment. Credit losses are inherent in the lending business, particularly so
with commercial portfolio lending which comprises 48% of our total loans at
December 31, 1999.
We make various assumptions and judgments about the collectibility of
our loan portfolio and provide an allowance for potential losses based on
various factors. If our assumptions are not accurate, our allowance for loan
losses may not be sufficient to cover our loan losses. Material increases to the
allowance for loan losses may also be necessary due to changes in economic
conditions, the performance of our loan portfolio and increases in both loan
originations and purchases. Any increase in our allowance for loan losses would
decrease our net income.
WE MAY BE UNABLE TO MANAGE INTEREST RATE RISKS AND THAT COULD REDUCE OUR NET
INTEREST INCOME.
Our results of operations are affected principally by net interest
income which is the difference between interest earned on loans and investments
and interest expense paid on deposits and other borrowings. We cannot predict or
control changes in interest rates. Regional and local economic conditions and
the policies of regulatory authorities, including monetary policies of the Board
of Governors of the Federal Reserve System, affect interest income and interest
expense. We take measures intended to manage the risks from changes in market
interest rates. However, changes in interest rates can still have a material
adverse effect on our profitability.
When we acquired County, we inherited interest rate swap agreements.
County had entered into these agreements to mange interest rate risk exposure.
As a result, we have managed our interest rate risk taking into consideration
the effects of these agreements. Some of the interest rate swap agreements will
begin to expire in December 1999. We do not currently intend to replace these
interest rate swap agreements as they expire. If we do not replace these
instruments, we will need to take other measures to manage our interest rate
risks. Other measures may include converting existing short-term repricing
liabilities to longer repricing terms.
In addition, certain assets and liabilities may react in different
degrees to changes in market interest rates. For example, interest rates on some
types of assets and liabilities may fluctuate prior to changes in broader market
interest rates, while interest rates on other types may lag behind. Some of our
assets, such as adjustable rate mortgages, have features including rate caps,
which restrict changes in their interest rates.
Interest rates are highly sensitive to many factors that are beyond our
control. Some of these factors include:
- inflation;
- recession;
- unemployment;
- money supply;
- international disorders; and
- instability in domestic and foreign financial markets.
20
<PAGE> 21
Changes in interest rates may affect:
- the level of voluntary prepayments on our loans; and
- the receipt of payment in our mortgage-backed securities
resulting in the receipt of proceeds that may be reinvested at
a lower rate than the loan or mortgage-backed security being
prepaid.
Although we pursue an asset-liability management strategy designed to
control our risk from changes in market interest rates, changes in interest
rates can still have a material adverse effect on our profitability.
CHANGES IN THE SBA PROGRAM OR INCREASED COMPETITION FOR SUCH LOANS COULD
ADVERSELY AFFECT OUR PROFITABILITY.
The SBA lending program is a federal government program. The U.S.
Congress continues to scrutinize government programs, including the SBA lending
program. We cannot assure you that the SBA lending program will continue in its
present manner. Our strategic plan includes an emphasis on continued growth of
our SBA lending program. Loans generated through this program contain portions
(typically 75%) which are guaranteed by the government. We have sold these
guaranteed portions in the secondary market. The non-interest income we generate
from these sales has been an important source of revenue for us, and continues
to play a significant role in our earnings. Future non-interest income from
these activities depends on our ability to generate and sell loans under the SBA
lending program. If the U.S. Congress changes the SBA lending program, or if we
have increased competition for such loans, our operating results could be
adversely affected.
WE CANNOT PREDICT HOW CHANGES IN TECHNOLOGY WILL IMPACT OUR BUSINESS.
The financial services industry, including the banking sector, is
increasingly affected by advances in technology, including developments in:
- telecommunications;
- data processing;
- automation;
- internet banking;
- telebanking; and
- debit cards and so-called "smart cards."
We currently do not provide Internet banking services or "smart cards."
We are testing an Internet banking product, but we cannot assure you that we
will be able to provide this service to our customers in the foreseeable future.
Our ability to compete successfully in the future will depend on whether we can
anticipate and respond to technological changes. To develop these and other new
technologies, we will likely have to make additional capital investments.
Although we continually invest in new technology, we cannot assure you that we
will have sufficient resources or access to the necessary technology to remain
competitive in the future or that the capital investments we make will not have
an adverse material effect on our financial condition or results of operations.
21
<PAGE> 22
WE ARE SUBJECT TO EXTENSIVE REGULATION.
We will depend primarily upon dividends from First National to meet our
obligations under the junior subordinated debentures. Banking regulations may
restrict or even prevent us from receiving dividends from First National in the
future. At December 31, 1999, First National had approximately $2.0 million of
retained earnings plus net income available to pay dividends to us without
regulatory approval. However, the banking industry is heavily regulated under
both federal and state law. We cannot assure you that modifications to existing
laws or new laws will not adversely affect our business and consequently our
ability to make payments under the junior subordinated debentures.
WE HAVE BROAD DISCRETION REGARDING THE USE OF THE PROCEEDS THAT WE RECEIVED FROM
THE SALE OF THE JUNIOR SUBORDINATED DEBENTURES.
We have allocated all of the net proceeds of our sale of junior
subordinated debentures for general corporate purposes, such as the repurchase
of our common stock and the purchase of securities by our banking subsidiary,
which may include long-term securities. Accordingly, management has broad
discretion in applying the proceeds. Pending our use of such proceeds, the funds
have been placed in short-term, interest-bearing, investment grade instruments.
Since we have not yet determined how we will use the proceeds of the offering,
you will be unable to predict the financial success of our long-term use of
proceeds. We will not receive any proceeds from this exchange offer.
22
<PAGE> 23
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the new
securities in this exchange offer. All of the old securities that are tendered
in the exchange offer will be retired and cancelled. All of the proceeds from
the initial sale by the Trust of its capital securities and common securities
were invested by the Trust in the junior subordinated debentures. The net
proceeds we received from the sale of the junior subordinated debentures were
approximately $19.2 million, net of commissions and other offering expenses. We
currently intend to use the net proceeds for general corporate purposes, such as
the repurchase of our common stock and the purchase of securities by our banking
subsidiary, which may include long-term securities, and we may use a portion of
the proceeds to fund the cash portion of the purchase price for the Milton
acquisition. Initially, we invested the net proceeds in short-term investment
grade financial securities.
ACCOUNTING TREATMENT
The new securities to be issued in the exchange offer will be recorded
at the same carrying value as the old securities as reflected in our accounting
records on the date of the exchange. Accordingly, we will not recognize any gain
or loss for accounting purposes. The expenses of the exchange offer and the
unamortized expenses relating to the issuance of the old securities will be
amortized over the term of the old securities and the new securities to be
issued in the exchange offer.
For financial reporting purposes, the Trust will be treated as our
subsidiary, and, accordingly, the accounts of the Trust will be included in our
consolidated financial statements. The capital securities will be included with
borrowings and presented as a separate line item in our consolidated balance
sheet under the caption "Guaranteed Preferred Beneficial Interests in
Subordinated Debt," and appropriate disclosures about the capital securities,
the guarantee and the junior subordinated debentures will be included in the
notes to consolidated financial statements. For financial reporting purposes, we
will record distributions payable on the capital securities as an interest
expense in the consolidated statements of operations.
Future reports we file under the Exchange Act will include a footnote
to the financial statements stating that:
- the Trust is wholly-owned;
- the sole assets of the Trust are the junior subordinated
debentures (specifying the principal amount, interest rate and
maturity date of such junior subordinated debentures); and
- the back-up obligations, in the aggregate, constitute a full
and unconditional guarantee by us of the obligations of the
Trust under the capital securities.
The Trust is not required to provide separate reports under the
Exchange Act.
23
<PAGE> 24
CAPITALIZATION
The following table sets forth our consolidated capitalization at
December 31, 1999, and as adjusted to give effect to the issuance of the
capital securities offered by the Trust and receipt and application by us of the
proceeds from the corresponding sale of the junior subordinated debentures to
the Trust. You should read this table in conjunction with our consolidated
financial statements and notes, which are incorporated by reference into this
prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------
ACTUAL AS ADJUSTED
------ -----------
(In thousands)
<S> <C> <C>
Long-term borrowings
FHLB advances due beyond one year .................... $ 99,148 $ 99,148
Term reverse repurchase agreements due beyond one year 50,000 50,000
Term note payable .................................... 6,250 6,250
Guaranteed Preferred Beneficial Interests in
Subordinated Debt (1) ............................ 20,000 20,000
------------ ------------
Total long-term borrowings ........................... $ 175,398 $ 175,398
============ ============
Common stock, no par or stated value; 20,000,000 shares
authorized, 8,162,467 outstanding .................... $ 66,318 $ 66,318
Treasury stock, at cost, 454,629 shares .................. (13,671) (13,671)
Accumulated other comprehensive income (2) ............... (8,334) (8,334)
Retained earnings ........................................ 35,795 35,795
------------ ------------
Total shareholders' equity ........................... $ 80,108 $ 80,108
============ ============
Total capitalization ................................. $ 255,506 $ 255,506
============ ============
- -------------
</TABLE>
(1) As described herein, the sole assets of the Trust, which is our subsidiary,
is $20,619,000 aggregate principal amount of the fixed rate junior
subordinated debentures, Series A, which will mature on October 15, 2029.
We own all of the common securities issued by the Trust. See "Description
of Junior Subordinated Debentures."
(2) Includes only net unrealized gain on securities available for sale.
PRO FORMA REGULATORY CAPITAL
Under regulations adopted by the Federal Reserve Board, First National
is required to maintain Tier 1 capital and total capital (Tier 1 plus Tier 2
capital) equal to at least 4.0% and 8.0%, respectively, of our risk weighted
assets, and Tier 1 capital equal to at least 4.0% of our average total assets
(calculated quarterly).
At December 31, 1999, our Tier 1 leverage capital, Tier 1 risk-based
capital and total capital amounted to $95.7 million (7.77% of average adjusted
total assets), $95.7 million (11.37% of risk weighted assets) and $103.1 million
(12.25% of risk weighted assets), respectively, exceeding all of our minimum
regulatory requirements. For additional information on the regulatory capital
requirements applicable to us, see "Regulation and Supervision."
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<PAGE> 25
The following tables set forth our regulatory capital and
regulatory capital ratios which reflect the receipt of the estimated net
proceeds from the offering. See "Use of Proceeds" and "Regulation
and Supervision."
<TABLE>
<CAPTION>
Risk Based
----------------------
Tier 1
Leverage Tier 1 Total
Capital Capital Capital
--------- --------- ---------
(Dollars in Thousands)
<S> <C> <C> <C>
Stockholders' equity $ 80,108 $ 80,108 $ 80,108
Minority interest--Capital Securities (1) 20,000 20,000 20,000
Unrealized losses on securities available for sale 8,334 8,334 8,334
Non-allowable capital:
Intangible assets (12,767) (12,767) (12,767)
--------- --------- ---------
Supplemental capital:
Allowance for loan losses . N/A N/A 7,431
--------- --------- ---------
Regulatory capital $ 95,675 $ 95,675 $ 103,106
========= ========= =========
</TABLE>
(1) Under Federal Reserve Board regulations, the capital securities cannot
represent more than 25% of Tier 1 capital.
<TABLE>
<CAPTION>
Risk Based
----------------------
Tier 1
Leverage Tier 1 Total
Capital Capital Capital
--------- --------- ---------
<S> <C> <C> <C>
Regulatory capital $ 95,675 $ 95,675 $ 103,106
7.77% 11.37% 12.25%
Regulatory requirement $ 49,267 $ 33,661 $ 67,322
4.00% 4.00% 8.00%
Excess above required ratio $ 46,408 $ 62,014 $ 35,784
3.77% 7.37% 4.25%
</TABLE>
The amount of average adjusted total assets for the Tier 1 leverage
ratio was approximately $1.2 billion. Risk-weighted assets used for the
risk-based capital ratios amounted to $841.5 million.
At December 31, 1999, First National's Tier 1 leverage capital, Tier 1
risk-based capital and total capital amounted to $76.1 million (6.20% of average
adjusted total assets), $76.1 million (9.01% of risk weighted assets) and $91.5
million (10.83% of risk weighted assets), respectively, exceeding all of its
minimum regulatory requirements. For additional information on the regulatory
capital requirements applicable to First National, see "Regulation and
Supervision."
25
<PAGE> 26
BANCFIRST OHIO CORP.
GENERAL
We were organized as a bank holding company under the laws of the State
of Ohio. We conduct a full-service commercial and retail banking business
through our wholly-owned subsidiary, The First National Bank of Zanesville.
Effective May 16, 1998, we merged our two other banking subsidiaries, Bellbrook
Community Bank and County Savings Bank, with First National under the national
bank charter of First National. We also own a full service financial planning
company that conducts business under the name Chornyak & Associates, Inc., which
we acquired in April 1999.
We are headquartered in Zanesville, Ohio, the county seat of Muskingum
County. Through First National, we operate 22 full-service banking facilities
which serve Muskingum, Licking, Franklin and Greene Counties, Ohio. Our primary
market extends along Interstate 70 in central Ohio and includes the markets of
Zanesville, Newark, Columbus, and Dayton. We primarily focus on providing
personalized, high quality and comprehensive banking services in order to
develop and maintain long-term relationships with our customers. We offer a
range of banking services, including:
- commercial and commercial real estate loans;
- Small Business Administration loans;
- residential real estate loans;
- consumer loans;
- personal and business checking accounts;
- savings accounts;
- demand and time deposits;
- safe deposit services; and
- trust, private banking, financial planning and investment
services.
At December 31, 1999, on a consolidated basis, we had total assets of
$1.3 billion, total liabilities of $1.2 billion, including total deposits of
$799.2 million, total loans of $849.8 million, and total stockholders' equity of
$80.1 million.
OUR STRATEGY
We believe our profitability in recent years is in part attributable to
the growth strategy that we began implementing in 1992. At December 31, 1991, we
had nine branch offices with assets of $298.2 million, an equity to assets ratio
of 11.82%, and operations heavily concentrated in Muskingum County. Management
believed that increased size would allow us to:
- take advantage of increased operating efficiencies associated
with the attendant economies of scale;
- achieve greater diversification of our markets and products;
- enhance shareholder value by more effectively leveraging our
equity capital; and
- more effectively position ourselves to take advantage of
acquisition opportunities in the rapidly changing financial
services industry.
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<PAGE> 27
Given our significant market share in our primary market area, we
recognized that our desired growth would have to come primarily from expansion
into new markets. In recognition of these factors, management undertook a growth
strategy which emphasized:
- acquiring existing branch locations from competing
institutions as well as de novo branching;
- increasing lending to small businesses through the formation
of small business lending centers outside Muskingum County;
- acquiring bank and thrift holding companies;
- expanding trust, private banking and investment services; and
- improving technology to enhance services and manage the cost
of operations.
We believe that we have been successful in implementing our strategy.
In 1992, First National acquired a $30.6 million branch of a savings and loan
association in Dresden, Ohio. Later in 1992, First National opened the first of
four small business lending centers to serve small businesses in Columbus, Ohio,
and specialize in loans guaranteed by the U.S. Department of Commerce, SBA.
During 1997 and 1998, First National was the largest originator of SBA Section
7(a) loans in Ohio and was awarded the designation of preferred lender by the
SBA. Currently, First National has small business lending centers located in
Cleveland, Columbus, Cincinnati and Dayton, Ohio, Indianapolis, Indiana,
Louisville, Kentucky and Detroit, Michigan.
Our 1995 acquisition of Bellbrook Community Bank provided access to the Dayton
metropolitan market. In August 1996, we acquired County Savings Bank which had
total assets of approximately $554 million. In October 1998, First National
opened a new branch location in Washington Township, Ohio, located in the Dayton
metropolitan market. We have also opened an additional branch location in New
Albany, Ohio, a rapidly growing suburb of Columbus, Ohio. As a result of our
strategic growth strategy, our assets have increased by more than $800 million
since December 31, 1991.
Our board of directors and management intend to seek continued controlled growth
of the organization through selective acquisitions of banks and/or savings and
loan associations. The objectives of such acquisitions will be to:
- increase the opportunity for quality earning asset growth,
deposit generation and fee-based income opportunities;
- diversify the earning assets portfolio and core deposit base
through expansion into new geographic markets;
- improve the potential profits from our combined operations
through economies of scale; and
- enhance shareholder value.
In furtherance of such objectives, we intend to continue our pursuit of
business combinations which fit our strategic objectives of growth,
diversification and market expansion and which provide the potential for
enhanced shareholder value. At the present time, we do not have any
understanding or agreements for any acquisition or combination.
27
<PAGE> 28
RECENT DEVELOPMENTS
On January 13, 2000, we entered into an agreement to acquire Milton
Federal Financial Corporation, by merging Milton into us. Under the terms of the
agreement, we will exchange .444 shares of our common stock and $6.80 for each
of the 2,099,995 outstanding shares of Milton. We will redeem Milton's
outstanding stock options for cash equal to the acquisition price per share less
the exercise price of the options prior to closing. Based on our closing price
of $20.375 on January 12, 2000, the transaction would be valued at $33.3
million. We will account for the merger as a purchase. We expect to consummate
the merger in the second quarter of 2000, pending approval by Milton's
shareholders, regulatory approval and other customary conditions of closing.
Milton has granted us an option to purchase up to 19.9% of Milton's outstanding
shares upon the occurrence of certain events.
At December 31, 1999, Milton had total assets of $260.0 million, deposits of
$166.3 million and shareholders' equity of $25.3 million. For its fiscal year
ended September 30, 1999 and the quarter ended December 31, 1999, Milton
reported net income of $1.6 million and $449,000, respectively.
REGULATION AND SUPERVISION
Almost all of our assets consist of our investment in First National,
our principal subsidiary. Thus, our ability to pay principal of, and interest
on, the junior subordinated debentures depends almost entirely on cash dividends
we receive from First National.
First National may not pay dividends to us if, after paying those
dividends, it would fail to meet the required minimum levels under risk-based
capital guidelines and the minimum leverage ratio requirements. First National
must have the approval of federal bank regulators if a dividend in any year
would cause the total dividends for that year to exceed the sum of the current
year's net income plus retained earnings for the preceding two years, less
required transfers to surplus. At December 31, 1999, approximately $2.0 million
of retained earnings plus net income was available for the payment of dividends
to us without regulatory approval. Payment of dividends by a banking subsidiary
may be restricted at any time at the discretion of the appropriate regulator if
it deems the payment to constitute an unsafe and/or unsound banking practice or
necessary to maintain adequate capital.
If we do not receive sufficient cash dividends from First National, it
is unlikely that we will have sufficient funds to make payments on the junior
subordinated debentures. See "Description of Junior Subordinated Debentures."
Other statutes and regulations that affect us and First National are
summarized in "Item 1. Business - Regulation and Supervision" of our Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 incorporated
into this prospectus by reference.
28
<PAGE> 29
BFOH CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law upon
the filing of a certificate of trust with the Delaware Secretary of State. The
Trust exists for the exclusive purposes of:
- issuing and selling the capital securities;
- using the proceeds from the sale of the capital securities to
acquire the junior subordinated debentures; and
- engaging in only those other activities necessary, advisable
or incidental thereto, including the exchange offer.
The junior subordinated debentures are the sole assets of the Trust,
and, accordingly, payments under the junior subordinated debentures will be the
sole revenues of the Trust. We own all of the common securities of the Trust.
The common securities rank pari passu, and payments will be made thereon pro
rata, with the capital securities, except that upon the occurrence and
continuance of an event of default under the Trust agreement resulting from a
debenture event of default, our rights as holder of the common securities to
payments in respect of distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the capital
securities. See "Description of Capital Securities -- Subordination of Common
Securities." We 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
approximately 35 years, but may dissolve earlier as provided in its Amended and
Restated Declaration of Trust, referred to in this prospectus as the trust
agreement. The Trust's business and affairs are conducted by the issuer
trustees, each of whom we appoint as holder of the common securities. The issuer
trustees for the Trust will be Wilmington Trust Company, as the property trustee
and as the Delaware trustee, and three administrative trustees who are our
officers. Wilmington Trust Company also acts as indenture trustee under the
indenture and as guarantee trustee under the guarantee. See "Description of
Guarantee" and "Description of Junior Subordinated Debentures." The holder of
the common securities of the Trust or, if an event of default under the trust
agreement has occurred and is continuing, the holders of not less than a
majority in liquidation amount of the 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 trust agreement. As
issuer of the junior subordinated debentures, we will pay all fees, expenses,
debts and obligations (other than the payment of principal of, and interest on,
the capital securities) related to the Trust and the offering of the capital
securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of the Trust. The principal executive office of the Trust is c/o
BancFirst Ohio Corp., 422 Main Street, Zanesville, Ohio 43702 and its telephone
number is (740) 452-8444.
29
<PAGE> 30
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
When we sold the outstanding capital securities on October 18, 1999, we
entered into a registration rights agreement with the initial purchaser of those
capital securities. Under the registration rights agreement, we have agreed to
file a registration statement regarding the exchange of the outstanding capital
securities for new capital securities which are registered under the Securities
Act. We have also agreed to use our reasonable best efforts to cause the
registration statement to become effective with the SEC, and to conduct this
exchange offer after the registration statement is declared effective. We will
use our reasonable best efforts to keep this registration statement effective at
least until the exchange offer is completed. The registration rights agreement
provides that we will be required to pay liquidated damages to the holders of
the outstanding capital securities if:
- the registration statement is not filed by March 16, 2000;
- the registration statement is not declared effective by April
15, 2000; or
- the exchange offer has not been completed within 30 business
days after the registration statement becomes effective.
TERMS OF THE EXCHANGE OFFER
This prospectus and the accompanying letter of transmittal together
constitute the exchange offer. Upon the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal, we will accept for
exchange outstanding capital securities which are properly tendered on or before
the expiration date and are not withdrawn as permitted below. The expiration
date for this exchange offer is 5:00 p.m., New York City time, on May 15, 2000,
or such later date and time to which we, in our sole discretion, extend the
exchange offer.
The form and terms of the new securities being issued in the exchange
offer are the same as the form and terms of the old securities, except that:
- the new securities being issued in the exchange offer will
have been registered under the Securities Act;
- the new securities being issued in the exchange offer will not
bear the restrictive legends restricting their transfer under
the Securities Act; and
- the new securities being issued in the exchange offer will not
contain the registration rights and liquidated damages
provisions contained in the old securities.
Outstanding capital securities being tendered in the exchange offer
must be in denominations of the principal amount of $1,000 and integral
multiples of that amount.
We expressly reserve the right, in our sole discretion:
- to extend the expiration date;
- to delay accepting any outstanding capital securities;
- if any of the conditions set forth below under "--Conditions
to the Exchange Offer" have not been satisfied, to terminate
the exchange offer and not accept any old securities for
exchange; or
- to amend the exchange offer in any manner.
30
<PAGE> 31
We will give oral or written notice of any extension, delay,
non-acceptance, termination or amendment as promptly as practicable by a public
announcement, and in the case of an extension, not later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date.
During an extension, all outstanding capital securities previously
tendered will remain subject to the exchange offer and may be accepted for
exchange by us. Any outstanding capital securities not accepted for exchange for
any reason will be returned without cost to the holder that tendered them as
promptly as practicable after the expiration or Termination of the exchange
offer.
HOW TO TENDER OLD SECURITIES FOR EXCHANGE
When the holder of old securities tenders, and we accept, old
securities for exchange, a binding agreement between us and the tendering holder
is created, subject to the terms and conditions set forth in this prospectus and
the accompanying letter of transmittal. Except as set forth below, a holder of
outstanding capital securities who wishes to tender them for exchange must, on
or prior to the expiration date:
- transmit a properly completed and duly executed letter of
transmittal, including all other documents required by that
letter of transmittal, to Wilmington Trust Company, the
"exchange agent", at the address set forth below under the
heading "Exchange Agent"; or
- if capital securities are tendered pursuant to the book-entry
procedures set forth below, the tendering holder must transmit
an agent's message to the exchange agent at the address set
forth below under the heading "Exchange Agent."
In addition, either:
- the exchange agent must receive the certificates for the
outstanding capital securities being tendered and the letter
of transmittal;
- the exchange agent must receive, prior to the expiration date,
a timely confirmation of the book-entry transfer of the
capital securities being tendered into the exchange agent's
account at DTC or an agent's message; or
- the holder must comply with the guaranteed delivery procedures
described below.
The term "agent's message" means a message, transmitted to DTC and
received by the exchange agent and forming a part of a book-entry transfer,
which states DTC has received an express acknowledgment that the tendering
holder agrees to be bound by the letter of transmittal and that we may enforce
the letter of transmittal against that holder.
THE METHOD OF DELIVERY OF THE OUTSTANDING CAPITAL SECURITIES, THE
LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF THE HOLDERS. IF THE DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW
SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR CAPITAL
SECURITIES SHOULD BE SENT DIRECTLY TO US.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old securities surrendered for
exchange are tendered:
- by a holder of the old securities, who has not completed the
box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the letter of transmittal; or
- for the account of an eligible institution.
31
<PAGE> 32
An "eligible institution" is a firm which is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
If signatures on a letter of transmittal or notice of withdrawal are
required to be guaranteed, the guarantor must be an eligible institution. If old
securities are registered in the name of a person other than the signer of the
letter of transmittal, the old securities surrendered for exchange must be
endorsed by, or accompanied by a written instrument or instruments of transfer
or exchange, in satisfactory form as determined by us in our sole discretion,
duly executed by the registered holder with the holder's signature guaranteed by
an eligible institution.
We will determine all questions as to the validity, form, eligibility
and acceptance of old securities tendered for exchange in our sole discretion,
including questions as to time of receipt. Our determination will be final and
binding. We reserve the absolute right to:
- reject any and all tenders of any old security improperly
tendered;
- refuse to accept any old security if, in our judgment or the
judgment of our counsel, acceptance of the old security may be
deemed unlawful; and
- waive any defects or irregularities or conditions of the
exchange offer as to any particular old security either before
or after the expiration date, including the right to waive the
ineligibility of any holder who seeks to tender old securities
in the exchange offer.
Our interpretation of the terms and conditions of the exchange offer as
to any particular old securities either before or after the expiration date,
including the letter of transmittal and the instructions to it, will be final
and binding on all parties. Holders must cure any defects and irregularities in
connection with tenders of old securities for exchange within such reasonable
period of time as we will determine, unless we waive those defects or
irregularities. Neither we, the exchange agent nor any other person shall be
under any duty to give notification of any defect or irregularity with respect
to any tender of old securities for exchange, nor shall any of us incur any
liability for failure to give that notification.
If a person or persons other than the registered holder or holders of
the old securities tendered for exchange signs the letter of transmittal, the
tendered old securities must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders that appear on the old securities being tendered.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any old securities or any power of
attorney, those persons should so indicate when signing, and you must submit
proper evidence satisfactory to us of, such person's authority to so act unless
we waive this requirement.
By tendering, each holder will represent to us that, among other
things, the person acquiring new securities in the exchange offer is obtaining
them in the ordinary course of its business, whether or not such person is the
holder, and that neither the holder nor such other person has any arrangement or
understanding with any person to participate in the distribution of the new
securities issued in the exchange offer. If any holder or any such other person
is an "affiliate," as defined under Rule 405 of the Securities Act, of BancFirst
Ohio, or is engaged in or intends to engage in or has an arrangement or
understanding with any person to participate in a distribution of new securities
to be acquired in the exchange offer, that holder or any such other person:
32
<PAGE> 33
- may not rely on the applicable interpretations of the staff of
the SEC; and
- must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any
resale transaction.
Each broker-dealer who acquired its old securities as a result of
market-making activities or other trading activities and thereafter receives new
securities issued for its own account in the exchange offer, must acknowledge
that it will deliver a prospectus in connection with any resale of such new
securities issued in the exchange offer. 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. See "Plan of Distribution" for a discussion of the exchange and resale
obligations of broker-dealers in connection with the exchange offer.
ACCEPTANCE OF OLD SECURITIES FOR EXCHANGE; DELIVERY OF NEW SECURITIES ISSUED IN
THE EXCHANGE OFFER
Upon satisfaction or waiver of all of the conditions to the exchange
offer, we will accept, promptly after the expiration date, all outstanding old
securities properly tendered and will issue new securities registered under the
Securities Act. For purposes of the exchange offer, we will be deemed to have
accepted properly tendered outstanding old securities for exchange when, as and
if we have given oral or written notice to the exchange agent, with written
confirmation of any oral notice to be given promptly thereafter. See
"--Conditions to the Exchange Offer" for a discussion of the conditions that
must be satisfied before we accept any old securities for exchange.
For each outstanding old security accepted for exchange, the holder
will receive a new security registered under the Securities Act having a
liquidation amount equal to that of the surrendered old security. Accordingly,
registered holders of new securities issued in the exchange offer on the
relevant record date for the first distribution date following the completion of
the exchange offer will receive a distribution accruing from the most recent
date to which a distribution has been paid or, if no distribution has been paid
on the outstanding capital securities, from October 18, 1999. Outstanding old
securities that we accept for exchange will cease to accrue distributions from
and after the date of completion of the exchange offer. Under the registration
rights agreement, we may be required to make additional payments in the form of
liquidated damages to the holders of the outstanding capital securities under
circumstances relating to the timing of the exchange offer.
In all cases, we will issue new securities in the exchange offer for
outstanding old securities that are accepted for exchange only after the
exchange agent timely receives:
- certificates for such old securities or a timely book-entry
confirmation of such old securities into the exchange agent's
account at DTC;
- a properly completed and duly executed letter of transmittal
or an agent's message; and
- all other required documents.
If for any reason set forth in the terms and conditions of the exchange
offer we do not accept any tendered outstanding old securities, or if a holder
submits outstanding old securities for a greater liquidation amount than the
holder desires to exchange, we will return such unaccepted or non-exchanged old
securities without cost to the tendering holder. In the case of old securities
tendered by book-entry transfer into the exchange agent's account at DTC, such
non-exchanged old securities will be credited to an account maintained with DTC.
We will return the old securities or have them credited to the DTC account as
promptly as practicable after the expiration or termination of the exchange
offer.
33
<PAGE> 34
BOOK-ENTRY TRANSFERS
The exchange agent will make a request to establish an account with
respect to the outstanding old securities at DTC for purposes of the exchange
offer as soon as practicable after the date of this prospectus. Any financial
institution that is a participant in DTC's systems must make book-entry delivery
of outstanding old securities by causing DTC to transfer such outstanding old
securities into the exchange agent's account at DTC in accordance with DTC's
procedures for transfer. That participant should transmit its acceptance to DTC
on or prior to the expiration date or comply with the guaranteed delivery
procedures described below. DTC will verify that acceptance, execute a
book-entry transfer of the tendered old securities into the exchange agent's
account at DTC and then send to the exchange agent confirmation of that
book-entry transfer. The confirmation of the book-entry transfer will include an
agent's message confirming that DTC has received an express acknowledgment from
the participant that the participant has received and agrees to be bound by the
letter of transmittal and that we may enforce the letter of transmittal against
that participant. Delivery of new securities issued in the exchange offer may be
effected through book-entry transfer at DTC. However, the letter of transmittal
or a facsimile of it or an agent's message, with any required signature
guarantees and any other required documents, must:
- be transmitted to and received by the exchange agent at the
address set forth below under "-- Exchange Agent" on or prior
to the expiration date; or
- comply with the guaranteed delivery procedures described
below.
GUARANTEED DELIVERY PROCEDURES
If a holder of outstanding old securities desires to tender them but
they are not immediately available, or if the holder cannot deliver the old
securities or other required documents to the exchange agent before the
expiration date, or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if:
- the holder tenders the outstanding old securities through an
eligible institution;
- prior to the expiration date, the exchange agent receives from
that eligible institution a properly completed and duly
executed notice of guaranteed delivery, substantially in the
form we have provided, by telegram, telex, facsimile
transmission, mail or hand delivery, setting forth the name
and address of the holder of the old securities being tendered
and the amount of the old securities being tendered. The
notice of guaranteed delivery must state that the tender is
being made and guarantee that within three New York Stock
Exchange trading days after the date of execution of the
notice of guaranteed delivery, the certificates for all
physically tendered old securities, in proper form for
transfer, or a book-entry confirmation, as the case may be,
together with a properly completed and duly executed letter of
transmittal or agent's message with any required signature
guarantees and any other documents required by the letter of
transmittal will be deposited by the eligible institution with
the Exchange Agent; and
- the exchange agent receives the certificates for all
physically tendered old securities, in proper form for
transfer, or a book-entry confirmation, as the case may be,
together with a properly completed and duly executed letter of
transmittal or agent's message with any required signature
guarantees and any other documents required by the letter of
transmittal, within three New York Stock Exchange trading days
after the date of execution of the notice of guaranteed
delivery.
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WITHDRAWAL RIGHTS
You may withdraw tenders of your old securities at any time prior to
5:00 p.m., New York City time, on the expiration date.
For a withdrawal to be effective, you must send a written notice of
withdrawal or a properly transmitted agent's message to the exchange agent at
one of the addresses set forth below under "-- Exchange Agent." The notice of
withdrawal must:
- specify the name of the person having tendered the old
securities to be withdrawn;
- identify the old securities to be withdrawn, including the
liquidation amount of the old securities; and
- where certificates for old securities are transmitted, specify
the name in which the old securities are registered, if
different from that of the withdrawing holder.
If certificates for old securities have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution unless the holder is an
eligible institution. If old securities have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawn old securities and otherwise comply with the procedures of that
facility. We will determine all questions as to the validity, form and
eligibility of such notices, including questions as to time of receipt, and our
determination will be final and binding on all parties. Any tendered old
securities so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer. Any old securities which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the tendering holder without cost to that holder. In the case of old
securities tendered by book-entry transfer into the exchange agent's account at
DTC, the old securities withdrawn will be credited to an account maintained with
DTC for the outstanding old securities. The old securities will be returned or
credited to the DTC account as soon as practicable after withdrawal, rejection
of tender or termination of the exchange offer. Properly withdrawn old
securities may be re-tendered by following the procedures described under "--
How to Tender Old Securities for Exchange" above at any time on or prior to 5:00
p.m., New York City time, on the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
We are not required to accept for exchange, or to issue new securities
in the exchange offer for, any outstanding old securities. We may terminate or
amend the exchange offer, if at any time before the acceptance of outstanding
old securities for exchange:
- any federal law, statute, rule or regulation is adopted or
enacted which, in our judgment, would reasonably be expected
to impair our ability to proceed with the exchange offer;
- any stop order is threatened or in effect with respect to the
registration statement of which this prospectus constitutes a
part or the qualification of the indenture under the Trust
Indenture Act of 1939; or
- there occurs a change in the current interpretation by staff
of the SEC which permits the new securities to be issued in
the exchange offer to be offered for resale, resold and
otherwise transferred by the holders of the new securities,
other than broker-dealers and any holder which is an
"affiliate" of BancFirst 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 the new securities acquired in the exchange
offer are acquired in the
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ordinary course of that holder's business and that holder has
no arrangement or understanding with any person to participate
in the distribution of the new securities to be issued in the
exchange offer.
The preceding conditions are for our sole benefit and we may assert
them regardless of the circumstances giving rise to any such condition. We may
waive the preceding conditions in whole or in part at any time and from time to
time in our sole discretion. If we do so, the exchange offer will remain open
for at least three business days following any waiver of the preceding
conditions. Our failure at any time to exercise the foregoing rights shall not
be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which we may assert at any time and from time to time.
THE EXCHANGE AGENT
Wilmington Trust Company, in its capacity as property trustee, has been
appointed as our exchange agent for the exchange offer. All executed letters of
transmittal should be directed to our exchange agent at the address set forth
below. Questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent addressed as
follows:
BY HAND, OVERNIGHT DELIVERY, REGISTERED OR CERTIFIED MAIL TO:
Wilmington Trust Company, as Exchange Agent
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration - BFOH
Capital Trust I Exchange Offer
CONFIRM BY TELEPHONE: (302) 651-1000
BY FACSIMILE (for eligible institutions only): (302) 651-8882
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THE LETTER OF TRANSMITTAL VIA FACSIMILE OTHER
THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF
TRANSMITTAL.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others soliciting
acceptance of the exchange offer except for reimbursement of mailing expenses.
The estimated cash expenses to be incurred in connection with the
exchange offer will be paid by us and are estimated in the aggregate to be
approximately $50,000.
TRANSFER TAXES
Holders who tender their outstanding old securities for exchange will
not be obligated to pay any transfer taxes in connection with the exchange. If,
however, new securities issued in the exchange offer are to be delivered to, or
are to be issued in the name of, any person other than the holder of the old
securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of the old securities in connection with the exchange offer, then
the holder must pay any such transfer taxes,
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whether imposed on the registered holder or on any other person. If satisfactory
evidence of payment of, or exemption from, those taxes is not submitted with the
letter of transmittal, the amount of those transfer taxes will be billed
directly to the tendering holder.
CONSEQUENCES OF FAILURE OF EXCHANGE OUTSTANDING SECURITIES
Holders who desire to tender their outstanding old securities in
exchange for new securities registered under the Securities Act should allow
sufficient time to ensure timely delivery. Neither the exchange agent nor
BancFirst Ohio nor the Trust is under any duty to give notification of defects
or irregularities with respect to the tenders of securities for exchange.
Outstanding old securities that are not tendered or are tendered but
not accepted will, following the completion of the exchange offer, continue to
be subject to the provisions in the indenture regarding the transfer and
exchange of the outstanding old securities and the existing restrictions on
transfer set forth in the legend on the outstanding old securities and in the
offering memorandum dated October 13, 1999, relating to the outstanding old
securities. Except in limited circumstances with respect to specific types of
holders of outstanding old securities, we will have no further obligation to
provide for the registration under the Securities Act of such outstanding old
securities. In general, outstanding old securities, unless registered under the
Securities Act, may not be offered or sold except pursuant to an exemption from,
or in a transaction not subject to, the Securities Act and applicable state
securities laws.
We do not currently anticipate that we will take any action to register
the outstanding old securities under the Securities Act or under any state
securities laws. Upon completion of the exchange offer, holders of the
outstanding old securities will not be entitled to any further registration
rights under the registration rights agreement, except under limited
circumstances.
Holders of the new securities of either series issued in the exchange
offer and any outstanding old securities of that series which remain outstanding
after completion of the exchange offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage of the class
have taken certain actions or exercised certain rights under the trust
agreement.
CONSEQUENCES OF EXCHANGING OUTSTANDING SECURITIES
Based on interpretations of the staff of the SEC, as set forth in
no-action letters to third parties, we believe that the new securities issued in
the exchange offer may be offered for resale, resold or otherwise transferred by
holders of those new securities, other than by any holder which is an
"affiliate" of BancFirst Ohio within the meaning of Rule 405 under the
Securities Act. Those new securities may be offered for resale, resold or
otherwise transferred without compliance with the registration and prospectus
delivery provisions of the Securities Act, if:
- those new securities issued in the exchange offer are acquired
in the ordinary course of the holder's business; and
- the holder, other than a broker-dealer, has no arrangement or
understanding with any person to participate in the
distribution of the new securities to be issued in the
exchange offer.
However, the SEC has not considered our exchange offer in the context
of a no-action letter and we cannot guarantee that the staff of the SEC would
make a similar determination with respect to our exchange offer as in such other
circumstances.
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Each holder, other than a broker-dealer, must furnish a written representation,
at our request, that:
- it is acquiring the new securities issued in the exchange
offer in the ordinary course of its business;
- it is not engaged in, and does not intend to engage in, a
distribution of the new securities issued in the exchange
offer and has no arrangement or understanding to participate
in a distribution of new securities issued in the exchange
offer;
- it is not a broker-dealer that acquired old securities
directly from BancFirst Ohio or the Trust;
- it is not an affiliate of BancFirst Ohio; and
- it is not acting on behalf of any person who could not
truthfully make the foregoing representations.
Each broker-dealer that receives new securities issued in the exchange
offer for its own account in exchange for outstanding old securities must
acknowledge that the old securities were acquired by that broker-dealer as a
result of market-making or other trading activities and that it will deliver a
prospectus in connection with any resale of those new securities issued in the
exchange offer . See "Plan of Distribution" for a discussion of the exchange and
resale obligations of broker-dealers in connection with the exchange offer.
In addition, to comply with the state securities laws of certain
jurisdictions, the new securities issued in the exchange offer may not be
offered or sold in any state unless they have been registered or qualified for
sale in that state or an exemption from registration or qualification is
available and complied with by the holders selling the new securities. We have
agreed in the registration rights agreement that, prior to any public offering
of transfer restricted securities, we will register or qualify the transfer
restricted securities for offer or sale under the securities laws of any
jurisdiction requested by a holder, provided that we are not required to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction where
we would not otherwise be required to qualify, or to take any action that would
subject us to taxation or to general service of process in any jurisdiction
where we are not then so subject to taxation or service of process. Unless a
holder requests, we currently do not intend to register or qualify the sale of
the new securities issued in the exchange offer in any state where an exemption
from registration or qualification is required and not available. "Transfer
restricted securities" means each outstanding old security until:
- the date on which that old security has been exchanged by a
person other than a broker- dealer for a new security in the
exchange offer;
- following the exchange by a broker-dealer in the exchange
offer of the outstanding old security for a new security
issued in the exchange offer, the date on which the new
security issued in the exchange offer is sold to a purchaser
who receives from that broker-dealer on or prior to the date
of the sale a copy of this prospectus;
- the date on which that old security has been effectively
registered under the Securities Act and disposed of in
accordance with a shelf registration statement that we file in
accordance with the registration rights agreement; or
- the date on which that old security is distributed to the
public in a transaction under Rule 144 of the Securities Act.
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DESCRIPTION OF CAPITAL SECURITIES
This summary describes the material provisions of the capital
securities. It is not complete and is subject to, and qualified by, the trust
agreement, including the definitions used in the trust agreement, and the Trust
Indenture Act of 1939. We have incorporated the definitions used in the trust
agreement in this prospectus. You can receive a complete copy of the form of
trust agreement by requesting a copy from BancFirst Ohio.
GENERAL
The terms of the new capital securities are the same as the old capital
securities, except as described in this prospectus. The descriptions in this
section describe the new capital securities and the old capital securities
unless we have stated otherwise.
The capital securities represent beneficial interests in the Trust. As
a holder of capital securities, you are entitled to a preference over the common
securities in certain circumstances with respect to distributions and amounts
payable on redemption of the capital securities or liquidation of the Trust, as
described under " -- Subordination of Common Securities." The trust agreement is
not qualified under the Trust Indenture Act of 1939, as amended, except upon
effectiveness of the exchange offer registration statement or the shelf
registration statement. By its terms, however, the trust agreement incorporates
certain provisions of the Trust Indenture Act, and, upon consummation of the
exchange offer or effectiveness of the shelf registration statement, the trust
agreement will be subject to and governed by the Trust Indenture Act.
The capital securities are limited to $20.0 million aggregate
liquidation amount at any one time outstanding, including any exchange capital
securities that may be issued from time to time in exchange for the capital
securities, as described under "Exchange Offer; Registration Rights." The
capital securities rank equal to, and payments will be made on a pro rata basis
with, the common securities, except as described under " -- Subordination of
Common Securities." The property trustee has legal title to the junior
subordinated debentures and holds them in trust for the benefit of you and the
other holders of the capital securities. Our guarantee for the benefit of the
holders of the capital securities is a guarantee on a subordinated basis with
respect to the capital securities, but will not guarantee payment of
distributions or amounts payable on redemption or liquidation of the capital
securities when the Trust does not have funds legally available for such
payments. You should read "Description of Guarantee" for more information about
our guarantee.
DISTRIBUTIONS
Distributions on the capital securities will be cumulative, and will
accumulate from October 18, 1999. Distributions will be made at the annual rate
of 9.875% of the stated liquidation amount, payable semi-annually in arrears on
the distribution dates, which are April 15 and October 15 of each year,
commencing April 15, 2000, to the holders of the capital securities on the
relevant record dates. The record dates will be the 1st day of the month in
which the relevant payment occurs. For a description of the circumstances under
which additional amounts may be paid on the capital securities, you should read
"Exchange Offer; Registration Rights." The amount of distributions payable for
any distribution period will be based on a 360-day year of twelve 30-day months.
If any distribution date would otherwise fall on a day that is not a business
day, the distribution date will be postponed to the next day that is a business
day without any additional payments for the delay, unless the distribution would
fall in the next calendar year, in which case the distribution date will be the
last business day of the calendar year. A business day means any day other than
a Saturday or a Sunday, or a
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day on which banking institutions in New York, New York or Wilmington, Delaware
are authorized or required by law or executive order to remain closed.
The Trust's revenue available for distribution to holders of the
capital securities will be limited to our payments to the Trust under our junior
subordinated debentures. For more information, please refer to "Description of
Junior Subordinated Debentures - General." If we do not make interest payments
on the junior subordinated debentures, the property trustee will not have funds
available to pay distributions on the capital securities and on the common
securities. We have irrevocably guaranteed the payment of distributions if and
to the extent that the Trust has funds legally available to pay the
distributions. You should read " -- Description of Guarantee" for more
information about the extent of our guarantee.
OPTION TO DEFER INTEREST PAYMENTS
As long as no event of default exists, we have the right under the
indenture to elect to defer the payment of interest on the junior subordinated
debentures, at any time or from time to time, for no more that 10 consecutive
semi-annual periods with respect to each deferral period, provided that no
deferral period will end on a date other than an interest payment date, or
extend beyond October 15, 2029, the stated maturity date of the junior
subordinated debentures. If we defer payments, the Trust will defer semi-annual
distributions on the capital securities during the deferral period. During any
deferral period, distributions will continue to accrue on the capital securities
and on any accrued and unpaid distributions, compounded semi-annually from the
relevant distribution date at the applicable distribution rate, which will be
equal to the applicable interest rate on the junior subordinated debentures. The
term distributions includes any accumulated additional distributions.
Before the end of any deferral period, we may extend the deferral
period, as long as the extension does not cause the deferral period to exceed 10
consecutive semi-annual periods, or, to end on a date other than an interest
payment date or extend beyond October 15, 2029. At the end of any deferral
period and upon the payment of all amounts then due on any interest payment
date, we may elect to begin a new deferral period, subject to the above
requirements. No interest shall be due and payable during a deferral period
until the deferral period ends. We must give the property trustee, the
administrative trustees and the debenture trustee notice of our election to
defer interest payments, or to extend a deferral period at least five business
days before the earlier of:
- the date the distributions on the capital securities would
have been payable, except for the election to begin a deferral
period; and
- the date the administrative trustees are required to give
notice to any securities exchange or automated quotation
system or to holders of the 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 we may elect to
begin a deferral period. Please refer to "Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment Date" and "Certain Federal
Income Tax Consequences -- Original Issue Discount."
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During any deferral period, we may not:
- declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect
to, any of our common stock;
- make any payment of principal of, or interest or premium, if
any, on or repay, repurchase or redeem any debt securities
that rank equal or junior to the junior subordinated
debentures; or
- make any guarantee payments with respect to any guarantee of
the debt securities of any subsidiary if such guarantee ranks
equal or junior to the junior subordinated debentures.
Notwithstanding the foregoing, during a deferral period we may make the
following payments:
- dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, our common
stock;
- any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance
of common stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto;
- payments under the guarantee;
- as a result of a reclassification of our common stock or the
exchange or conversion of one class or series of our capital
stock for another class or series of our capital stock;
- the purchase of fractional interests in shares of our common
stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or
exchanged; and
- purchases of common stock related to the issuance of common
stock or rights under any of our benefit plans for our
directors, officers or employees or any of our dividend
reinvestment plans.
We do not currently intend to exercise our right to defer payments of
interest on the junior subordinated debentures. Our obligations under the
guarantee to make payments of distributions is limited to the extent that the
Trust has funds legally available to pay distributions. You should read
"Description of Guarantee" for more information about the extent of our
guarantee.
REDEMPTION
Upon repayment on October 15, 2029 or prepayment, in whole or in part
prior to October 15, 2029, of the junior subordinated debentures (other than
following the distribution of the junior subordinated debentures to you as a
holder of the Trust's capital securities and us, as the holder of the Trust's
common securities), the property trustee will apply the proceeds from the
repayment or prepayment of the junior subordinated debentures (as long as the
property trustee has received written notice no later than 45 days before the
repayment) to redeem at the applicable redemption price (which may include a
premium) an amount of capital securities having an aggregate liquidation amount
equal to the principal amount of the junior subordinated debentures paid to the
Trust. We will give notice of any redemption between 30 to 60 days prior to the
redemption date.
If we prepay less than all of the junior subordinated debentures on a
redemption date, then the property trustee will allocate the proceeds of the
prepayment on a pro rata basis among the capital securities and the common
securities. If a court of competent jurisdiction enters an order to dissolve the
Trust, the junior subordinated debentures will be subject to optional prepayment
in whole, but not in part, on or after October 15, 2009.
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We will have the right to prepay the junior subordinated debentures:
- in whole or in part, on or after October 15, 2009; and
- in whole but not in part, at any time, if there are changes in
the bank regulatory, investment company or tax laws that would
adversely affect the status of the Trust, the capital
securities or the junior subordinated debentures.
We may have to obtain regulatory approval, including the approval of
the Federal Reserve Board before we redeem any junior subordinated debentures.
Please refer to "Description of Subordinated Debentures -- Optional Prepayment"
and " -- Special Event Prepayment" for information on prepayment of the junior
subordinated debentures.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We will have the right at any time to dissolve the Trust and, after
satisfying the liabilities owed to the Trust's creditors, as required by
applicable law, we will have the right to distribute the junior subordinated
debentures to the holders of the capital securities and to us as holder of the
common securities. Our right to dissolve the Trust is subject to our receiving:
- an opinion of counsel to the effect that if we distribute the
junior subordinated debentures, the holders of the capital
securities will not experience a taxable event; and
- any required regulatory approval.
The Trust will automatically dissolve if:
- certain bankruptcy events occur, or we dissolve or liquidate;
- we distribute junior subordinated debentures having a
principal amount equal to the liquidation amount of the
capital securities to holders of the capital securities and
we, as sponsor, have given written directions to the property
trustee to dissolve the Trust (which direction is at our
option and, except as described above, wholly within our
discretion, as sponsor);
- the Trust redeems all of the capital securities as described
under " -- Redemption;" the Trust's term expires; or
- a court of competent jurisdiction enters an order for the
dissolution of the Trust.
If the Trust is dissolved for any of the above reasons, except for a
redemption of all capital securities, it will be liquidated by the trustees as
quickly as the trustees determine to be possible by distributing to holders of
the capital securities, after satisfying the liabilities owed to the Trust's
creditors, as provided by applicable law, junior subordinated debentures having
a principal amount equal to the liquidation amount of the capital securities,
unless the property trustee determines that this distribution is not
practicable. If the property trustee determines that this distribution is not
practicable, the holders of the capital securities will be entitled to receive
an amount equal to the aggregate of the liquidation amount plus accumulated and
unpaid distributions on the capital securities to the date of payment (such
amount being the "liquidation distribution") out of the assets of the Trust
legally available for distribution to holders, after satisfying the liabilities
owed to the Trust's creditors as provided by applicable law. If the liquidation
distribution can be paid only in part because the Trust has insufficient assets
legally available to pay the full amount of the liquidation distribution, or if
a debenture event of default exists, the capital securities will have a priority
over the common securities. For more information, please refer to " --
Subordination of Common Securities."
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After the liquidation date is fixed for any distribution of junior
subordinated debentures to holders of the capital securities:
- the capital securities will no longer be deemed to be
outstanding;
- DTC or its nominee will receive in respect of each registered
global certificate representing capital securities a
registered global certificate representing the junior
subordinated debentures to be delivered upon this
distribution; and
- any certificates representing capital securities not held by
DTC or its nominee will be deemed to represent junior
subordinated debentures having a principal amount equal to the
liquidation amount of those capital securities, and bearing
accrued and unpaid interest in an amount equal to the
accumulated and unpaid distributions on those capital
securities until such certificates are presented to the
administrative trustees or their agent for cancellation, in
which case we will issue to those holders, and the debenture
trustee will authenticate, a certificate representing the
junior subordinated debentures.
We cannot assure you of the market prices for the capital securities,
or the junior subordinated debentures that may be distributed to you in exchange
for the capital securities if a dissolution and liquidation of the Trust were to
occur. Accordingly, the capital securities that you purchased or received in the
exchange offer, or the junior subordinated debentures that you may receive upon
a dissolution and liquidation of the Trust, may trade at a discount to the price
that you paid to purchase the capital securities offered by this prospectus.
If we elect not to prepay the junior subordinated debentures prior to maturity
and either elect not to or we are unable to liquidate the Trust and distribute
the junior subordinated debentures to holders of the capital securities, the
capital securities will remain outstanding until the repayment of the junior
subordinated debentures on October 15, 2029.
REDEMPTION PROCEDURES
If we redeem the junior subordinated debentures, the Trust will redeem
capital securities at the applicable redemption price with the proceeds that it
receives from our redemption of the junior subordinated debentures. Any
redemption of capital securities will be made and the applicable redemption
price will be payable on the redemption date only to the extent that the Trust
has funds legally available to pay the applicable redemption price. For more
information, you should refer to " -- Subordination of Common Securities."
If the Trust gives a notice of redemption for the capital securities,
then, by 12:00 noon, New York City time, on the redemption date, to the extent
funds legally are available, with respect to:
- the capital securities held by DTC or its nominees, the
property trustee will deposit, or cause the paying agent to
deposit, irrevocably with DTC funds sufficient to pay the
applicable redemption price. For more information, you should
refer to " - Form, Denomination, Book--Entry Procedures and
Transfers."
- the capital securities held in certificated form, the property
trustee will irrevocably deposit with the paying agent funds
sufficient to pay the applicable redemption price and will
give the paying agent irrevocable instructions and authority
to pay the applicable redemption price to the holders upon
surrender of their certificates evidencing the capital
securities. For more information, you should refer to " --
Payment and Paying Agency."
The paying agent will initially be the property trustee and any
co-paying agent chosen by the property trustee and acceptable to the
administrative trustees and us.
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Notwithstanding the foregoing, distributions payable on or before the
redemption date will be payable to the holders of the capital securities on the
relevant record dates for the related distribution dates. If the Trust gives a
notice of redemption and funds are deposited as required, then upon the date of
the deposit, all rights of the holders of the capital securities called for
redemption will cease, except the right of the holders of the capital securities
to receive the applicable redemption price, without interest, and the capital
securities called to be redeemed will cease to be outstanding.
If any redemption date for the capital securities is not a business
day, then the applicable redemption price, without interest or any other payment
in respect of the delay, will be paid on the next business day, except that, if
the next business day falls in the next calendar year, the payment shall be made
on the last business day of the calendar year. If payment of the applicable
redemption price is improperly withheld or refused and not paid either by the
Trust or by us pursuant to the guarantee:
- distributions on the capital securities will continue to
accumulate at the rate of 9.875% per year, from the redemption
date originally established by the Trust to the date such
applicable redemption price is actually paid; and
- the actual payment date will be the redemption date for
purposes of calculating the applicable redemption price.
Notice of any redemption will be mailed between 30 and 60 days before
the redemption date to each holder of capital securities at its registered
address. Unless we default in payment of the applicable redemption price on, or
in the repayment of, the junior subordinated debentures, on and after the
redemption date, distributions will cease to accrue on the capital securities
called for redemption.
Subject to applicable law, including, without limitation, U.S. federal
securities laws, we or our subsidiaries may at any time, and from time to time,
purchase outstanding capital securities in the open market or by private
agreement.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the capital
securities and the common securities, as applicable, will generally be made on a
pro rata basis. However, if a debenture event of default exists on any
distribution or redemption date, no payment of any distribution on, or
applicable redemption price of, any of the common securities, and no other
payment on account of the redemption, liquidation or other acquisition of the
common securities, will be made unless payment in full in cash of all
accumulated and unpaid distributions on all of the outstanding capital
securities for all distribution periods terminating on or before the
distribution or redemption date, or payment of the applicable redemption price
is made in full. All funds available to the property trustee will first be
applied to the payment in full in cash of all distributions on, or redemption
price of, the capital securities then due and payable.
In the case of any event of default, we, as holder of all of the common
securities, will be deemed to have waived any right to act with respect to the
event of default until the effect of the event of default has been cured, waived
or otherwise eliminated. Until any event of default has been cured, waived or
otherwise eliminated, the property trustee will act solely on behalf of the
holders of the capital securities and not on our behalf, and only the holders of
the capital securities will have the right to direct the property trustee to act
on their behalf.
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EVENTS OF DEFAULT; NOTICE
An event of default under the indenture constitutes an event of default
under the trust agreement. See "Description of Junior Subordinated Debentures --
Debenture Events of Default."
The trust agreement provides that within ten (10) business days after a
responsible officer of the property trustee has actual knowledge of the
occurrence of any event of default, the property trustee will give notice of the
event of default to the holders of the capital securities, the administrative
trustees and to us, as sponsor, unless the event of default has been cured or
waived. We, as sponsor, and the administrative trustees are required to file
annually with the property trustee a certificate as to whether we and the
administrative trustees have complied with the applicable conditions and
covenants of the trust agreement.
If a debenture event of default exists, the capital securities will
have a preference over the common securities as described under " -- Liquidation
of the Trust and Distribution of Junior Subordinated Debentures" and " --
Subordination of Common Securities." An event of default does not entitle the
holders of capital securities to accelerate the maturity date of the capital
securities.
REMOVAL OF ISSUER TRUSTEES
Unless a debenture event of default exists, we may remove the property
trustee and the Delaware trustee at any time. If a debenture event of default
exists, the property trustee and the Delaware trustee may be removed only 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, because
these voting rights are vested exclusively in us as the holder of all of the
common securities. No resignation or removal of the property trustee or the
Delaware trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the trust agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
If an issuer trustee that is not a natural person is merged, converted
or consolidated into another entity, or such issuer trustee is a party to a
merger, conversion or consolidation which results in a new entity, or an entity
succeeds to all or substantially all of the corporate trust business of such
issuer trustee, the new entity shall be the successor of such issuer trustee
under the trust agreement, provided that the entity is otherwise qualified and
eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease substantially all of its properties
and assets to any corporation or other entity, except as described below or as
otherwise described under " -- Liquidation of the Trust and Distribution of
Junior Subordinated Debentures." The Trust may, at our request, as sponsor, and
with the consent of the administrative trustees but without the consent of the
holders of the capital securities, merge with or into, consolidate, amalgamate
or be replaced by or convey, transfer or lease substantially all of its
properties and assets to a trust organized as such under the laws of any state;
provided, that:
- the successor either:
(a) expressly assumes all of the obligations of the Trust with
respect to the capital securities; or
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<PAGE> 46
(b) substitutes securities for the capital securities that
have substantially the same terms as the capital
securities so long as the substitute securities rank equal
to same as the capital securities in priority with respect
to distributions and payments upon liquidation, redemption
and otherwise;
- we appoint a trustee of the successor possessing the same
powers and duties as the property trustee with respect to the
junior subordinated debentures;
- the substitute securities are listed, or any substitute
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;
- if the capital securities, substitute securities or junior
subordinated debentures are rated by any nationally recognized
statistical rating organization prior to such transaction, the
transaction does not cause any of those securities to be
downgraded by the rating organization;
- the transaction does not adversely affect the rights,
preferences and privileges of the holders of the capital
securities (including any successor securities) in any
material respect;
- the successor has a purpose substantially identical to that of
the Trust;
- prior to the transaction, we received an opinion from
independent counsel to the Trust experienced in such matters
to the effect that:
(a) the transaction 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);
(b) following the transaction, neither the Trust nor the
successor will be required to register as an investment
company under the Investment Company Act;
(c) continue to be classified as a grantor trust; and
- we, or any permitted successor or assignee owns all of the
common securities of the successor and guarantees the
obligations of the successor under the substituted securities
at least to the extent provided by the guarantee and the
common securities guarantee.
Notwithstanding the foregoing, the Trust may not, except with the
consent of holders of 100% in liquidation amount of the capital securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if the transaction would cause the
Trust or the successor not to be classified as a grantor trust.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under " -- Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "Description of Guarantee --
Amendments and Assignment" and as otherwise required by law and the trust
agreement, the holders of the capital securities will have no voting rights.
We, together with the property trustee and the administrative trustees,
may amend the trust agreement from time to time, without the consent of the
holders of the capital securities:
(1) to cure any ambiguity, correct or supplement any provisions in the
trust agreement that may be inconsistent with any other provision, or to make
any other provisions with respect to matters or questions arising under the
trust agreement, which are not inconsistent with the other provisions of the
trust agreement; or
(2) to modify, eliminate or add to any provisions of the trust
agreement as is necessary to ensure that at all times that any capital
securities are outstanding, the Trust will not be classified as an association
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<PAGE> 47
taxable as a corporation or to enable the Trust to qualify as a grantor trust,
in each case for U.S. federal income tax purposes, or to ensure that the Trust
will not be required to register as an investment company under the Investment
Company Act;
(3) to modify, eliminate or add any provisions of the trust agreement
as is necessary to enable us or the Trust to conduct an exchange offer in the
manner contemplated by the registration rights agreement;
provided, however, that in the case of clause (1) and (3) the amendment would
not adversely affect in any material respect the interests of the holders of the
capital securities. Any amendments of the trust agreement pursuant to the
foregoing shall become effective when notice of the amendment is given to the
holders of the capital securities.
We, together with the trustees, may amend the trust agreement:
- with the consent of holders representing a majority (based
upon liquidation amount) of the outstanding capital
securities; and
- upon receipt by the trustees of an opinion of counsel
experienced in such matters to the effect that the amendment
or the exercise of any power granted to the trustees in
accordance with the amendment will not affect the Trust's
classification as an entity that is not taxable as a
corporation or as being a grantor trust for U.S. 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 capital securities, no
amendment may change the amount or timing of any distribution on the capital
securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the capital securities as of a specified date; or
restrict the right of a holder of capital securities to sue for the enforcement
of any payment on or after the specified date.
So long as the property trustee holds any junior subordinated
debentures, the trustees may not:
- direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee, or execute
any trust or power conferred on the debenture trustee with
respect to the junior subordinated debentures;
- waive certain past defaults under the indenture;
- exercise any right to rescind or annul a declaration
accelerating the maturity of the principal of the junior
subordinated debentures; or
- consent to any amendment, modification or termination of the
indenture or the junior subordinated debentures, where such
consent shall be required,
without, in each case, obtaining the prior consent 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 by the amendment, modification
or termination, the property trustee will not give consent without the prior
approval of each holder of the capital securities.
The trustees will 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 it receives with respect to the
junior subordinated debentures. In addition to obtaining the approvals of the
holders of the capital securities, prior to taking any of the foregoing actions,
the trustees shall obtain an opinion of counsel experienced in such matters to
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<PAGE> 48
the effect that the Trust will not be classified as an association taxable as a
corporation for U.S. federal income tax purposes on account of such action.
Any required approval of holders of capital securities may be given at
a meeting of the holders convened for the purpose of approving the matter or
pursuant to written consent. The property trustee will cause a notice of any
meeting at which holders of capital securities are entitled to vote, or of any
matter upon which action by written consent of such holders has been taken, to
be given to each holder of record of capital securities in accordance with the
trust agreement.
No vote or consent of the holders of capital securities will be
required for the Trust to redeem and cancel the capital securities in accordance
with the trust agreement.
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 us, the trustees or any of our or any
trustee's affiliates, shall, for purposes of such vote or consent, be treated as
if they were not outstanding.
PAYMENT AND PAYING AGENCY
The Trust will make payments on the capital securities that are held in
global form to DTC, which will credit the relevant accounts at DTC on the
applicable distribution dates. The Trust will make payments on the capital
securities that are not held by DTC by mailing a check to the address of the
holder entitled to the payment as the holder's address appears on the register.
The paying agent will initially be the property trustee and any co-paying agent
chosen by the property trustee and acceptable to the administrative trustees and
us. The paying agent will be permitted to resign as paying agent upon 30 days'
notice to the property trustee, the administrative trustees and us. In the event
that the property trustee is no longer the paying agent, the administrative
trustees will appoint a successor (which must be a bank or trust company
acceptable to the administrative trustees and us) to act as paying agent.
RESTRICTIONS ON TRANSFER
The original capital securities were issued, and may be transferred,
only in blocks having a liquidation amount of not less than $100,000 (100
capital securities) and multiples of $1,000 in excess thereof. Any attempted
sale, transfer or other disposition of capital securities in a block having a
liquidation amount of less than $100,000 will be deemed to be void and of no
legal effect whatsoever. Any such purported transferee will be deemed not to be
the holder of such capital securities for any purpose, including but not limited
to the receipt of distributions on such capital securities, and such purported
transferee will be deemed to have no interest whatsoever in such capital
securities.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the
capital securities.
The Trust will register transfers of the capital securities without
charge, except for any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. The Trust will not be required to have
the transfer of the capital securities registered after they have been called
for redemption.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
Except if an event of default exists, the property trustee will
undertake to perform only the duties specifically set forth in the trust
agreement. After an event of default, the property trustee must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the property
trustee is not obligated to exercise any of the powers vested in it by the trust
agreement at the request of any holder of capital securities, unless it is
offered reasonable indemnity against the costs, expenses and liabilities that it
might incur. If no event of default exists and the property trustee is required
to decide between alternative causes of action, construe ambiguous provisions in
the trust agreement or is unsure of the application of any provision of the
trust agreement, and the matter is not one on which holders of the capital
securities or the common securities are entitled under the trust agreement to
vote, then the property trustee shall take such action as directed by us and, if
not directed, shall take such action as it deems advisable and in the best
interests of the holders of the capital 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 so that:
- the Trust will not be deemed to be an investment company
required to be registered under the Investment Company Act;
- the Trust will be classified as a grantor trust for U.S.
federal income tax purposes; and
- the junior subordinated debentures will be treated as our
indebtedness for U.S. federal income tax purposes.
We, together with the administrative trustees, are authorized to take
any action, not inconsistent with applicable law, the certificate of trust of
the Trust or the trust agreement, that we and the administrative trustees
determine in our discretion is necessary or desirable, as long as it does not
materially adversely affect the interests of the holders of the capital
securities.
The trust agreement provides that holders of the capital securities
have no preemptive or similar rights to subscribe for any additional capital
securities and the issuance of capital securities is not subject to preemptive
rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
GOVERNING LAW
The trust agreement and capital securities will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflict of law principles.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
This summary describes the material provisions of the junior
subordinated debentures. It is not complete and is subject to, and qualified in
its entirety by, the indenture. The indenture will not be qualified under the
Trust Indenture Act, except upon effectiveness of the exchange offer
registration statement or the shelf registration statement. However, by its
terms, the indenture will incorporate by reference certain provisions of the
Trust Indenture Act and upon consummation of the exchange offer or effectiveness
of the shelf registration statement, the indenture will be governed by and
subject to the Trust Indenture Act. We have incorporated the definitions used in
the indenture in this prospectus. You can obtain a copy of the indenture by
requesting it from BancFirst Ohio. Wilmington Trust Company will act as
debenture trustee under the indenture.
GENERAL
The Trust has invested the proceeds from the sale of the original
capital securities in the junior subordinated debentures issued by BancFirst
Ohio. The junior subordinated debentures bear interest at the annual rate of
9.875% of the principal amount of the junior subordinated debentures, payable
semi- annually in arrears on interest payment dates of April 15 and October 15
of each year and at maturity to the person in whose name each junior
subordinated debenture is registered at the close of business on the relevant
record date. The first interest payment date for the junior subordinated
debentures will be April 15, 2000. The period beginning on October 18, 1999 and
ending on but excluding April 15, 2000 and each period beginning on and
including an interest payment date and ending on but excluding the next interest
payment date is an interest period.
We anticipate that, until the liquidation, if any, of the Trust, each
junior subordinated debenture will be held by the property trustee in trust for
the benefit of the holders of the capital securities. The amount of interest
payable for any interest period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any interest payment date would
otherwise fall on a day that is not a business day, the interest payment date
will be postponed to the next business day (without any interest or other
payment due to the delay), unless it would fall in the next calendar year, in
which case the interest payment date shall be the last business day of the
calendar year.
Accrued interest that is not paid on the applicable interest payment
date will bear additional interest (to the extent permitted by law) at the rate
of 9.875% per year, compounded semi-annually from the relevant interest payment
date. The term "interest" as used in this prospectus includes semi-annual
interest payments and interest on semi-annual interest payments not paid on the
applicable interest payment date.
Notwithstanding anything to the contrary above, if the maturity date
falls on a day that is not a business day, the payment of principal and interest
will be paid on the next business day, with the same force and effect as if made
on the maturity date, and no interest on such payments will accrue from and
after the maturity date.
The junior subordinated debentures were issued as a series of junior
subordinated deferrable interest debentures under the indenture.
The junior subordinated debentures will mature on October 15, 2029.
The junior subordinated debentures rank equal to all of our other
subordinated debentures which have been or may be issued to other trusts
established by us, in each case similar to the Trust, and are
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unsecured and rank subordinate and junior to all indebtedness for money that we
borrow to the extent and in the manner set forth in the indenture. See "--
Subordination."
We are a bank holding company regulated by the Federal Reserve Board,
and substantially all of our operating assets are owned by First National. We
are a legal entity separate and distinct from our subsidiaries. Holders of
junior subordinated debentures should look only to us for payments on the junior
subordinated debentures. The principal sources of our income are dividends,
interest and fees from First National. We rely primarily on dividends from First
National to meet our obligations for payment of principal and interest on our
outstanding debt obligations and corporate expenses. Dividend payments from
First National are subject to regulatory limitations, generally based on current
and retained earnings, imposed by the various regulatory agencies with authority
over First National. Under the Federal Deposit Insurance Act, an insured
depositary institution such as First National is prohibited from making capital
distributions, including the payment of dividends, if, after making such
distribution, the institution would become "undercapitalized" (as such term is
used in the statute). Based on First National's current financial condition, we
do not expect that this provision will have any impact on our ability to obtain
dividends from First National. At December 31, 1999, approximately $2.0 million
of retained earnings of First National were available for dividend declaration
without prior regulatory approval.
Payment of dividends by First National is also subject to First
National's profitability, financial condition and capital expenditures and other
cash flow requirements. The Federal Reserve Board has stated that, as a matter
of prudent banking, a bank or bank holding company should not maintain its
existing rate of cash dividends on common stock unless:
- the organization's net income available to common shareholders
over the past year has been sufficient to fund fully the
dividends, and
- the prospective rate of earnings retention appears consistent
with the organization's capital needs, asset quality, and
overall financial condition.
We cannot assure you that First National will be able to pay dividends at past
levels, or at all, in the future.
In addition to restrictions on the payment of dividends, First National
is subject to certain restrictions imposed by federal law on any extensions of
credit to, and certain other transactions with, us and certain other affiliates,
and on investments in stock or other securities thereof. Such restrictions
prevent us and such other affiliates from borrowing from First National unless
the loans are secured by various types of collateral. Furthermore, such secured
loans, other transactions and investments by First National are generally
limited in amount as to us and as to each of such other affiliates to 10% of the
First National's capital and surplus and as to us and all of such other
affiliates to an aggregate of 20% of the First National's capital and surplus.
As of September 30, 1999, approximately $8.4 million of credit was available to
us under this limitation, if adequate collateral would have been available to
secure such borrowings.
Because we are a holding company, our right to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the capital
securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary (including depositors, in the case
of First National), except to the extent that we may be recognized as a creditor
of that subsidiary. At December 31, 1999, our subsidiaries had total
liabilities, including deposits, of $1.2 billion. Accordingly, the junior
subordinated debentures are effectively subordinated to all existing and future
liabilities of our subsidiaries (including First National's deposit liabilities)
and all liabilities of any of our future subsidiaries. The indenture does not
limit the incurrence or issuance of other secured or unsecured debt by us or any
subsidiary, including senior indebtedness. See " -- Subordination."
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FORM, REGISTRATION AND TRANSFER
If the junior subordinated debentures are distributed to the holders of
the capital securities, the 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
capital securities.
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and interest on the
junior subordinated debentures will be made at the office of the debenture
trustee in Wilmington, Delaware or at the office of such paying agent or paying
agents as we may designate from time to time, except that, at our option,
payment of any interest may be made, except in the case of junior subordinated
debentures in global form:
- by check mailed to the address of the person or entity
entitled to the interest payment as such address shall appear
in the register for the junior subordinated debentures; or
- by transfer to an account maintained by the person or entity
entitled to the interest payment as specified in the register,
provided that proper transfer instructions have been received
by the relevant record date.
Payment of any interest on any junior subordinated debenture will be
made to the person or entity in whose name the junior subordinated debenture is
registered at the close of business on the record date for the interest payment
date, except in the case of defaulted interest. We may at any time designate
additional paying agents or rescind the designation of any paying agent; however
we will always be required to maintain a paying agent in each place of payment
for the junior subordinated debentures.
Any moneys deposited with the debenture trustee or any paying agent, or
then held by us, in trust for the payment of the principal of (or premium, if
any) or interest on any junior subordinated debenture and remaining unclaimed
for two years after such principal (or premium, if any) or interest has become
due and payable shall, at our request, be repaid to us and the holder of the
junior subordinated debenture shall thereafter look, as a general unsecured
creditor, only to us for payment.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no debenture event of default exists, we will have the right
under the indenture to defer the payment of interest on the junior subordinated
debentures, at any time and from time to time, for no more than 10 consecutive
semi-annual periods for each deferral period, provided that no deferral period
shall end on a date other than an interest payment date or extend beyond October
15, 2029. At the end of a deferral period, we must pay all interest then accrued
and unpaid (together with interest thereon at the rate of 9.875% per year,
compounded semi-annually from the relevant interest payment date, to the extent
permitted by applicable law). During a deferral period, interest will continue
to accrue, and holders of the capital securities or, if the junior subordinated
debentures have been distributed to holders of the capital securities, holders
of junior subordinated debentures, will be required to include that deferred
interest in gross income for U.S. federal income tax purposes on an accrual
method of accounting prescribed by the Code and Treasury regulation provisions
on original issue discount prior to the receipt of cash attributable to that
income. See "Certain Federal IncomeTax Consequences -- Original Issue Discount."
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During any such deferral period, we may not:
- declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect
to, any of our capital stock;
- make any payment of principal of, or interest or premium, if
any, on or repay, repurchase or redeem any of our debt
securities that rank equal to or junior to the junior
subordinated debentures; or
- make any guarantee payments with respect to any guarantee by
us of the debt securities of any of our subsidiaries
(including our guarantee of the capital securities of the
Trust and any other guarantees) if such guarantee ranks equal
or junior to the junior subordinated debentures other than:
- dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase
shares of, our common stock;
- 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 rights
pursuant thereto;
- payments under the guarantee;
- as a result of a reclassification of our capital
stock or the exchange or conversion of one class or
series of our capital stock for another class or
series of our capital stock;
- the purchase of fractional interests in shares of our
capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security
being converted or exchanged; and
- purchases of our common stock related to the issuance
of common stock or rights under any of our benefit
plans for our directors, officers or employees or any
of our dividend reinvestment plans.
We do not currently intend to exercise our option to defer payments of
interest on the junior subordinated debentures.
Before the end of any deferral period, we may extend the deferral
period, as long as no event of default exists and the extension does not cause
the deferral period to exceed 10 consecutive semi-annual periods, to end on a
date other than an interest payment date or to extend beyond October 15, 2029.
At the end of any deferral period and upon the payment of all then accrued and
unpaid interest (together with interest thereon at the rate of 9.875% per year,
compounded semi-annually, to the extent permitted by applicable law), we may
elect to begin a new deferral period, subject to the requirements set forth
herein. No interest will be due and payable during a deferral period until the
deferral period ends. We must give the property trustee, the administrative
trustees and the debenture trustee notice of our election at least five business
days before the earlier of:
- the date the distributions on the capital securities would
have been payable, except for the election to begin or extend
such deferral period;
- the date the administrative trustees are required to give
notice to any securities exchange or automated quotation
system on which the capital securities are listed or quoted or
to holders of capital securities of the record date for such
distributions; or
- the date such distributions are payable, but at least five
business days prior to the record date.
The debenture trustee will notify holders of the capital securities of
our election to begin or extend a new deferral period.
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There is no limit on the number of times that we may elect to begin a
deferral period.
OPTIONAL PREPAYMENT
The junior subordinated debentures will be prepayable, in whole or in
part, at our option on or after October 15, 2009, subject to our receipt of any
required regulatory approval, at an optional prepayment price equal to the
percentage of the outstanding principal amount of the junior subordinated
debentures specified below, plus, in each case, accrued and unpaid interest on
the junior subordinated debentures, if any, to the date of prepayment if
redeemed during the 12-month period beginning October 15 of the years indicated
below:
YEAR PERCENTAGE
2009...................................................................104.938%
2010...................................................................104.444%
2011...................................................................103.950%
2012...................................................................103.457%
2013...................................................................102.963%
2014...................................................................102.469%
2015...................................................................101.975%
2016...................................................................101.481%
2017...................................................................100.988%
2018...................................................................100.494%
2019 and thereafter....................................................100.000%
SPECIAL EVENT PREPAYMENT
If there are changes in the bank regulatory, investment company or tax
laws that adversely affect the status of the Trust, the capital securities or
the junior subordinated debentures, we may, at our option and at any time,
subject to our receipt of any required regulatory approval, prepay the junior
subordinated debentures, in whole but not in part, at any time within 90 days of
the change in the law, at the special event prepayment price. If we exercise our
option to prepay the junior subordinated debentures under these circumstances,
then the proceeds of that prepayment must be applied to redeem the capital
securities at a prepayment price equal to 100% of the principal amount of the
junior subordinated debentures so prepaid, plus, in each case, accrued and
unpaid interest on the junior subordinated debentures, if any, to the date of
prepayment. See "Description of Capital Securities -- Redemption." The special
event prepayment price will be an amount equal to the greater of:
- 100% of the principal amount of the junior subordinated
debentures, or
- the sum, as determined by a quotation agent of the present
values of the remaining scheduled payments of principal and
interest on the junior subordinated debentures from the
prepayment date to the maturity date, 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 the case of each of the above scenarios, accrued and unpaid interest
and liquidated damages, if any, to the date of prepayment.
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A change in the bank regulatory law means our receipt of an opinion of
independent bank regulatory counsel experienced in such matters to the effect
that, as a result of:
- any amendment to, or change (including any announced
prospective change) in, any laws or regulations of the United
States or any rules, guidelines or policies of an applicable
regulatory agency or authority; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, the
capital securities do not constitute, or within 90 days of the opinion will not
constitute, Tier 1 Capital (or its then equivalent if we were subject to such
capital requirement).
A change in the investment company law means the receipt by us and the
Trust of an opinion of independent securities counsel experienced in such
matters to the effect that, as a result of:
- any amendment to, or change (including any announced
prospective change) in, any laws or regulations of the United
States or any rules, guidelines or policies of any applicable
regulatory agency or authority; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, the
Trust is, or within 90 days of the date of the opinion will be, considered an
investment company that is required to be registered under the Investment
Company Act.
A change in tax law means the receipt by us and the Trust of an opinion
of independent 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, any laws or regulations of the United
States or any political subdivision or taxing authority
thereof or therein; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, there is
more than an insubstantial risk that:
- the Trust is, or will be within 90 days of the date of such
opinion, subject to U.S. federal income tax with respect to
any income received or accrued on the junior subordinated
debentures;
- interest payable by us on the junior subordinated debentures
is not, or within 90 days of the date of such opinion will not
be, deductible by us, in whole or in part, for U.S. federal
income tax purposes; or
- 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.
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Adjusted treasury rate means, with respect to a prepayment date, the
rate per annum equal to:
- the yield, under the heading which represents the average for
the immediately prior week, appearing in the most recently
published statistical release designed "H.15 (519)" or any
successor publication which is published weekly by the Federal
Reserve Board and which established yields on actively traded
United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for
the maturity corresponding to the remaining life, as defined
below (if no maturity is within three months before or three
months after the maturity corresponding to the remaining life,
yields for the two published maturities most closely
corresponding to the remaining life shall be determined, and
the adjusted treasury rate shall be interpolated or
extrapolated from such yields on a straight-line basis,
rounding to the nearest month), or
- 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 to the comparable
treasury issue, calculated using 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: 299 basis points.
Comparable treasury issue means the United States Treasury security
selected by the quotation agent (defined below) giving a maturity comparable to
the remaining life of the junior subordinated debentures that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining life. If no United States Treasury security has a maturity which is
within a period from three months before to three months after the remaining
life, the two most closely corresponding United States Treasury securities, as
selected by the quotation agent, shall be used as the comparable treasury issue,
and the adjusted treasury rate shall be interpolated or extrapolated on a
straight-line basis, rounding to the nearest month, using such securities.
Comparable treasury price means, with respect to a prepayment date:
- the average of three reference treasury dealer quotations for
such prepayment date, after excluding the highest and lowest
such reference treasury dealer quotations, or
- if the quotation agent obtains fewer than five such reference
treasury dealer quotations, the average of all such
quotations.
Quotation agent means the reference treasury dealer appointed by us.
Reference treasury dealer means a nationally recognized U.S. Government
securities dealer in New York, New York selected by us.
Reference treasury dealer quotations means, with respect to each
reference treasury dealer and the 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 time, on the third business day preceding such prepayment date.
Remaining life means the term of the junior subordinated debentures
from the prepayment date to the maturity date.
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We will mail any notice of prepayment between 30 and 60 days before the
prepayment date to each holder of junior subordinated debentures to be prepaid
at its registered address. Unless we default in payment of the prepayment price,
on the prepayment date interest shall cease to accrue on the 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 change in the tax law, we will pay as
additional amounts on the junior subordinated debentures any amounts as may be
necessary in order that the amount of distributions then due and payable by the
Trust on the outstanding capital securities shall not be reduced as a result of
any additional sums, including taxes, duties or other governmental charges to
which the Trust has become subject as a result of a change in the tax law.
CERTAIN COVENANTS OF BANCFIRST OHIO
We covenant that we will not:
(1) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of our
capital stock;
(2) make any payment of principal of, or interest or premium, if any,
on or repay, repurchase or redeem any of our debt securities that rank equal or
junior to the junior subordinated debentures; or
(3) make any guarantee payments with respect to any of our guarantees
of the debt securities of any of our subsidiaries if such guarantee ranks equal
or junior to the junior subordinated debentures, other than:
- dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase
shares of, our common stock;
- any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the
issuance of common stock under any such plan in the
future, or the redemption or repurchase of any such
rights pursuant thereto;
- payments under the guarantee;
- as a result of a reclassification of our common stock
or the exchange or conversion of one class or series
of our common stock for another class or series of
our common stock;
- the purchase of fractional interests in shares of our
common stock pursuant to the conversion or exchange
provisions of such common stock or the security being
converted or exchanged; and
- purchases of our common stock related to the issuance
of common stock or rights under any of our benefit
plans for its directors, officers or employees or any
of our dividend reinvestment plans,
if at such time:
- we have actual knowledge that there is any event that is, or
with the giving of notice or the lapse of time, or both, would
be, a debenture event of default and that we have not taken
reasonable steps to cure;
- we are in default with respect to our payment of any
obligations under the guarantee; or
- we have given notice of our election to exercise our right to
defer interest payments on the junior subordinated debentures
as provided in the indenture and the deferral period, or any
extension of the deferral period, is continuing.
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So long as the capital securities remain outstanding, we also will
covenant:
- to directly or indirectly maintain 100% direct or indirect
ownership of the common securities; provided, however, that
any of our permitted successors under the indenture may
succeed to our ownership of the common securities;
- to use commercially reasonable efforts to cause the Trust to
remain a business trust, except in connection with the
distribution of junior subordinated debentures to the holders
of capital securities in liquidation of the Trust, the
redemption of all of the capital securities, or certain
mergers, consolidations or amalgamations, each as permitted by
the trust agreement;
- to use commercially reasonable efforts to cause the Trust to
otherwise continue not to be classified as an association
taxable as a corporation and to be classified as a grantor
trust for U.S. federal income tax purposes;
- to use commercially reasonable efforts to cause each holder of
capital securities to be treated as owning an undivided
beneficial interest in the junior subordinated debentures; and
- to not cause, as sponsor of the Trust, or permit, as holder of
the common securities, the dissolution, winding-up or
liquidation of the Trust, except as provided in the trust
agreement.
MODIFICATION OF INDENTURE
From time to time, we, together with the debenture trustee, may,
without the consent of the holders of junior subordinated debentures, amend the
indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies and to enable us and the Trust to
conduct and exchange offer as contemplated by the registration rights agreement,
provided that any amendment in the indenture 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 permits us and the debenture trustee, with the consent of
the holders of a majority in aggregate principal amount of junior subordinated
debentures, to modify the indenture in a manner affecting the rights of the
holders of the junior subordinated debentures; provided that no modification
may, without the consent of the holders of each outstanding subordinated
debenture affected:
- change the stated maturity date, or reduce the principal
amount, of the junior subordinated debentures;
- reduce the amount payable on prepayment or reduce the rate or
extend the time of payment of interest, except pursuant to our
right under the indenture to defer the payment of interest.
Please refer to " -- Option to Extend Interest Payment Date";
- make the principal of, (or premium, if any) or interest on,
the junior subordinated debentures payable in any coin or
currency other than that provided in the junior subordinated
debentures;
- impair or affect the right of any holder of junior
subordinated debentures to institute suit for the payment
thereof; or
- reduce the percentage of the principal amount of the junior
subordinated debentures, the holders of which are required to
consent to any such modification.
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DEBENTURE EVENTS OF DEFAULT
A "debenture event of default" is:
- our failure for 30 days to pay any interest (including
compounded interest and additional sums, if any), or
liquidated damages, if any, on the junior subordinated
debentures or any other debentures when due (subject to the
deferral of any interest due date in the case of a deferral
period with respect to the junior subordinated debentures or
other debentures as the case may be);
- our failure to pay any principal or premium, if any, on the
junior subordinated debentures or any other debentures when
due whether at maturity, upon prepayment, by accelerating the
maturity or otherwise;
- our failure to observe or perform, in any material respect,
any other covenant contained in the indenture for 90 days
after written notice to us from the debenture trustee or to us
and the debenture trustee from the holders of at least 25% in
aggregate outstanding principal amount of junior subordinated
debentures; or
- certain events related to our bankruptcy, insolvency or
reorganization.
The holders of a majority in aggregate outstanding principal amount of
the junior subordinated debentures have, subject to certain exceptions, the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the debenture trustee. 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
this 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 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 (including additional
sums and compounded interest, if any), or liquidated damages, if any, (unless
such default has been cured and a sum sufficient to pay all matured installments
of interest and principal (and premium, if any) 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 that we file with the debenture trustee a
certificate annually as to the absence of defaults specified 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 if the debenture trustee considers it in the interest of the holders
to do so.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a debenture event of default exists that is attributable to our
failure to pay the principal of (or premium, if any) or interest (including
compounded interest and additional sums, if any), or liquidated damages, if any,
on the junior subordinated debentures on the due date, a holder of capital
securities may institute a direct action. We may not amend the indenture to
remove this right to bring a direct action
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without the prior written consent of the holders of all of the capital
securities. Notwithstanding any payments that we make to a holder of capital
securities in connection with a direct action, we shall remain obligated to pay
the principal of (or premium, if any) or interest (including compounded interest
and additional sums, if any) on the junior subordinated debentures, and we shall
be subrogated to the rights of the holder of the capital securities with respect
to payments on the capital securities to the extent that we make any payments to
a holder in any direct action.
The holders of the capital securities will not be able to exercise
directly any remedies, other than those described in the above paragraph,
available to the holders of the junior subordinated debentures, unless an event
of default exists under the trust agreement. See "Description of Capital
Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The indenture provides that we will not consolidate with or merge into
any other person or convey, transfer or lease all or substantially all of our
properties to any person, and no person shall consolidate with or merge into us
or convey, transfer or lease all or substantially all of its properties to us,
unless:
- in case we consolidate with or merge into another person or
convey or transfer all or substantially all of our properties
to any person, the successor is organized under the laws of
the United States or any state or the District of Columbia,
and the successor expressly assumes our obligations under the
indenture with respect to the junior subordinated debentures;
- immediately after giving effect to the transaction, no
debenture event of default, and no event which, after notice
or lapse of time or both, would become a debenture event of
default, exists; and
- 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 that we may become involved in that may adversely affect
holders of the junior subordinated debentures.
SATISFACTION AND DISCHARGE
The indenture provides that when, among other things,
- all junior subordinated debentures not previously delivered to
the debenture trustee for cancellation have become due and
payable or will become due and payable at maturity or called
for prepayment within one year, and
- we deposit or cause to be deposited with the debenture trustee
funds, in trust, for the purpose and in an amount sufficient
to pay and discharge the entire indebtedness on the junior
subordinated debentures not previously delivered to the
debenture trustee for cancellation, for the principal (and
premium, if any) and interest (including compounded interest
and additional sums, if any) to the date of the prepayment or
to October 15, 2029, as the case may be,
then the indenture will cease to be of further effect (except as to our
obligations to pay all other sums due pursuant to the indenture and to provide
the officers' certificates and opinions of counsel), and we will be deemed to
have satisfied and discharged the indenture.
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SUBORDINATION
We have promised that any of our junior subordinated debentures issued
under the indenture will be ranked junior to all of our senior indebtedness to
the extent provided in the indenture. Upon any payment or distribution of our
assets to creditors upon our liquidation, dissolution, winding up,
reorganization, assignment for the benefit of our creditors, marshaling of our
assets or any bankruptcy, insolvency, debt restructuring or similar proceedings
in connection with any insolvency or bankruptcy proceeding of us, the senior
indebtedness must be paid in full all allocable amounts (as defined below)
before the holders of the junior subordinated debentures will be entitled to
receive or retain any payment in respect thereof.
If the maturity of junior subordinated debentures is accelerated, the
holders of all senior indebtedness outstanding at such time will first be
entitled to receive payment in full of such senior indebtedness before the
holders of junior subordinated debentures will be entitled to receive or retain
any payment in respect of the principal of (or premium, if any) or interest, if
any, on 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
is:
- a default in any payment with respect to senior indebtedness;
- an event of default exists with respect to any senior
indebtedness that accelerates the maturity of the senior
indebtedness;
- or if any judicial proceeding shall be pending with respect to
the default.
This restriction does not apply if the total amount outstanding for such senior
indebtedness in default is less than $100,000; provided, the default does not
relate to the indebtedness under the loan agreement we currently have
outstanding with LaSalle National Bank.
Allocable amounts, when used with respect to any senior indebtedness,
means all amounts due or to become due on such senior indebtedness less, if
applicable, any amount which would have been paid to, and retained by, the
holders of such senior indebtedness (whether as a result of the receipt of
payments by the holders of such senior indebtedness from us or any other obligor
thereon or from any holders of, or trustee in respect of, other indebtedness
that is subordinate and junior in right of payment to such senior indebtedness
pursuant to any provision of such indebtedness for the payment over of amounts
received on account of such indebtedness to the holders of such senior
indebtedness or otherwise) but for the fact that such senior indebtedness is
subordinate or junior in right of payment to (or subject to a requirement that
amounts received on such senior indebtedness be paid over to obligees on) trade
accounts payable or accrued liabilities arising in the ordinary course of
business.
Indebtedness for money borrowed means any obligation of or any
obligation guaranteed by us, to repay borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments; except that
indebtedness for money borrowed does not include trade accounts payable or
accrued liabilities arising in the ordinary course of business.
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Indebtedness ranking on a parity with the junior subordinated debentures means:
- indebtedness for money borrowed, whether outstanding on the
date the indenture is executed or created, assumed or incurred
after the date that the indenture is executed, to the extent
the indebtedness for money borrowed by its terms ranks equal
to and not prior to the subordinated debentures in the right
of payment upon the happening of our dissolution, winding-up,
liquidation or reorganization; and
- all other debt securities, and guarantees in respect of those
debt securities, issued to any trust other than the Trust, or
a trustee of the trust, partnership or other entity affiliated
with us, that is our financing vehicle (a "financing entity"),
in connection with the issuance by the financing entity of
equity securities or other securities guaranteed by us
pursuant to an instrument that ranks equal to, with or junior
to the guarantee. The securing of any indebtedness otherwise
constituting indebtedness ranking on a parity with the
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 means
any indebtedness for money borrowed, whether outstanding on the date the
indenture is executed or created, assumed or incurred after the date the
indenture is executed, to the extent the indebtedness for money borrowed by its
terms ranks junior to and not equal to 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 our
dissolution or winding-up or liquidation or reorganization. The securing of any
indebtedness for money borrowed otherwise constituting indebtedness ranking
junior to the junior subordinated debentures shall not be deemed to prevent the
indebtedness for money borrowed from constituting indebtedness ranking junior to
the junior subordinated debentures.
Senior indebtedness means all indebtedness for money borrowed, whether
outstanding on the date the indenture is executed or created, assumed or
incurred after the date the indenture is executed, 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 the senior indebtedness.
We are a bank holding company and almost all of our operating assets
are owned by First National. We rely primarily on dividends from First National
to meet our obligations for payment of principal and interest on our outstanding
debt obligations and corporate expenses. We are a legal entity separate and
distinct from its subsidiaries. Holders of junior subordinated debentures should
look only to us for payments on the junior subordinated debentures. There are
regulatory limitations on the payment of dividends directly or indirectly to us
from First National. See " -- General." In addition, First National is subject
to certain restrictions imposed by federal law on any extensions of credit to,
and certain other transactions with, us and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent us
and such other affiliates from borrowing from First National unless the loans
are secured by various types of collateral. Further, such secured loans, other
transactions and investments by First National are generally limited in amount
as to us and as to each of such other affiliates to 10% of First National's
capital and surplus and as to us and all of such other affiliates to an
aggregate of 20% of First National's capital and surplus. Accordingly, the
junior subordinated debentures will be effectively subordinated to all existing
and future liabilities of our subsidiaries.
Because we are a bank holding company, our right to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the capital
securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary (including depositors, in the case
of First National), except to the extent we may be recognized as a creditor of
that subsidiary. At December 31, 1999, our subsidiaries had total
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liabilities, including deposits, of $1.2 billion. Accordingly, the junior
subordinated debentures are effectively subordinated to all existing and future
liabilities of our subsidiaries (including First National's deposit liabilities)
and all liabilities of any of our future subsidiaries. The indenture does not
limit the incurrence or issuance of other secured or unsecured debt of us or any
subsidiary, including senior indebtedness.
RESTRICTIONS ON TRANSFER
The junior subordinated debentures were issued and may be transferred
only in blocks having an aggregate principal amount of not less than $100,000
(100 junior subordinated debentures) and multiples of $1,000 in excess thereof.
Any attempted transfer of junior subordinated debentures in a block having an
aggregate principal amount of less than $100,000 will be deemed to be void and
of no legal effect whatsoever. Any such purported transferee shall be deemed not
to be the holder of such junior subordinated debentures for any purpose,
including but not limited to the receipt of payments on such junior subordinated
debentures, and such purported transferee shall be deemed to have no interest
whatsoever in such junior subordinated debentures.
GOVERNING LAW
The indenture and the junior subordinated debentures will be governed
by and construed in accordance with the laws of the State of New York, without
regard to conflict of law principles.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
Following the exchange offer and the qualification of the indenture
under the Trust Indenture Act, the debenture trustee will 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 not obligated to exercise any of the powers vested in it by the
indenture at the request of any holder of junior subordinated debentures, unless
offered reasonable indemnity by the 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 under the indenture.
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DESCRIPTION OF GUARANTEE
We delivered a guarantee at the same time the original capital
securities were issued. A new guarantee will be executed and delivered in this
exchange offer The terms of the new guarantee are the same as the original
guarantee, except as described in this section. The guarantee will not be
qualified as an indenture under the Trust Indenture Act, except upon
effectiveness of the registration statement related to this exchange offer. This
summary of the material provisions of the guarantee is not complete and is
subject to, and qualified in its entirety by, the guarantee and the Trust
Indenture Act. The guarantee trustee will hold the guarantee for the benefit of
the holders of the capital securities. You can obtain a copy of the guarantee by
requesting it from BancFirst Ohio. Wilmington Trust Company will act as
guarantee trustee under the guarantee.
GENERAL
We irrevocably agreed to pay in full on a subordinated basis, to the
extent set forth herein, the payments with respect to the capital securities to
the extent not paid by the Trust. The payments that are subject to the guarantee
are:
- any accumulated and unpaid distributions required to be paid
on the capital securities, to the extent that the Trust has
funds legally available at that time;
- the applicable redemption price with respect to the capital
securities called for redemption, to the extent that the Trust
has funds legally available at that time; and
- upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Trust (other than in connection with the
distribution of the junior subordinated debentures to holders
of the capital securities or the redemption of all capital
securities), the lesser of (a) the liquidation distribution,
to the extent the Trust has funds legally available at that
time, and (b) the amount of assets of the Trust remaining
available for distribution to holders of capital securities
after satisfying the liabilities owed to the Trust's creditors
as required by applicable law.
The guarantee ranks subordinate and junior to all senior indebtedness
to the extent provided in the guarantee. See "--Status of the Guarantee." Our
obligation to make a guarantee payment may be satisfied by our direct payment of
the required amounts to the holders of the capital securities or by causing the
Trust to pay these amounts to the holders of the capital securities.
The guarantee is an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the capital securities, but will apply only to the
extent that the Trust has funds sufficient to make these payments. If we do not
make interest payments on the junior subordinated debentures held by the Trust,
then it will not be able to pay you distributions on the capital securities and
will not have funds legally available. Please refer to the "Relationship among
the Capital Securities, the Subordinated Debentures and the Guarantee" section
of this prospectus. The guarantee does not limit us from incurring or issuing
other secured or unsecured debt, including senior indebtedness, whether under
the indenture, any other indenture that we may enter into in the future or
otherwise.
The holders of at least a majority in aggregate liquidation amount of
the capital securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee in
respect of our guarantee or to direct the exercise of any trust power conferred
upon the guarantee trustee under our guarantee. Any holder of the capital
securities may institute a legal proceeding directly against us to enforce their
rights under the guarantee without first instituting a legal proceeding against
the Trust, the guarantee trustee or any other person or entity.
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If we default on our obligation to pay amounts payable under the junior
subordinated debentures, theTrust will lack funds for the payment of
distributions or amounts payable on redemption of the capital securities or
otherwise, and the holders of the capital securities will not be able to rely
upon the guarantee for payment of such amounts. Instead, if a debenture event of
default exists that is attributable to our failure to pay principal of (or
premium, if any) or interest on the junior subordinated debentures on a payment
date, then any holder of capital securities may institute a direct action
against us pursuant to the terms of the indenture for enforcement of payment to
that holder of the principal of (or premium, if any) or interest on such junior
subordinated debentures having a principal amount equal to the aggregate
liquidation amount of the capital securities of that holder. In connection with
a direct action, we will have a right of set-off under the indenture to the
extent that we made any payment to the holder of capital securities in the
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 assert directly any other rights in
respect of the junior subordinated debentures. The trust agreement provides that
each holder of capital securities by accepting the capital securities agrees to
the provisions of the guarantee and the indenture.
We will, through our guarantee, the trust agreement, the junior
subordinated debentures and the indenture, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the capital
securities. No single document standing alone, or operating in conjunction with
fewer than all of the other documents, constitutes that guarantee. Only the
combined operation of these documents provides a full, irrevocable and
unconditional guarantee of the Trust's obligations under the capital securities.
You should refer to "Relationship among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee" for more information about our
guarantee.
STATUS OF THE GUARANTEE
Our guarantee constitutes an unsecured obligation and ranks subordinate
and junior to all senior indebtedness in the same manner as the junior
subordinated debentures. See "Description of Junior Subordinated Debentures --
Subordination." In addition, because we are a holding company, our right to
participate in any distribution of First National's assets upon First National's
liquidation or reorganization or otherwise is subject to the prior claims of
First National's creditors (including its depositors), except to the extent we
may be recognized as a creditor of First National. Accordingly, our obligations
under the guarantee effectively are subordinated to all existing and future
liabilities of our present and future subsidiaries (including depositors of
First National). As a result, claimants should look only to our assets for
payments under the guarantee. See "Description of Junior Subordinated Debentures
- -- General."
Our guarantee ranks equal to all of our other guarantees with respect
to preferred beneficial interests issued by other trusts. Our guarantee of the
Trust's capital securities does not limit the amount of secured or unsecured
debt, including senior indebtedness, that we or any of our subsidiaries may
incur. We expect from time to time that we will incur additional indebtedness
and that our subsidiaries will also incur additional liabilities. Our guarantee
constitutes a guarantee of payment and not of collection, enabling the
guaranteed party to institute a legal proceeding directly against us to enforce
their rights under the guarantee without first instituting a legal proceeding
against any other person or entity. Our guarantee will be held for the benefit
of the holders of the capital securities. Our guarantee will not be discharged,
except by payment of the guarantee payments in full to the extent that the Trust
has not paid, or upon distribution of the junior subordinated debentures to, the
holders of the capital securities.
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EVENTS OF DEFAULT
There will be an event of default under the guarantee if we fail to
perform any of our payment or other obligations under the guarantee; except that
with respect to a default in payment of any guarantee payment, we shall have
received notice of default and shall not have cured the default within 60 days
after receipt of the notice. The holders of at least 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 our guarantee or to direct the exercise of any trust or
power conferred upon the guarantee trustee under our guarantee.
Any holder of the capital securities may institute a legal proceeding
directly against us to enforce the rights of the holders of the capital
securities under the guarantee without first instituting a legal proceeding
against the Trust, the guarantee trustee or any other person or entity.
We, as guarantor, will be required to file annually with the guarantee
trustee a certificate regarding our compliance with the applicable conditions
and covenants under our guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely
affect the rights of holders of the capital securities (in which case no vote
will be required), the guarantee may not be amended without the prior approval
of the holders of a majority of the liquidation amount of such outstanding
capital securities. You should read "Description of Capital Securities -- Voting
Rights; Amendment of the Trust Agreement" for more information about the manner
of obtaining the holders' approval. All guarantees and agreements contained in
the guarantee agreement shall bind our successors, assigns, receivers, trustees
and representatives and shall inure to the benefit of the holders of the capital
securities then outstanding.
TERMINATION OF THE GUARANTEE
Our guarantee will terminate and be of no further force and effect
upon:
- full payment of the applicable redemption price of all
outstanding capital securities;
- full payment of the liquidation amount payable upon
liquidation of the Trust; or
- distribution of junior subordinated debentures to the holders
of the capital securities.
Our guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of the capital securities must
restore payment of any sums paid under the capital securities or the guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, except if we default under the guarantee, will
undertake to perform only such duties as are specifically set forth in the
guarantee and, in case a default with respect to the guarantee has occurred,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the guarantee trustee will not be obligated to exercise any of the
powers vested in it by the guarantee at the request of any holder of the capital
securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that it might incur.
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GOVERNING LAW
The guarantee will be governed by and construed in accordance with the
laws of the State of New York, without regard to conflict of law principles.
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We have irrevocably guaranteed payments of distributions and other
amounts due on the capital securities to the extent the Trust has funds legally
available to pay distributions as and to the extent set forth under "Description
of Guarantee." Taken together, our obligations under the junior subordinated
debentures, the indenture, the trust agreement and the guarantee provide, a
full, irrevocable and unconditional guarantee of the Trust's payments of
distributions and other amounts due on the capital securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes this guarantee. Only the combined operation of these
documents effectively provides a full, irrevocable and unconditional guarantee
of the Trust's obligations under the capital securities.
If and to the extent that we do not make the required payments on the
junior subordinated debentures, the Trust will not have sufficient funds to make
its related payments, including distributions on the capital securities. Our
guarantee will not cover any payments when the Trust does not have sufficient
funds legally available to make those payments. Your remedy, as a holder of
capital securities, is to institute a direct action. Our obligations under the
guarantee are subordinate and junior to all senior indebtedness.
SUFFICIENCY OF PAYMENTS
As long as we pay the interest and other payments when due on the
junior subordinated debentures, the Trust will have sufficient funds to cover
distributions and other payments due on the capital securities, primarily
because:
- the aggregate principal amount or prepayment price of the
junior subordinated debentures will equal the sum of the
liquidation amount or redemption price, as applicable, of the
capital securities;
- the interest rate and interest payment dates and other payment
dates on the junior subordinated debentures will match the
distribution rate and distribution payment dates and other
payment dates for the capital securities;
- as sponsor, we will pay for all and any costs, expenses and
liabilities of the Trust, except for the Trust's obligations
to holders of capital securities; and
- the trust agreement also provides that the Trust is not
authorized to engage in any activity that is not consistent
with its limited purposes.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
You, as holder of capital securities, may institute a legal proceeding
directly against us to enforce your rights under our guarantee without first
instituting a legal proceeding against the guarantee trustee, the Trust or any
other person or entity.
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A default or event of default under any senior indebtedness would not constitute
a default or event of default under the trust agreement. However, if there are
payment defaults under, or accelerations of, senior indebtedness, the
subordination provisions of the indenture provide that we cannot make payments
in respect of the junior subordinated debentures until we have paid the senior
indebtedness in full or we have cured any payment default or a payment default
has been waived. Our failure to make required payments on junior subordinated
debentures would constitute an event of default under the trust agreement.
LIMITED PURPOSE OF THE TRUST
The capital securities represent beneficial interests in the Trust, and
the Trust exists for the sole purpose of issuing and selling the capital
securities, using the proceeds from the sale of the capital securities to
acquire our junior subordinated debentures and engaging in only those other
activities necessary, advisable or incidental thereto. A principal difference
between the rights of a holder of a capital security and a holder of a junior
subordinated debenture is that a holder of a junior subordinated debenture will
be entitled to receive from us the principal amount of (and premium, if any) and
interest on junior subordinated debentures held, while a holder of capital
securities is entitled to receive distributions from the Trust (or, in certain
circumstances, from us under our guarantee) if and to the extent the Trust has
funds legally available to pay the distributions.
RIGHTS UPON DISSOLUTION
Unless the junior subordinated debentures are distributed to holders of
the capital securities, if the Trust is voluntarily or involuntarily dissolved,
wound-up or liquidated, after satisfying the liabilities owed to the Trust's
creditors as required by applicable law, the holders of the capital securities
will be entitled to receive, out of assets held by the Trust, the liquidation
distribution in cash. See "Description of Capital Securities -- Liquidation of
the Trust and Distribution of Junior Subordinated Debentures."
If we are voluntarily or involuntarily liquidated or bankrupted, the
property trustee, as holder of the junior subordinated debentures, would be one
of our subordinated creditors, subordinated in right of payment to all senior
indebtedness, but entitled to receive payment in full of principal (and premium,
if any) and interest, before any of our stockholders receive payments or
distributions. Since we will be the guarantor under the guarantee and will agree
to pay all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of its capital securities), the positions of a holder
of capital securities and a holder of junior subordinated debentures relative to
other creditors and to our stockholders in the event of our liquidation or
bankruptcy are expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
We intend to take the position that the junior subordinated debentures
will be classified for U.S. federal income tax purposes as our indebtedness. We,
together with the Trust and the holders of the capital securities (by acceptance
of a beneficial interest in a capital security) will agree to treat the junior
subordinated debentures as our indebtedness for all U.S. federal income tax
purposes. We cannot be sure that this position will not be challenged by the IRS
or, if challenged, that the challenge will not be successful. The remainder of
this discussion assumes that the junior subordinated debentures will be
classified as our indebtedness for U.S. federal income tax purposes.
GENERAL
In the opinion of Baker & Hostetler LLP, special federal income tax
counsel to us and the Trust, the following describes the material U.S. federal
income tax consequences of the purchase, ownership and disposition of a capital
security.
This summary addresses only the tax consequences to a person that
acquires a capital security on its original issuance at its original price and
that holds the security as a capital asset. This summary does not address all
tax consequences that may be applicable to a beneficial owner of a capital
security and does not address the tax consequences to holders subject to special
tax regimes (like banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors or persons that will hold a capital security as a position
in a "straddle," as part of a "synthetic security" or "hedge" or as part of a
"conversion transaction" or other integrated investment). This summary 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
apply to a capital security. Except as noted below in the discussion of Non-U.S.
Holders, this discussion is addressed to a U.S. Holder, which is defined as a
beneficial owner of a capital security that, for U.S. federal income tax
purposes, is (or is treated as):
- a citizen or individual resident of the United States;
- a corporation or partnership (or entity treated for federal
income tax purposes as a corporation or partnership) created
or organized in or under the laws of the United States or any
political subdivision thereof;
- an estate the income of which is includible in gross income
for U.S. federal income tax purposes without regarding to its
source; or
- a trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more U.S. persons have the ability to control
all substantial decisions of the trust.
This summary does not address the tax consequences to any shareholder,
partner or beneficiary of a holder of a capital security. This summary is based
on the Code, Treasury regulations thereunder and the administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. An opinion of Baker & Hostetler LLP is
not binding on the IRS or the courts. No rulings have been or are expected to be
sought from the IRS with respect to any of the matters described herein. We can
give no assurance that the opinions expressed herein will not be challenged by
the IRS or, if challenged, that the challenge will not be successful.
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YOU ARE ADVISED TO CONSULT WITH YOUR OWN TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN,
AND OTHER TAX LAWS AND POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS.
CLASSIFICATION OF THE TRUST
In connection with the original issuance of the capital securities,
Baker & Hostetler LLP rendered its opinion that, under then current law and
assuming full compliance with the terms of the trust agreement and the indenture
(and certain other documents), and based on certain facts and assumptions
contained in that opinion, the Trust will be classified for U.S. federal income
tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, for U.S. federal income tax purposes, the Trust will
not be subject to U.S. federal income tax, and each holder of a capital security
will be required to include in its gross income any interest (or accrued
original issue discount), with respect to its allocable share of the junior
subordinated debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the indenture, we have the right to defer the payment of interest
on the junior subordinated debentures at any time or from time to time for one
or more deferral periods not exceeding 10 consecutive semi-annual periods each,
provided that no deferral period shall end on a date other than an interest
payment date or extend beyond October 15, 2029. By reason of that right, the
Treasury regulations will subject the junior subordinated debentures to the
rules in the Code and Treasury regulations on debt instruments issued with
original issue discount, unless the indenture or junior subordinated debentures
contain terms or conditions that make the likelihood of exercise of the deferral
option remote. Under the Treasury regulations, a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with original issue discount. Although the answer is
not clear, we believe that the likelihood that we would exercise our option to
defer payments of interest is "remote" since exercising that option would, among
other things, prevent us from declaring dividends on any class of our equity
securities. Accordingly, we intend to take the position that the junior
subordinated debentures will not be considered to be issued with original issue
discount 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 Treasury regulations, if we were to exercise our option to
defer payments of interest, the junior subordinated debentures would at that
time be treated as issued with original issue discount, and all stated interest
on the junior subordinated debentures would thereafter be treated as original
issue discount as long as the junior subordinated debentures remain outstanding.
If this occurred, all of a holder's 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 a capital security would be required to include in
gross income original issue discount even though we would not make actual cash
payments during a deferral period. The amount of such includible original issue
discount could be significant. Also, under the Treasury regulations, if the
option to defer the payment of interest were determined not to be "remote," the
junior subordinated debentures would be treated as having been originally issued
with original issue discount. In such event, a holder would be required to
include in gross income an amount of original issue discount each taxable year
that approximates the amount of interest that accrues on the junior subordinated
debentures at the stated interest rate, regardless of such holder's method of
tax accounting, and actual cash payments of interest on the junior subordinated
debenture would not be separately includible in gross income. These Treasury
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regulations have not yet been addressed in any rulings or other interpretations
by the IRS, and it is possible that the IRS could take a position contrary to
the interpretation described herein.
Because income on the capital securities will constitute interest or
original issue discount, 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 DEBENTURE OR CASH UPON LIQUIDATION OF THE TRUST
We will have the right at any time to liquidate the Trust and cause the
junior subordinated debentures to be distributed to the holders of the trust
securities. Under current law, the liquidation of the Trust and the distribution
of the junior subordinated debentures to trust security holders, for U.S.
federal income tax purposes, would be treated as a nontaxable event to each
holder, and the aggregate tax basis in the junior subordinated debentures
received by such holder would be equal to the holder's aggregate tax basis in
its capital securities surrendered. A holder's holding period in the junior
subordinated debentures received in liquidation of the Trust would be no shorter
than the period during which the capital securities were held by that holder.
The junior subordinated debentures may be prepaid in cash, and the
proceeds of that prepayment would be distributed to holders in redemption of
their capital securities. Under current law, that redemption would constitute,
for U.S. federal income tax purposes, a taxable disposition of the redeemed
capital securities, the tax consequences of which are described below under
"--Sales or Redemptions of Capital Securities."
SALES OR REDEMPTIONS OF CAPITAL SECURITIES
On a sale or redemption of a capital security for cash, a holder will
recognize gain or loss equal to the difference between its adjusted tax basis in
the capital security and the amount realized on the sale or redemption of that
capital security. If the rules regarding original issue discount do not apply, a
holder's adjusted basis in a capital security generally will be its initial
purchase price, and if the holder uses an accrual method of accounting, the
holder will have a basis in any accrued but unpaid interest. If the rules
regarding original issue discount apply, a holder's adjusted basis in a capital
security generally will be its initial purchase price increased by any original
issue discount previously included in the holder's gross income to the date of
disposition and decreased by any payments received on the capital security. Gain
or loss recognized on a sale or redemption of a capital security will be capital
gain or loss. Capital gain recognized by an individual in respect of a capital
security held for more than one year as of the date of sale or redemption is
subject to a maximum U.S. federal income tax rate of 20 percent.
The capital securities may trade at a price that discounts any accrued
but unpaid interest on the junior subordinated debentures. Therefore, the amount
realized by a holder who disposes of a capital security between distribution
payment dates and whose adjusted basis in the capital security has been
increased by the amount of any accrued but unpaid original issue discount (or
interest) may be less than the holder's adjusted basis in the capital security.
A holder's basis in a capital security could be increased either under the rules
regarding original issue discount or, if those rules do not apply, in the case
of a holder that uses an accrual method of accounting, under the accrual
accounting rules. In that case, the holder will recognize a capital loss.
Subject to a limited exception in the case of individual taxpayers, capital
losses cannot be applied to offset ordinary income for U.S. federal income tax
purposes.
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EXCHANGE OF CAPITAL SECURITIES
The exchange of the capital securities for exchange capital securities
pursuant to the exchange offer should not be treated as an exchange for federal
income tax purposes and, therefore, should not be a taxable event to holders for
United States federal income tax purposes, because the exchange capital
securities should not be considered to differ materially in kind or extent from
the capital securities and because the exchange will occur by operation of the
terms of the capital securities. If the exchange 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 exchange
capital securities should have the same issue price as the capital securities,
and a holder should have the same adjusted tax basis and holding period in the
exchange capital securities as the holder had in the capital securities
immediately before the exchange.
NON-U.S. HOLDERS
For purposes of this discussion, a "Non-U.S. Holder" generally is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for U.S. federal income tax purposes.
Under current U.S. federal income tax laws, subject to the discussion
below of backup withholding, payments by the Trust or any of its paying agents
to a Non-U.S. Holder will not be subject to U.S. federal withholding tax,
provided that (a) the Non-U.S. Holder does not own, actually or constructively,
ten percent or more of the total combined voting power of all classes of our
stock entitled to vote, (b) the Non-U.S. Holder is not a controlled foreign
corporation that is related to us through stock ownership, (c) the Non-U.S.
Holder is not a bank whose receipt of interest on the junior subordinated
debentures is described in Section 881(c)(3)(A) of the Code, and (d) either (A)
the Non-U.S. Holder certifies to the Trust or its agent, under penalties of
perjury, that it is not a U.S. Holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of business (a "Financial
Institution") and holds the capital security in that capacity certifies to the
Trust or its agent, under penalties of perjury, that the statement has been
received from the Non-U.S. Holder by it or by a Financial Institution between it
and the Non-U.S. Holder and furnishes the Trust or its agent with a copy
thereof. New Treasury regulations provides alternative methods for satisfying
the certification requirements described in clause (d), effective for certain
payments made after December 31, 2000.
If a Non-U.S. Holder is engaged in a trade or business in the United
States and interest on the capital securities (or the junior subordinated
debentures) is effectively connected with the conduct of that trade or business,
the Non-U.S. Holder, although exempt from the withholding tax discussed above,
will be subject to U.S. federal income tax on that interest on a net income
basis in generally the same manner as if it were a U.S. Holder. In addition, if
such Non-U.S. Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its effectively connected earnings and profits that
are repatriated or treated as repatriated. For this purpose, the interest income
would be included in the foreign corporation's earnings and profits. In the case
of a Non-U.S. Holder entitled to the benefits of a tax treaty with the United
States, the foregoing discussion generally applies only if the Non-U.S. Holder
is engaged in business in the United States through a U.S. permanent
establishment and the income on the junior subordinated debentures is
attributable to that permanent establishment within the meaning of the treaty,
and the rate of the branch profits tax may be limited to a rate prescribed by
the treaty for the withholding of tax on dividends. New final Treasury
regulations generally prescribe new methods for certifying that a Non-U.S.
Holder is exempt from the withholding of U.S. federal income tax by reason of
being engaged in trade or business or the United States.
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Any gain recognized upon a sale or other disposition of capital
securities (or junior subordinated debentures) generally will not be subject to
U.S. federal income tax unless (1) the gain is, or is treated as, effectively
connected with a U.S. trade or business of the Non-U.S. Holder or (2) in the
case of a Non-U.S. Holder who is an individual, that individual is present in
the United States for 183 days or more in the taxable year of the sale or other
disposition, and certain other conditions are met.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest, including original issue discount, accrued on
capital securities held of record by U.S. persons (other than corporations and
other exempt holders) will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt U.S. persons unless
the holder furnishes its taxpayer identification number in the manner prescribed
in applicable Treasury regulations, certifies that the number is correct,
certifies as to no loss of exemption from backup withholding and meets certain
other conditions.
Payment of the proceeds from the disposition of capital securities to
or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Non-U.S. Holders are generally exempt from the information reporting
and backup withholding rules but may be required to comply with certain
certification and identification requirements to prove their exemption.
Any amount withheld from a holder under the backup withholding rules
will be allowed as a refund or credit against such holder's U.S. federal income
tax liability, provided the required information is furnished to the IRS.
It is anticipated that income on capital securities will be reported to
holders on Form 1099 (or any successor form) and mailed to holders of capital
securities by January 31 following each calendar year.
THE U.S. 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. YOU SHOULD CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE
TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF A CAPITAL
SECURITY, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN U.S. FEDERAL OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
GENERAL
In evaluating the purchase of capital securities, a fiduciary of a
qualified profit-sharing, pension or stock bonus plan, including a plan for
self-employed individuals and their employees or any other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a collective investment fund or separate account in which such plans
invest and any other investor using assets that are treated as assets of an
employee benefit plan subject to ERISA (each, a "Plan" and collectively,
"Plans") should consider:
- whether the ownership of capital securities is in accordance
with the documents and instruments governing such Plan;
- whether the ownership of capital securities is solely in the
interest of Plan participants and beneficiaries and otherwise
consistent with the fiduciary's responsibilities and in
compliance with the requirements of Part 4 of Title I of
ERISA, including, in particular, the diversification, prudence
and liquidity requirements of Section 404 of ERISA and the
prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code;
- whether the assets of the Trust are treated as assets of the
Plan; and
- the need to value the assets of the Plan annually.
In addition, the fiduciary of an individual retirement arrangement under 408 of
the Code (an "IRA") considering the purchase of capital securities should
consider whether the ownership of the capital securities would result in a
non-exempt prohibited transaction under Section 4975 of the Code.
Governmental plans and certain church plans (each as defined under
ERISA) are not subject to the prohibited transaction rules. Such plans may,
however, be subject to federal, state or local laws or regulations which may
affect their investment in the capital securities. Any fiduciary of such a
governmental or church plan considering an investment in the capital securities
should determine the need for, and the availability, if necessary, of any
exemptive relief under such laws or regulations.
The fiduciary investment considerations summarized below provide a
general discussion that does not include all of the fiduciary investment
considerations relevant to Plans and, where indicated, IRAs. This summary is
based on the current provisions of ERISA and the Code and regulations and
rulings thereunder, and may be changed (perhaps adversely and with retroactive
effect) by future legislative, administrative or judicial action.
PLANS AND IRAS THAT ARE PROSPECTIVE PURCHASERS OF CAPITAL SECURITIES
SHOULD CONSULT WITH AND RELY UPON THEIR OWN ADVISORS IN EVALUATING THESE MATTERS
IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
PLAN ASSET REGULATION
Under Department of Labor regulations governing what constitutes the
assets of a Plan or IRA ("Plan Assets") for purposes of ERISA and the related
prohibited transaction provisions of the Code (the "Plan Asset Regulation," 29
C.F.R. Sec. 2510.3-101), when a Plan or IRA acquires an equity interest in
another entity, and such interest does not represent a "publicly offered
security" nor a security issued by an investment company registered under the
1940 Act, the Plan's assets include both the equity interest and an undivided
interest in each of the underlying assets of the entity, unless it is
established either that the entity is an operating company or that equity
participation in the entity by "benefit plan investors," as
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defined in the Plan Assets Regulation, is not "significant." For purposes of the
Plan Asset Regulation, the Trust will be neither an investment company nor an
operating company.
Under the Plan Asset Regulation, equity participation by benefit plan
investors will not be considered "significant" on any date only if immediately
after the most recent acquisition of the capital securities, the aggregate
interest in the capital securities held by benefit plan investors will be less
than 25% of the aggregate outstanding principal amount of the capital
securities. Although it is possible that the equity participation by benefit
plan investors on any date will not be "significant" for purposes of the Plan
Asset Regulation, such a result cannot be assured. Consequently, if Plans, IRAs
or investors using assets of Plans purchase the capital securities, the Trust's
assets could be deemed to be "plan assets" of such Plans and/or IRAs for
purposes of the fiduciary responsibility provisions of ERISA and the prohibited
transactions rules of ERISA and the Code. Under ERISA and the Code, any person
who exercises any authority or control respecting the management or disposition
of the assets of a Plan or IRA is considered to be a fiduciary of such Plan or
IRA. The property trustee of the Trust could therefore become a fiduciary of the
Plans and IRAs that invest in the capital securities and be subject to the
general fiduciary requirements of ERISA in exercising its authority with respect
to the management of the assets of the Trust. However, the property trustee will
have only limited discretionary authority with respect to the Trust assets and
the remaining functions and responsibilities performed by the property trustee
will be for the most part custodial and ministerial in nature.
PROHIBITED TRANSACTIONS
Each of the Trust, BancFirst Ohio (the obligor with respect to the
junior subordinated debentures held by the Trust) and their affiliates or the
property trustee may be a party in interest or a disqualified person with
respect to a Plan or IRA investing in the capital securities. Therefore, such
investment by a Plan or IRA may give rise to a prohibited transaction.
Consequently, before investing in the capital securities or acquiring junior
subordinated debentures, any person who is, or who is acquiring such securities
for, or on behalf of, a Plan or IRA should determine that either a statutory or
an administrative exemption from the prohibited transaction rules discussed
below or otherwise available is applicable to such investment in the capital
securities, or that such investment in, or acquisition of, such securities will
not result in a non-exempt prohibited transaction.
The statutory or administrative exemptions from the prohibited
transaction rules under ERISA and the Code which may be available to a Plan or
IRA, which is investing in the capital securities include the following
(collectively referred to as the "ERISA Investor Exemptions"):
- Prohibited Transaction Class Exemption ("PTCE") 90-1,
regarding investments by insurance company pooled separate
accounts;
- PTCE 91-38, regarding investments by bank collective
investment funds;
- PTCE 84-14, regarding transactions effected by qualified
professional asset managers;
- PTCE 96-23, regarding transactions effected by in-house asset
managers; and o PTCE 95-60, regarding investments by insurance
company general accounts.
No person who is, or who in acquiring capital securities is using the
assets of, a Plan or IRA may acquire capital securities unless one of the ERISA
Investor Exemptions or another applicable exemption is available to the Plan or
IRA, or such acquisition or holding of the capital securities will not result in
a non-exempt Prohibited Transaction. The acquisition of the capital securities
by any person who is, or who in acquiring such capital securities is using the
assets of, a Plan or IRA shall be deemed to constitute a representation by such
person to the property trustee of the Trust, BancFirst Ohio and the initial
purchaser either that:
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- it is not a Plan, IRA, trustee or other person acting on
behalf of a Plan or IRA or other person or entity using the
assets of any Plan or IRA to finance such purchase; or
- such acquisition will not result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code for
which there is no applicable statutory or administrative
exemption.
In the case of capital securities delivered in certificated form, the
purchaser will be required to make such representation, in writing, to the
trustee of the Trust, BancFirst Ohio and the initial purchaser.
THE DISCUSSION OF ERISA HEREIN IS GENERAL IN NATURE AND IS NOT INTENDED
TO BE ALL INCLUSIVE. ANY FIDUCIARY OF A PLAN, IRA, GOVERNMENTAL PLAN OR CHURCH
PLAN CONSIDERING AN INVESTMENT IN THE CAPITAL SECURITIES SHOULD CONSULT WITH ITS
LEGAL ADVISORS REGARDING THE CONSEQUENCES OF SUCH INVESTMENT AND CONSIDER
WHETHER THE PLAN OR IRA CAN MAKE THE REPRESENTATIONS NOTED ABOVE.
FURTHER, THE SALE OF INVESTMENTS TO PLANS AND IRAS IS IN NO RESPECT A
REPRESENTATION BY THE TRUST, BANCFIRST OHIO, THE PROPERTY TRUSTEE, THE INITIAL
PURCHASER OR ANY OTHER PERSON ASSOCIATED WITH THE SALE OF THE CAPITAL SECURITIES
THAT SUCH SECURITIES MEET ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO
INVESTMENTS BY PLANS AND IRAS GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH
SECURITIES ARE OTHERWISE APPROPRIATE FOR PLANS AND IRAS GENERALLY OR ANY
PARTICULAR PLAN.
ANY PURCHASER PROPOSING TO ACQUIRE CAPITAL SECURITIES WITH ASSETS OF
ANY PLAN OR IRA SHOULD CONSULT WITH ITS COUNSEL.
EXCHANGE OFFER; REGISTRATION RIGHTS
We entered into a registration rights agreement with the Trust and the
initial purchaser for the benefit of the holders of the capital securities
wherein we and the Trust agreed, for the benefit of the holders of the capital
securities:
- - to use our best efforts to file with the Commission within 150 days
after the issue date the exchange offer registration statement relating
to the exchange offer for (a) the exchange capital securities, which
will have terms identical in all material respects to the capital
securities (except that the exchange capital securities will not
provide for any increase in the distribution rate thereon under the
circumstances described below), (b) the exchange guarantee, which will
have terms identical in all material respects to the guarantee, and (c)
the exchange debentures, which will have terms identical in all
material respects to the junior subordinated debentures (except that
the exchange debentures will not provide for any liquidated damages)
and
- - to use our best efforts to cause the exchange offer registration
statement to be declared effective under the Securities Act within 180
days after the issue date. Promptly after the exchange offer
registration statement has been declared effective, we will offer the
exchange debentures in exchange for surrender of the junior
subordinated debentures, and the property trustee will be required
pursuant to the Indenture to so exchange all of the junior subordinated
debentures held thereby, and the Trust will offer the exchange capital
securities and we will offer the exchange guarantee in exchange for
surrender of the capital securities and the guarantee, respectively. We
and the Trust will keep the exchange offer open for not less than 30
calendar days (or longer if required by applicable law) after the date
notice of the exchange offer has been mailed to the holders of the
capital securities and the junior subordinated debentures. For each
capital security, guarantee or junior subordinated debenture validly
tendered to the Trust or us, as the case may be, pursuant to the
exchange offer and not validly withdrawn by the holder thereof, the
holder of such capital security,
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guarantee or junior subordinated debenture will receive an exchange
capital security having a liquidation amount equal to the liquidation
amount of the tendered capital security, an exchange guarantee or an
exchange debenture having a principal amount equal to the principal
amount of the tendered junior subordinated debentures, as applicable.
Distributions on each exchange capital security and interest on each
exchange debenture will accrue from the last date on which a
distribution or interest was paid on the capital security or junior
subordinated debentures tendered in exchange therefor or, if no
distribution or interest has been paid on such capital security or
junior subordinated debenture, from the date of original issuance.
Based on existing interpretations of the Securities Act by the staff of
the Commission set forth in several no-action letters to third parties, and
subject to the immediately following sentence, we and the Trust believe that the
exchange capital securities, exchange guarantee and exchange debentures issued
pursuant to the exchange offer may be offered for resale, resold and otherwise
transferred by the holders thereof (other than holders who are broker-dealers)
without further compliance with the registration and prospectus delivery
provisions of the Securities Act. However, any purchaser of capital securities
who is an affiliate of the Trust or us or who intends to participate in the
exchange offer for the purpose of distributing the exchange capital securities,
or any broker-dealer who purchased the capital securities from the Trust to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act:
- will not be able to rely on the interpretation of the staff
set forth in the above-mentioned no-action letters;
- will not be entitled to tender its capital securities in the
exchange offer; and
- must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale
or transfer of the capital securities or junior subordinated
debentures and the guarantee unless such sale or transfer is
made pursuant to an exemption from such requirements.
Neither us nor the Trust intends to seek our own no-action letter and
there can be no assurance that the staff would make a similar determination with
respect to the exchange capital securities, exchange guarantee and exchange
debentures as it has in such no-action letters to third parties.
Each holder of the capital securities (other than certain specified
holders) who wishes to exchange the capital securities for exchange capital
securities in the exchange offer will be required to represent that:
- it is not an affiliate of the Trust or us;
- the exchange capital securities to be received by it were
acquired in the ordinary course of its business; and
- at the time of the exchange offer, it has no arrangement with
any person to participate in the distribution (within the
meaning of the Securities Act) of the exchange capital
securities.
In addition, in connection with any resales of exchange capital
securities, any broker-dealer (a "participating broker-dealer") who acquired the
capital securities for its own account as a result of market-making or other
trading activities must deliver a prospectus meeting the requirements of the
Securities Act. The Commission has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to the exchange capital securities (other than a resale of an unsold allotment
from the original sale of the capital securities) with the prospectus contained
in the exchange offer registration statement. Under the registration rights
agreement, the Trust is required to allow participating broker-dealers and other
persons, if any, subject to similar prospectus delivery requirements to use the
prospectus contained in the exchange offer registration statement in connection
with the resale of such exchange capital securities.
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In the event:
- because of any change in law or in the applicable
interpretations of the staff, we and the Trust are not
permitted to effect the exchange offer;
- we shall determine in good faith that there is a reasonable
likelihood, or that a material uncertainty exists as to
whether, consummation of the exchange offer would result in a
material adverse tax consequence to us; or
- for any reason the exchange offer registration statement is
not declared effective within 180 days of the issue date, or
in certain other circumstances, then in lieu of effecting the
registration of the exchange capital securities pursuant to
the exchange offer registration statement, the administrative
trustees on behalf of the Trust will (x) promptly deliver to
the holders and the Delaware trustee written notice thereof
and (y) at our sole expense, (a) as promptly as practicable,
file the shelf registration statement, (b) use our best
efforts to cause the shelf registration statement to be
declared effective under the Securities Act and (c) use our
best efforts to keep effective the shelf registration
statement until the earlier of two years after the issue date
or such time as all of the applicable capital securities, the
guarantee and the junior subordinated debentures have been
sold thereunder or otherwise cease to be registrable
securities within the meaning of the registration rights
agreement. We will, in the event that a shelf registration
statement is filed, provide to each holder copies of the
prospectus that is a part of the shelf registration statement,
notify each such holder when the shelf registration statement
for the capital securities, the guarantee and the junior
subordinated debentures has become effective and take certain
other actions as are required to permit unrestricted resales
of the capital securities, the guarantee and the junior
subordinated debentures. A holder that sells capital
securities, the guarantee and the junior subordinated
debentures pursuant to the shelf registration statement
generally will be required to be named as a selling security
holder in the related prospectus and to deliver a prospectus
to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the
registration rights agreement that are applicable to such a
holder (including certain indemnification rights and
obligations). In addition, each holder of capital securities
may be required to deliver information to be used in
connection with the shelf registration statement in order to
have its capital securities, guarantee and junior subordinated
debentures included in the shelf registration statement and to
benefit from the provisions of the succeeding paragraph.
Each capital security, the guarantee and each junior subordinated
debenture contained a legend to the effect that the holder thereof, by its
acceptance thereof, was deemed to have agreed to be bound by the provisions of
the registration rights agreement. In that regard, each holder will be deemed to
have agreed that, upon receipt of notice from us of the occurrence of any event
which makes a statement in the prospectus which is part of the shelf
registration statement (or, in the case of participating broker-dealers, the
prospectus which is part of the exchange offer registration statement) untrue in
any material respect or which requires the making of any changes in such
prospectus in order to make the statements therein not misleading or of certain
other events specified in the registration rights agreement, such holder (or
participating broker-dealer, as the case may be) will suspend the sale of
capital securities, the guarantee and the junior subordinated debentures
pursuant to such prospectus until we have amended or supplemented such
prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented prospectus to such holder (or participating
broker-dealer, as the case may be) or we have given notice that the sale of the
capital securities, the guarantee and the junior subordinated debentures may be
resumed, as the case may be.
If we give such notice to suspend the sale of the capital securities,
the guarantee and the junior subordinated debentures, we will extend the
relevant period referred to above during which we and the Trust are required to
keep effective the shelf registration statement (or the period during which
participating broker-dealers are entitled to use the prospectus included in the
exchange offer registration statement in connection with the resale of exchange
capital securities, exchange guarantee or exchange
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debentures, as the case may be) 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
holders shall have received copies of the supplemented or amended prospectus
necessary to permit resales of the capital securities, the guarantee and the
junior subordinated debentures or to and including the date on which we have
given notice that the sale of capital securities may be resumed, as the case may
be.
If we or the Trust fail to comply with the registration rights
agreement or if the exchange offer registration statement or the shelf
registration statement fails to become effective, then liquidated damages (the
"liquidated damages") shall become payable in respect of the junior subordinated
debentures, and corresponding additional distributions (the "additional
distributions") shall become payable on the capital securities, as follows:
(i) if neither the exchange offer registration statement nor a shelf
registration statement is filed with the Commission on or prior to the
150th day after the issue date (in the case of an exchange offer
registration statement) or on or prior to the date required by the
registration rights agreement (in the case of a shelf registration
statement), liquidated damages shall accrue on the principal amount of the
junior subordinated debentures, and additional distributions shall
accumulate on the liquidation amount of the capital securities, each at a
rate of 25 basis points per annum; or
(ii) if neither the exchange offer registration statement nor a shelf
registration statement is declared effective by the Commission on or prior
to the 180th day after the issue date (in the case of an exchange offer
registration statement) or on or prior to the later of the 30th day after
the date such registration statement was required to be filed and the
180th day after the issue date (in the case of a shelf registration
statement), liquidated damages shall accrue on the principal amount of the
junior subordinated debentures, and additional distributions shall
accumulate on the liquidation amount of the capital securities, each at a
rate of 25 basis points per annum; or
(iii) if (A) the Trust has not exchanged exchange capital securities
for all capital securities or we have not exchanged the exchange guarantee
for the guarantee or exchange debentures for all junior subordinated
debentures validly tendered, in accordance with the terms of the exchange
offer, on or prior to the 45th day after the date on which the exchange
offer registration statement was declared effective or (B) if applicable,
the shelf registration statement has been declared effective and such
shelf registration statement ceases to be effective or usable for resales
at any time prior to the second anniversary of the issue date (other than
after such time as all capital securities have been disposed of thereunder
or otherwise cease to be registrable securities within the meaning of the
registration rights agreement), then liquidated damages shall accrue on
the principal amount of junior subordinated debentures, and additional
distributions shall accumulate on the liquidation amount of the capital
securities, each at a rate of 25 basis points per annum commencing on (x)
the 46th day after such effective date, in the case of (A) above, or (y)
the day such shelf registration statement ceases to be effective or usable
for resales in the case of (B) above;
provided, however, that neither the liquidated damages rate on the junior
subordinated debentures, nor the additional distributions rate on the
liquidation amount of the capital securities, may exceed in the aggregate 25
basis points per annum; provided, further, however, that (1) upon the filing of
the exchange offer registration statement or a shelf registration statement (in
the case of clause (i) above), (2) upon the effectiveness of the exchange offer
registration statement or a shelf registration statement (in the case of clause
(ii) above), (3) upon the exchange of exchange capital securities, the exchange
guarantee and exchange debentures for all capital securities, the guarantee and
junior subordinated debentures tendered (in the case of clause (iii) (A) above),
or at such time as the shelf registration statement which had ceased to remain
effective or usable for resales (in the case of clause (iii) (B) above) again
becomes effective or usable for resales, liquidated damages on the junior
subordinated debentures and additional distributions on the liquidation amount
of the capital securities as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.
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Any amounts of liquidated damages and additional distributions due
pursuant to the foregoing paragraphs will be payable in cash on October 15 and
April 15 of each year to the holders of record on the 1st day of the month in
which the relevant payment occurs.
The registration rights agreement will be governed by, and construed in
accordance with, the laws of the State of New York, without regard to conflict
of law principles. The summary herein of certain provisions of the registration
rights agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
registration rights agreement, a form of which is available upon request to us.
See "Available Information." In addition, the information set forth above
concerning certain interpretations of and positions taken by the staff is not
intended to constitute legal advice, and you should consult your own legal
advisors with respect to such matters.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new securities for its own account in
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of those securities. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new securities received in the exchange offer where
the old securities were acquired as a result of market-making activities or
other trading activities. We have agreed that, for a period of 90 days after
the completion of the exchange offer, we will make this prospectus, as amended
and supplemented, available to any broker-dealer for use in connection with any
such resale.
We will not receive any proceeds from any sale of new securities issued
in the exchange offer by broker-dealers. New securities issued in the exchange
offer received by broker-dealers for their own account under 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 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 to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such new securities. Any broker-dealer
that resells new securities that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of
such new securities may be deemed to be an "underwriter" within the meaning of
the Securities Act, and profit on any such resale of new securities issued in
the exchange and any commission 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.
For a period of 90 days after the completion of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all fees and expenses
incident to the exchange offer, other than the commissions or concessions of any
broker-dealers, and will indemnify the holders of the old securities, including
any broker-dealers, against certain liabilities, including liabilities under the
Securities Act. We note, however, that, in the opinion of the SEC,
indemnification against liabilities arising under federal securities laws is
against public policy and may be unenforceable.
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LEGAL MATTERS
Certain legal matters will be passed upon for us by Baker & Hostetler
LLP. Certain matters of Delaware law relating to the validity of the capital
securities will be passed upon on behalf of the Trust by Morris, James, Hitchens
& Williams LLP, special Delaware counsel to the Trust and us. Certain matters
relating to United States federal income tax considerations will be passed upon
for us by Baker & Hostetler LLP, special tax counsel to us.
INDEPENDENT ACCOUNTANTS
The consolidated balance sheets as of December 31, 1999 and 1998 and
the consolidated statements of income, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999,
incorporated by reference in this prospectus, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their report
incorporated by reference herein. Such consolidated financial statements have
been included herein in reliance upon the report of such firm given their
authority as experts in accounting and auditing.
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