As filed with the Securities and Exchange Commission
on November 25, 1997
Registration Nos. 333-39017
333-39017-01
=====================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
to
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------------
ALBANK FINANCIAL CORPORATION ALBANK CAPITAL TRUST I
(Exact name of registrant (Exact name of registrant as
as specified in its charter) specified in its Trust Agreement)
Delaware Delaware
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization) of incorporation or organization)
6712 6799
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
14-1746910 14-6186122
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
c/o ALBANK Financial Corporation
10 North Pearl Street 10 North Pearl Street
Albany, New York 12207 Albany, New York 12207
(518) 445-2100 (518) 445-2100
(Address, including zip code, (Address, including zip code,
and telephone number, including and telephone number, including
area code, of registrant's area code, of registrant's
principal executive offices) principal executive offices)
-------------------------
Freling H. Smith
Senior Vice President, Secretary and General Counsel
ALBANK Financial Corporation
10 North Pearl Street
Albany, New York 12207
(518) 445-2100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Kenneth L. Bachman, Esq.
Cleary, Gottlieb, Steen & Hamilton
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-1801
(202) 974-1520
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: As promptly as practicable after the effective date of
this Registration Statement.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, please check the
following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
=====================================================================
Proposed
Title of Maximum Proposed
each Class of Offering Maximum
Securities Amount Price Aggregate Amount of
to be to be Per Offering Registration
Registered Registered Unit (1) Price (1) Fee
- ---------------------------------------------------------------------
9.27% Capital
Securiies, $50,000,000 100% $50,000,000 $15,151.52
Series B
of ALBANK
Capital
Trust I
- ---------------------------------------------------------------------
Junior N/A N/A N/A N/A
Subordinated
Deferrable
Interest
Debentures,
Series B due
2027 of
ALBANK
Financial
Corporation (2)
- ---------------------------------------------------------------------
ALBANK N/A N/A N/A N/A
Financial
Corporation
Guarantee
with respect
to the 9.27%
Capital
Securities,
Series
B (3)
- ---------------------------------------------------------------------
Total (4) $50,000,000 100% $50,000,000 (5) $15,151.52
=====================================================================
(1) Estimated solely for the purpose of computing the registration
fee.
(2) The Junior Subordinated Deferrable Interest Debentures due
2027, Series A were purchased by ALBANK Capital Trust I
with the proceeds of the sale of the 9.27% Capital
Securities, Series A (the "Old Capital Securities"). No
separate consideration will be received for the Junior
Subordinated Deferrable Interest Debentures due 2027,
Series B distributed upon any liquidation of ALBANK Capital
Trust I.
(3) No separate consideration will be received for the ALBANK
Financial Corporation Guarantee.
(4) This Registration Statement is deemed to cover the Junior
Subordinated Deferrable Interest Debentures due 2027,
Series B of ALBANK Financial Corporation, the rights of
holders of Junior Subordinated Deferrable Interest
Debentures due 2027, Series B of ALBANK Financial
Corporation under the Indenture, and the rights of holders
of 9.27% Capital Securities, Series B under the Guarantee
of ALBANK Financial Corporation, which taken together fully
and unconditionally guarantee the obligations of ALBANK
Capital Trust I under the 9.27% Capital Securities, Series
B.
(5) Such amount represents the aggregate liquidation amount of
the 9.27% Capital Securities, Series B to be issued and
exchanged hereunder for the Old Capital Securities and the
principal amount of Junior Subordinated Debentures due
2027, Series B that may be distributed upon liquidation of
ALBANK Capital Trust I.
--------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
showing location in the Prospectus
of Information Required by Items in Form S-4
Item Location in Prospectus
---- ----------------------
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus Facing Page of the
Registration Statement;
Cross Reference Sheet;
Outside From Cover Page of
Prospectus
2. Inside Front and Outside
Back Cover Pages of
Prospectus Available Information;
Outside Back Cover of
Prospectus
3. Risk Factors, Ratio of
Earnings to Fixed Charges
and Other Information Summary; Risk Factors; Ratio
of Earnings to Fixed
Charges; ALBANK Capital
Trust I; Selected
Consolidated Financial
Information
4. Terms of the Transaction Summary; Risk Factors; The
Exchange Offer; Description
of Capital Securities;
Description of Junior
Subordinated Debentures;
Description of Guarantee;
Relationship Among the
Capital Securities, the
Junior Subordinated
Debentures and the
Guarantee; Plan of
Distribution; Certain
Federal Income Tax
Consequences
5. Pro Forma Financial
Information Not Applicable
6. Material Contracts With
the Company Being Acquired Not Applicable
7. Additional Information
required for Reoffering
by Persons and Parties
Deemed to be Underwriters Not Applicable
8. Interests of Named Experts
and Counsel Not Applicable
9. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities Not Applicable
<PAGE>
10. Information with Respect
to S-3 Registrants Not Applicable
11. Incorporation of Certain
Information by Reference Available Information;
Incorporation of Certain
Documents by Reference
12. Information with Respect
to S-2 or S-3 Registrants Not Applicable
13. Incorporation of Certain
Information by Reference Not Applicable
14. Information with Respect
to Registrants Other than
S-3 or S-2 Registrants Not Applicable
15. Information with Respect
to S-3 Companies Not Applicable
16. Information with Respect
to S-2 or S-3 Companies Not Applicable
17. Information with Respect
to Companies Other Than
S-3 or S-2 Companies Not Applicable
18. Information if Proxies,
Consents or Authorizations
Are To Be Solicited Not Applicable
19. Information if Proxies,
Consents or Authorizations
Are Not To Be Solicited or
in an Exchange Offer Description of Junior
Subordinated Debentures;
Description of Guarantee;
Relationship Among the
Capital Securities, the
Junior Subordinated
Debentures and the
Guarantee; Summary; The
Exchange Offer; Description
of Capital Securities
<PAGE>
*********************************************************************
* Information contained herein is subject to completion or *
* amendment. A registration statement relating to these securities *
* has been filed with the Securities and Exchange Commission. These *
* securities may not be sold nor may offers to buy be accepted *
* prior to the time the registration statement becomes effective. *
* This prospectus shall not constitute an offer to sell or the *
* solicitation of an offer to buy nor shall there be any sale of *
* these securities in any state in which such offer, solicitation *
* or sale would be unlawful prior to registration or qualification *
* under the securities laws of any such state. *
*********************************************************************
SUBJECT TO COMPLETION, DATED NOVEMBER __, 1997
PROSPECTUS
$50,000,000
ALBANK CAPITAL TRUST I
Offer to exchange its 9.27% Capital Securities, Series B which
have been registered under the Securities Act of 1933 for any and
all of its outstanding 9.27% Capital Securities, Series A
(Liquidation Amount $1,000 per Capital Security)
fully and unconditionally guaranteed, as described herein, by
ALBANK FINANCIAL CORPORATION
The Exchange Offer and Withdrawal Rights will
expire at 5:00 p.m., New York City time,
on December 29, 1997, unless extended
--------------------
ALBANK Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby
offers, upon the terms and subject to the conditions set forth in
this Prospectus (as the same may be amended or supplemented from
time to time, the "Prospectus") and in the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to
exchange up to $50,000,000 aggregate liquidation amount of its
9.27% Capital Securities, Series B, liquidation amount $1,000 per
Capital Security (the "New Capital Securities"), which have been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement (as
defined herein) of which this Prospectus constitutes a part, for
a like liquidation amount of its outstanding 9.27% Capital
Securities, Series A, liquidation amount $1,000 per Capital
Security (the "Old Capital Securities"), of which $50,000,000
aggregate liquidation amount is outstanding. Pursuant to the
Exchange Offer, ALBANK Financial Corporation, a Delaware
corporation ("ALBANK" or the "Corporation"), is also exchanging
(i) its guarantee with respect to the payment of distributions
and other payments on liquidation of the Trust or redemption of
the Old Capital Securities (the "Old Guarantee") for a like
guarantee of the New Capital Securities (the "New Guarantee") and
(ii) all of its outstanding 9.27% Junior Subordinated Deferrable
Interest Debentures due 2027, Series A (the "Old Subordinated
Debentures"), of which $51,547,000 aggregate principal amount is
outstanding, for a like aggregate principal amount of its 9.27%
Junior Subordinated Deferrable Interest Debentures due 2027,
Series B (the "New Junior Subordinated Debentures"), which New
Guarantee and New Junior Subordinated Debentures also have been
registered under the Securities Act. The Old Capital Securities,
the Old Guarantee and the Old Junior Subordinated Debentures are
collectively referred to herein as the "Old Securities" and the
New Capital Securities, the New Guarantee and the New Junior
Subordinated Debentures are collectively referred to herein as
the "New Securities."
--------------------
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ARE FIRST
BEING MAILED TO HOLDERS OF OLD CAPITAL SECURITIES ON NOVEMBER 26,
1997.
(continued on following page)
<PAGE>
SEE "RISK FACTORS" BEGINNING ON PAGE 16 OF THIS PROSPECTUS
FOR CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE NEW
SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is November __, 1997.
<PAGE>
(continued from the previous page)
The terms of the New Securities are identical in all
material respects to the respective terms of the Old Securities,
except that (i) the New Securities have been registered under the
Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Securities, (ii)
the New Capital Securities will not provide for any increase in
the distribution rate thereon, and (iii) the New Junior
Subordinated Debentures will not provide for any increase in the
interest rate thereon. See "Description of Capital Securities."
The New Capital Securities are being offered for exchange in
order to satisfy certain obligations of the Corporation and the
Trust under the Registration Rights Agreement, dated June 6, 1997
(the "Registration Rights Agreement"), among the Corporation, the
Trust and Merrill Lynch, Pierce Fenner & Smith Incorporated, as
the initial purchaser (the "Initial Purchaser") of the Old
Capital Securities. In the event that the Exchange Offer is
consummated, any Old Capital Securities which remain outstanding
after consummation of the Exchange Offer will vote together with
the New Capital Securities issued in the Exchange Offer as a
single class for purposes of determining whether holders of the
requisite percentage in outstanding liquidation amount thereof
have taken certain actions or exercised certain rights under the
Trust Agreement (as defined herein).
As the context may require, unless otherwise expressly
stated, the Old Capital Securities and the New Capital Securities
are collectively referred to herein as the "Capital Securities."
The Old Capital Securities represent, and the New Capital
Securities when issued will represent, undivided beneficial
interests in the assets of the Trust. The Corporation owns all of
the common securities of the Trust (the "Common Securities")
representing undivided beneficial interests in the assets of the
Trust. The Trust exists for the sole purpose of issuing the
Common Securities and the Capital Securities (together, the
"Trust Securities") and investing the proceeds thereof in the
Junior Subordinated Debentures and certain other limited
activities described herein.
The Old Junior Subordinated Debentures and the New Junior
Subordinated Debentures are collectively referred to herein as
the "Junior Subordinated Debentures" and the Old Guarantee and
the New Guarantee are collectively referred to herein as the
"Guarantee."
As used herein, (i) the "Indenture" means the Indenture,
dated as of June 6, 1997, as amended and supplemented from time
to time, between the Corporation and The Chase Manhattan Bank, as
trustee (the "Debenture Trustee"), relating to the Junior
Subordinated Debentures, (ii) the "Trust Agreement" means the
Amended and Restated Declaration of Trust relating to the Trust
among the Corporation, as Sponsor, The Chase
Manhattan Bank, as Property Trustee (the "Property Trustee"),
Chase Manhattan Bank Delaware, as Delaware Trustee (the "Delaware
Trustee"), the Administrators (as defined herein) and the holders
from time to time of the Trust Securities and (iii) the "Common
Guarantee" means the Guarantee Agreement of the Corporation
relating to the Common Securities.
Except as provided below, the Capital Securities will be
represented by global Capital Securities in fully registered
form, deposited with a custodian for and registered in the name
of a nominee of DTC (as defined herein). Beneficial interests in
such Capital Securities will be shown on, and transfers thereof
will be effected through, records maintained by DTC and its
participants. Beneficial interests in such Capital Securities
will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in such interests will
therefore settle in immediately available funds. The Capital
Securities will be issued, and may be transferred, only in blocks
having a Liquidation Amount of not less than $100,000 (100
Capital Securities). See "Description of Capital
Securities--Restrictions on Transfer."
Holders of the Trust Securities are or will be, as the case
may be, entitled to receive cumulative cash distributions arising
from the payment of interest on the Junior Subordinated
Debentures, accumulating from the date of original issuance of
the Common Securities and the Old Capital Securities and payable
semi-annually in arrears on June 6 and December 6 of each year,
commencing December 6, 1997, at the annual rate of 9.27% of the
Liquidation Amount of $1,000 per Trust Security
("Distributions"). So long as no Debenture Event of Default (as
defined herein) has occurred and is continuing, the Corporation
will have the right to defer payments of interest on the Junior
Subordinated Debentures at any time and from time to time for a
period not exceeding 10 consecutive semi-annual periods with
respect to each deferral period (each, an "Extension Period"),
provided that
2
<PAGE>
no Extension Period may extend beyond the Stated Maturity Date. Upon
the expiration of any Extension Period and the payment of all
amounts then due, the Corporation may elect to begin a new
Extension Period, subject to the requirements set forth herein.
If and for so long as interest payments on the Junior
Subordinated Debentures are so deferred, Distributions on the
Trust Securities will also be deferred and the Corporation will
not be permitted, subject to certain exceptions described herein,
to declare or pay any cash distributions with respect to the
Corporation's capital stock (which includes common and preferred
stock) or to make any payment with respect to debt securities of
the Corporation that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on
the Junior Subordinated Debentures will continue to accrue (and
the amount of Distributions to which holders of the Trust
Securities are entitled will continue to accumulate) at the rate
of 9.27% per annum, compounded semi-annually, and holders of
Trust Securities will be required to accrue such deferred
interest income for United States federal income tax purposes
prior to the receipt of cash payments attributable to such
interest income. See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Date" and "Certain
Federal Income Tax Consequences--Interest Income and Original
Issue Discount."
The Corporation, through the Guarantee, the Common
Guarantee, the Trust Agreement, the Junior Subordinated
Debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guarantees on a subordinated basis all of the
Trust's obligations under the Trust Securities. See "Relationship
Among the Capital Securities, the Junior Subordinated Debentures
and the Guarantee--Full and Unconditional Guarantee." The
Guarantee and the Common Guarantee guarantee payments of
Distributions and payments on liquidation or redemption of the
Trust Securities, but in each case only to the extent that the
Trust holds funds on hand legally available therefor and has
failed to make such payments, as described herein. See
"Description of Guarantee." If the Corporation defaults on its
obligation to make a required payment on the Junior Subordinated
Debentures, the Trust will not have sufficient funds to make the
related payments, including Distributions, on the Trust
Securities. The Guarantee and the Common Guarantee will not cover
any such payment when the Trust does not have sufficient funds on
hand legally available therefor. In such event, a holder of
Capital Securities may institute a legal proceeding directly
against the Corporation to enforce its rights in respect of such
payment as described herein and as provided in the Trust
Agreement. See "Risk Factors--Rights Under the Guarantee" and
"Description of Junior Subordinated Debentures--Enforcement of
Certain Rights by Holders of Capital Securities." The obligations
of the Corporation under the Guarantee, the Common Guarantee and
the Junior Subordinated Debentures rank subordinate and junior in
right of payment to all Senior Indebtedness (as defined in
"Description of Junior Subordinated Debentures--Subordination").
At September 30, 1997, the Corporation had no Senior
Indebtedness. See "Risk Factors--Ranking of Subordinated
Obligations under the Guarantee and the Junior Subordinated
Debentures."
The Trust Securities will be subject to mandatory
redemption in a Like Amount (as defined herein), (i) in whole but
not in part, on the Stated Maturity Date upon repayment of the
Junior Subordinated Debentures at a redemption price equal to the
principal amount of, plus accrued and unpaid interest on, the
Junior Subordinated Debentures (the "Maturity Redemption Price"),
(ii) in whole but not in part, at any time prior to June 6, 2007,
contemporaneously with the optional prepayment by the Corporation
of the Junior Subordinated Debentures, upon the occurrence and
continuation of a Special Event (as defined herein) at a
redemption price equal to the Special Event Prepayment Price (as
defined herein) (the "Special Event Redemption Price"), and (iii)
in whole or in part, on or after June 6, 2007, contemporaneously
with the optional prepayment by the Corporation of the Junior
Subordinated Debentures, at a redemption price equal to the
Optional Prepayment Price (as defined herein) (the "Optional
Redemption Price"). Any of the Maturity Redemption Price, the
Special Event Redemption Price and the Optional Redemption Price
may be referred to herein as the "Redemption Price." See
"Description of Capital Securities--Redemption."
Subject to the Corporation having received any required
regulatory approval, the Junior Subordinated Debentures will be
prepayable prior to the Stated Maturity Date at the option of the
Corporation (i) on or after June 6, 2007, in whole or in part, at
a prepayment price (the "Optional Prepayment Price") equal to
104.635% of the principal amount thereof on June 6, 2007,
declining ratably on each June 6 thereafter to 100% on or after
June 6, 2017, and (ii) prior to June 6, 2007, in whole but not in
part, upon the occurrence and continuation of a Special Event, at
a prepayment price (the "Special Event Prepayment Price") equal
to the greater of (a) 100% of
3
<PAGE>
the principal amount thereof and (b) the sum, as determined by a
Quotation Agent (as defined herein), of the present value of 100%
of the principal amount thereof plus the scheduled payments of
interest thereon from the prepayment date to and including June
6, 2007, discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate (as defined herein), plus, in the case
of a redemption under clause (i) or clause (ii), accrued and
unpaid interest thereon to the date of prepayment. Either of the
Optional Prepayment Price or the Special Event Prepayment Price
may be referred to herein as the "Prepayment Price." See
"Description of Junior Subordinated Debentures--Optional
Prepayment" and "--Special Event Prepayment."
The Corporation will have the right at any time to dissolve
the Trust and, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, cause a Like Amount of
the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust,
subject to the Corporation's having received (i) an opinion of
counsel to the effect that such distribution will not be a
taxable event to holders of Capital Securities and (ii) any
required regulatory approval. Unless the Junior Subordinated
Debentures are distributed to the holders of the Trust
Securities, in the event of a liquidation of the Trust as
described herein, after satisfaction of liabilities to creditors
of the Trust as required by applicable law, the holders of the
Trust Securities generally will be entitled to receive a
Liquidation Amount of $1,000 per Trust Security plus accumulated
and unpaid Distributions thereon to the date of payment. See
"Description of Capital Securities--Liquidation of the Trust and
Distribution of Junior Subordinated Debentures."
Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission"), as set forth in no-action
letters issued to third parties, the Corporation and the Trust
believe that the New Securities issued pursuant to the Exchange
Offer may be offered for resale, resold or otherwise transferred
by holders thereof (other than any holder that is an "affiliate"
of the Corporation or the Trust as defined in Rule 405 under the
Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act; provided
that such New Securities are acquired in the ordinary course of
such holders' business and such holders are not engaged in, and
do not intend to engage in, a distribution of such New Securities
and have no arrangement or understanding with any person to
participate in the distribution of such New Securities. However,
the staff of the Commission has not considered the Exchange Offer
in the context of a no-action letter, and there can be no
assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer as in such other
circumstances. By tendering the Old Capital Securities in
exchange for New Capital Securities, each holder, other than a
broker-dealer, will represent to the Corporation and the Trust
that: (i) it is not an affiliate of the Corporation or the Trust
(as defined in Rule 405 under the Securities Act); (ii) any New
Capital Securities to be received by it are being acquired in the
course of its ordinary business; and (iii) it is not engaged in,
and does not intend to engage in, a distribution of the New
Capital Securities and has no arrangement or understanding with
any person to participate in a distribution (within the meaning
of the Securities Act) of the New Capital Securities. In
addition, the Corporation and the Trust may require each holder,
as a condition to such holder's eligibility to participate in the
Exchange Offer, to furnish to the Corporation and the Trust (or
an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) on behalf of whom
such holder holds the Old Capital Securities to be exchanged in
the Exchange Offer.
Each broker-dealer that receives New Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale
of such New Capital Securities. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. 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 Capital Securities received in exchange for Old Capital
Securities where such Old Capital Securities were acquired by
such broker-dealer as a result of market-making activities or
other trading activities. The Corporation and the Trust have
agreed that, starting on the date on which the Exchange Offer is
consummated and ending on the close of business one year after
such date, they will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See
"Plan of Distribution." However, an Exchanging Dealer (as defined
herein) that intends to use this Prospectus in connection with
the resale of New Capital Securities pursuant to the Exchange
Offer must notify the Corporation or the Trust, or cause the
4
<PAGE>
Corporation or the Trust to be notified, on or prior to the
Expiration Date, that it is an Exchanging Dealer. Such notice may
be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at the
address set forth herein under "The Exchange Offer--Exchange
Agent." Any Exchanging Dealer who is an "affiliate" of the
Corporation or the Trust may not rely on the no-action letters
mentioned in the preceding paragraph and must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. See
"The Exchange Offer--Resales of New Capital Securities."
In that regard, each Exchanging Dealer (as defined herein)
who surrenders Old Capital Securities pursuant to the Exchange
Offer will be deemed to have agreed, by execution of the Letter
of Transmittal or by delivery of an Agent's Message (as defined
herein), that, upon receipt of notice from the Corporation or the
Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference
in this Prospectus untrue in any material respect or which causes
this Prospectus to omit to state a material fact necessary in
order to make the statements contained or incorporated by
reference herein, in the light of the circumstances under which
they were made, not misleading, or of the occurrence of certain
other events specified in the Registration Rights Agreement, such
Exchanging Dealer will suspend the sale of New Securities
pursuant to this Prospectus until the Corporation or the Trust
has amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to such Exchanging Dealer, or the
Corporation or the Trust has given notice that the sale of the
New Securities may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited
secondary market and no public market for the Old Capital
Securities. The New Capital Securities will be a new issue of
securities for which there currently is no market. Although the
Initial Purchaser has informed the Corporation and the Trust that
it currently intends to make a market in the New Capital
Securities, it is not obligated to do so, and any such
market-making may be discontinued at any time without notice. The
New Capital Securities will not be listed on a securities
exchange or for quotation through NASDAQ (as defined herein) and
there can be no assurance as to the development or liquidity of
any market for the New Capital Securities.
Any Old Capital Securities not tendered and accepted in the
Exchange Offer will remain outstanding and will be entitled to
all the same rights and will be subject to the same limitations
applicable thereto under the Trust Agreement (except for those
rights which terminate upon consummation of the Exchange Offer).
Following consummation of the Exchange Offer, the holders of Old
Capital Securities will continue to be subject to all of the
existing restrictions upon transfer thereof and neither the
Corporation nor the Trust will have any further obligation to
such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old
Capital Securities held by them. To the extent that Old Capital
Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Capital Securities could
be adversely affected. See "Risk Factors--Consequences of a
Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES
ARE URGED TO READ THIS PROSPECTUS AND THE RELATED LETTER OF
TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or
prior to 5:00 p.m., New York City time, on December 29, 1997
(such time on such date being hereinafter called the "Expiration
Date"), unless the Exchange Offer is extended by the Corporation
and the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at
any time on or prior to the Expiration Date. The Exchange Offer
is not conditioned upon any minimum liquidation amount of Old
Capital Securities being tendered for exchange. However, the
Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Trust and to the terms
and provisions of the Registration Rights Agreement. Old Capital
Securities may be tendered in whole or in part. The Corporation
has agreed to pay all expenses of the Exchange Offer, except as
otherwise specified herein. See "The Exchange Offer--Fees and
Expenses." The New Capital Securities will pay cumulative
distributions from the most recent Distribution Date (as defined
herein) on the Old Capital Securities surrendered
5
<PAGE>
in exchange for such New Capital Securities or, if no
distributions have been paid on such Old Capital Securities, from
June 6, 1997. Holders of the Old Capital Securities whose Old
Capital Securities are accepted for exchange will not receive
accumulated distributions on such Old Capital Securities for any
period from and after the last Distribution Date on such Old
Capital Securities prior to the original issue date of the New
Capital Securities or, if no such distributions have been paid,
will not receive any accumulated distributions on such Old
Capital Securities, and will be deemed to have waived the right
to receive any distributions on such Old Capital Securities
accumulated from and after such Distribution Date or, if no such
distributions have been paid or duly provided for, from and after
June 6, 1997. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old
Capital Securities as of November 26, 1997.
Neither the Corporation nor the Trust will receive any cash
proceeds from the issuance of the New Capital Securities offered
hereby. No dealer-manager is being used in connection with the
Exchange Offer. See "Use of Proceeds" and "Plan of Distribution."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE
CORPORATION OR THE TRUST ACCEPT SURRENDERS FOR EXCHANGE FROM,
HOLDERS OF OLD CAPITAL SECURITIES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH
JURISDICTION.
6
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith, files reports,
proxy statements and other information with the Commission. Such
reports, proxy statements and other information 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. Copies of such material may also be obtained by
mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
Such information may also be accessed electronically by means of
the Commission's home page on the Internet (http://www.sec.gov.).
The Corporation's common stock is traded on the National
Association of Securities Dealers, Inc.'s Automated Quotation
("NASDAQ") National Market System. In addition, such reports,
proxy statements and other information concerning the Corporation
may be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
The Corporation and the Trust have filed with the
Commission a Registration Statement on Form S-4 (together with
all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with
respect to the Corporation, the Trust and the securities offered
hereby, reference is made to the Registration Statement and the
exhibits and financial statements, notes and schedules filed as a
part thereof or incorporated by reference therein, which may be
inspected or obtained at or from the Commission as described
above. Statements made in this Prospectus concerning the contents
of any documents referred to herein are not necessarily complete,
and in each instance are qualified in all respects by reference
to the copy of such document filed as an exhibit to the
Registration Statement.
No separate financial statements of the Trust have been
included herein. The Corporation and the Trust do not consider
that such financial statements would be material to holders of
the Capital Securities because the Trust is a newly formed
special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage
in any activity other than holding as trust assets the Junior
Subordinated Debentures, issuing the Trust Securities and
engaging in incidental activities. See "ALBANK Capital Trust I,"
"Description of Capital Securities," "Description of Junior
Subordinated Debentures" and "Description of Guarantee." In
addition, the Corporation does not expect that the Trust will
file reports, proxy statements and other information under the
Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and the Corporation's
Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1997, June 30, 1997 and September 30, 1997, each as
filed by the Corporation with the Commission, are incorporated
into this Prospectus by reference.
All documents subsequently filed by the Corporation
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date hereof and prior to the termination of the
offering of the Capital Securities offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a
part of this Prospectus from the date of filing of such document.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
7
<PAGE>
AS USED HEREIN, THE TERMS "PROSPECTUS" AND "HEREIN" MEAN
THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED OR DEEMED
TO BE INCORPORATED HEREIN BY REFERENCE, AS THE SAME MAY BE
AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. STATEMENTS CONTAINED IN
THIS PROSPECTUS AS TO THE CONTENTS OF ANY CONTRACT OR OTHER
DOCUMENT REFERRED TO HEREIN DO NOT PURPORT TO BE COMPLETE, AND
WHERE REFERENCE IS MADE TO THE PARTICULAR PROVISIONS OF SUCH
CONTRACT OR OTHER DOCUMENT, SUCH PROVISIONS ARE QUALIFIED IN ALL
RESPECTS BY REFERENCE TO ALL OF THE PROVISIONS OF SUCH CONTRACT
OR OTHER DOCUMENT. THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO
ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN
OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE
FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER THAN
EXHIBITS NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO THE
TEXTS OF SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE
DIRECTED TO: FRELING H. SMITH, SENIOR VICE PRESIDENT, SECRETARY
AND GENERAL COUNSEL, ALBANK FINANCIAL CORPORATION, 10 NORTH PEARL
STREET, ALBANY, NEW YORK 12207. TELEPHONE REQUESTS MAY BE
DIRECTED TO FRELING H. SMITH AT (518) 445-2100. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE
MADE BY DECEMBER 19, 1997, FIVE BUSINESS DAYS PRIOR TO THE
EXPIRATION DATE.
8
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus.
ALBANK Financial Corporation
ALBANK, through its subsidiary, ALBANK, FSB, a federally
chartered savings association (the "Bank"), serves approximately
350,000 customers in eastern and central upstate New York,
Vermont and western Massachusetts through 73 branch offices.
Headquartered in Albany, New York, ALBANK has grown significantly
in recent years primarily through a series of acquisitions which
have expanded and strengthened its franchise and accelerated its
shift from a traditional thrift institution to more of a
bank-like financial institution. Moreover, ALBANK's shift in
lines of business has contributed to the increase in its net
interest margin, which was 3.91% for the year ended December 31,
1996 and 3.99% for the nine months ended September 30, 1997. As
of September 30, 1997, ALBANK had consolidated total assets of
$3.7 billion, deposits of $3.0 billion and stockholders' equity
of $343.5 million. ALBANK's net income for the year ended
December 31, 1996 was $26.2 million or $1.84 per fully diluted
share. Net income for 1996 included a one-time Savings
Association Insurance Fund ("SAIF") special assessment of $6.4
million after tax ($10.4 million before tax); excluding this
charge, 1996 net income would have been $32.6 million or $2.28
per fully diluted share. Net income for the nine months ended
September 30, 1997 was $28.1 million, an increase of $10.9
million (64%) from the comparable period the year before. Primary
and fully diluted earnings per share were $2.03 and $2.02,
respectively, for the first nine months of 1997, up from $1.20
per share a year ago, representing increases of 69% and 68%,
respectively. Core net income for the nine months ended September
30, 1997 was $28.0 million, an increase of $4.4 million (19%)
from the comparable period the year before. Fully diluted core
earnings per share were $2.01 for the first nine months of 1997,
up from $1.64 per share a year ago, representing an increase of
23%.
In January 1997, ALBANK announced a definitive purchase
agreement to acquire 35 branch offices in eastern and central
upstate New York from Key Bank N.A. (the "Key Branch
Acquisition"), with total deposits of approximately $530 million
and related small business, consumer and mortgage loans of
approximately $53 million. ALBANK consummated the Key Branch
Acquisition on November 10, 1997. In August 1997, ALBANK
announced a definitive purchase agreement to acquire three New
York state branch offices from First Union National Bank (the
"First Union Branch Acquisition"), with total deposits of
approximately $33.5 million. The First Union Branch Acquisition
is subject to regulatory approval.
ALBANK Capital Trust I
The Trust is a statutory business trust created under
Delaware law pursuant to the filing of a certificate of trust
with the Delaware Secretary of State on April 3, 1997. Subject to
the limitations contained in the Trust Agreement, the Trust's
business and affairs are conducted by the Property Trustee. In
addition, three individuals who are employees or officers of or
affiliated with the Corporation act as administrators with
respect to the Trust (the "Administrators"). The Trust exists for
the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures issued
by the Corporation and (iii) engaging in only those other
activities necessary, advisable or incidental thereto (such as
registering the transfer of the Trust Securities). The Junior
Subordinated Debentures are the sole assets of the Trust, and
payments under the Junior Subordinated Debentures will be the
sole revenue of the Trust. All of the Common Securities are owned
by the Corporation.
9
<PAGE>
The Exchange Offer
The Exchange Offer ........ Up to $50,000,000 aggregate liquidation
amount of New Capital Securities are being
offered in exchange for a like aggregate
liquidation amount of Old Capital
Securities. Old Capital Securities may
be tendered for exchange, in whole or in
part, in a liquidation amount of
$100,000 or any integral multiple of
$1,000 in excess thereof, provided that,
if any Old Capital Securities are
tendered for exchange in part, the
untendered liquidation amount thereof
must be $100,000 or any integral
multiple of $1,000 in excess thereof.
The Corporation and the Trust are making
the Exchange Offer in order to satisfy
their obligations under the Registration
Rights Agreement relating to the Old
Capital Securities. For a description of
the procedures for tendering Old Capital
Securities, see "The Exchange
Offer--Procedures for Tendering Old
Capital Securities."
Expiration Date ........... The Expiration Date of the Exchange
Offer will be 5:00 p.m., New York
City time, on December 29, 1997,
unless the Exchange Offer is extended by
the Corporation and the Trust (in which
case the Expiration Date will be the
latest date and time to which the
Exchange Offer is extended). See "The
Exchange Offer--Expiration Date;
Extensions; Amendments."
Conditions to the
Exchange Offer ............ The Exchange Offer is subject to
certain conditions, which may be
waived by the Corporation and
the Trust in their sole
discretion. The Exchange Offer
is not conditioned upon any
minimum liquidation amount of
Old Capital Securities being
tendered. See "The Exchange
Offer--Conditions to the
Exchange Offer."
Terms of the Exchange
Offer ..................... The Corporation and the Trust reserve the
right in their sole discretion, subject to
applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old
Capital Securities for exchange, (ii) to
terminate the Exchange Offer if certain
specified events have occurred, (iii) to
extend the Expiration Date of the
Exchange Offer and retain all Old
Capital Securities tendered pursuant to
the Exchange Offer, subject, however, to
the right of holders of Old Capital
Securities to withdraw their tendered
Old Capital Securities, or (iv) to waive
any condition or otherwise amend the
terms of the Exchange Offer in any
respect. See "The Exchange
Offer--Expiration Date; Extensions;
Amendments."
Withdrawal Rights ......... Tenders of Old Capital Securities
may be withdrawn at any time
on or prior to the Expiration Date by
delivering a written notice of such
withdrawal to The Chase Manhattan Bank,
as Exchange Agent (the "Exchange
Agent"), in conformity with certain
procedures set forth below under
10
<PAGE>
"The Exchange Offer--Withdrawal Rights."
Procedures for
Tendering Old
Capital Securities ........ Tendering holders of Old Capital Securities
must complete and sign a Letter of
Transmittal in accordance with the
instructions contained therein and
forward the same by mail, facsimile or
hand delivery, together with any other
required documents, to the Exchange
Agent, either with the Old Capital
Securities to be tendered or in
compliance with the specified procedures
for guaranteed delivery of Old Capital
Securities. Certain brokers, dealers,
commercial banks, trust companies and
other nominees may also effect tenders
by book-entry transfer, including an
Agent's Message in lieu of the Letter of
Transmittal. Holders of Old Capital
Securities registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee are urged to
contact such person promptly if they
wish to tender Old Capital Securities
pursuant to the Exchange Offer. See "The
Exchange Offer--Procedures for Tendering
Old Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities
should not be sent to the Corporation or
the Trust. Such documents should only be
sent to the Exchange Agent. Questions
regarding how to tender and requests for
information should be directed to the
Exchange Agent. See "The Exchange
Offer--Exchange Agent."
Resales of New
Capital Securities ........ Based on interpretations by the staff of
the Commission as set forth in no-action
letters issued to third parties, the
Corporation and the Trust believe that
the New Securities issued pursuant to
the Exchange Offer may be offered for
resale, resold or otherwise transferred
by holders thereof (other than any
holder that is an "affiliate" of the
Corporation or the Trust as defined in
Rule 405 under the Securities Act)
without compliance with the registration
and prospectus delivery provisions of
the Securities Act; provided that such
New Securities are acquired in the
ordinary course of such holders'
business and such holders are not
engaged in, and do not intend to engage
in, a distribution of such New
Securities and have no arrangement or
understanding with any person to
participate in the distribution of such
New Securities. However, the staff of
the Commission has not considered the
Exchange Offer in the context of a
no-action letter, and there can be no
assurance that the staff of the
Commission would make a similar
determination with respect to the
Exchange Offer as in such other
circumstances. By tendering the Old
Capital Securities in exchange for New
Capital Securities, each holder, other
than a broker-dealer, will represent to
the Corporation and the Trust that: (i)
it is not an affiliate of the
Corporation or the Trust (as defined in
Rule 405 under the Securities Act); (ii)
any New Capital Securities to be
received by it are being acquired in the
course of its ordinary business; and
(iii) it is not engaged in, and does not
intend to
11
<PAGE>
engage in, a distribution of the New
Capital Securities and has no
arrangement or understanding
with any person to participate
in a distribution (within the
meaning of the Securities Act)
of the New Capital Securities.
In addition, the Corporation and
the Trust may require each
holder, as a condition to such
holder's eligibility to
participate in the Exchange
Offer, to furnish to the
Corporation and the Trust (or an
agent thereof) in writing
information as to the number of
"beneficial owners" (within the
meaning of Rule 13d-3 under the
Securities Exchange Act of 1934,
as amended) on behalf of whom
such holder holds the Old
Capital Securities to be
exchanged in the Exchange Offer.
Each broker-dealer that receives
New Capital Securities for its
own account pursuant to the
Exchange Offer must acknowledge
that it will deliver a
prospectus in connection with
any resale of such New Capital
Securities. The Letter of
Transmittal states that by so
acknowledging and by delivering
a prospectus, a broker-dealer
will not be deemed to admit that
it is an "underwriter" within
the meaning of the Securities
Act. 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 Capital
Securities received in exchange
for Old Capital Securities where
such Old Capital Securities were
acquired by such broker-dealer
as a result of market-making
activities or other trading
activities. The Corporation and
the Trust have agreed that,
starting on the date on which
the Exchange Offer is
consummated and ending on the
close of business one year after
such date, they will make this
Prospectus available to any
broker-dealer for use in
connection with any such resale.
See "Plan of Distribution."
However, an Exchanging Dealer
that intends to use this
Prospectus in connection with
the resale of New Capital
Securities pursuant to the
Exchange Offer must notify the
Corporation or the Trust, or
cause the Corporation or the
Trust to be notified, on or
prior to the Expiration Date,
that it is an Exchanging Dealer.
Such notice may be given in the
space provided for that purpose
in the Letter of Transmittal or
may be delivered to the Exchange
Agent at the address set forth
herein under "The Exchange
Offer--Exchange Agent." Any
Exchanging Dealer who is an
"affiliate" of the Corporation
or the Trust may not rely on the
no-action letters mentioned in
the preceding paragraph and must
comply with the registration and
prospectus delivery requirements
of the Securities Act in
connection with any resale
transaction. See "The Exchange
Offer--Resales of New Capital
Securities."
In that regard, each Exchanging
Dealer who surrenders Old Capital
Securities pursuant to the
Exchange Offer will be deemed to
have agreed, by execution of the
Letter of Transmittal or
delivery of an Agent's Message,
that, upon receipt of notice
from the Corporation or the
Trust of the occurrence of any event
or the discovery of any fact which
12
<PAGE>
makes any statement contained
or incorporated by reference
in this Prospectus untrue in any
material respect or which causes
this Prospectus to omit to state
a material fact necessary in
order to make the statements
contained or incorporated by
reference herein, in the light
of the circumstances under which
they were made, not misleading,
or of the occurrence of certain
other events specified in the
Registration Rights Agreement,
such Exchanging Dealer will
suspend the sale of New
Securities pursuant to this
Prospectus until the Corporation
or the Trust has amended or
supplemented this Prospectus to
correct such misstatement or
omission and has furnished
copies of the amended or
supplemented Prospectus to such
Exchanging Dealer, or the
Corporation or the Trust has
given notice that the sale of
the New Securities may be
resumed, as the case may be.
Exchange Agent ............ The Exchange Agent is The
Chase Manhattan Bank. The
address and telephone and
facsimile numbers of the
Exchange Agent are set forth
under "The Exchange
Offer--Exchange Agent" and in
the Letter of Transmittal.
Use of Proceeds .......... Neither the Corporation nor the
Trust will receive any cash proceeds
from the issuance of the New Capital
Securities offered hereby. The Old
Capital Securities surrendered in
exchange for the New Capital Securities
will be retired and canceled. See
"Use of Proceeds."
Certain Federal
Income Tax
Consequences;
ERISA Considerations ...... Holders of Old Capital Securities
should carefully review the
information set forth under "Certain
Federal Income Tax Consequences" and
"ERISA Considerations" prior to
tendering Old Capital Securities in the
Exchange Offer.
The Capital Securities
The Exchange Offer applies to the Old Securities. The terms
of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the
New Securities have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer
applicable to the Old Securities, (ii) the New Capital Securities
will not provide for any increase in the distribution rate
thereon, and (iii) the New Junior Subordinated Debentures will
not provide for any increase in the interest rate thereon. In the
event that the Exchange Offer is consummated, any Old Capital
Securities which remain outstanding after consummation of the
Exchange Offer will vote together with the New Capital Securities
issued in the Exchange Offer as a single class for purposes of
determining whether holders of the requisite percentage in
outstanding liquidation amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement.
Securities Offered ........ 50,000 9.27% Capital Securities,
Series B (Liquidation Amount
$1,000 per Capital Security).
Distribution Dates ........ June 6 and December 6 of each year,
commencing December 6, 1997.
Extension Periods ......... So long as no Debenture Event of Default
(as defined herein) has occurred and is
continuing, distributions on Capital
Securities will be deferred for the
duration of any Extension
13
<PAGE>
Period elected by the Corporation
with respect to the payment
of interest on the Junior
Subordinated Debentures.
No Extension Period will exceed
10 consecutive semi-annual
periods, end on a day other than
an Interest Payment Date or
extend beyond the Stated
Maturity Date. See "Description
of Junior Subordinated
Debentures--Option to Extend
Interest Payment Date" and
"Certain Federal Income Tax
Consequences--Interest Income
and Original Issue Discount."
Ranking ................... The Capital Securities rank pari passu,
and payments thereon will be made pro rata,
with the Common Securities except as
described under "Description of Capital
Securities-- Subordination of Common
Securities." The Junior Subordinated
Debentures rank pari passu with all
other junior subordinated debentures (if
any) issued by the Corporation ("Other
Debentures") and sold (if at all) to
other trusts (if any) established by the
Corporation (if any), in each case
similar to the Trust ("Other Trusts"),
and are unsecured and subordinate and
rank junior in right of payment to all
Senior Indebtedness to the extent and in
the manner set forth in the Indenture.
See "Description of Junior Subordinated
Debentures." The Guarantee ranks pari
passu with all other guarantees (if any)
issued by the Corporation with respect
to capital securities (if any) issued by
Other Trusts ("Other Guarantees") and is
unsecured and subordinate and ranks
junior in right of payment to all Senior
Indebtedness to the extent and in the
manner set forth in the Guarantee. See
"Description of Guarantee."
Redemption ................ The Trust Securities are subject to
mandatory redemption in a Like Amount,
(i) in whole but not in part, on the Stated
Maturity Date upon repayment of the
Junior Subordinated Debentures, (ii) in
whole but not in part, at any time prior
to June 6, 2007, contemporaneously with
the optional prepayment of the Junior
Subordinated Debentures by the
Corporation upon the occurrence and
continuation of a Special Event and
(iii) in whole or in part, on or after
June 6, 2007, contemporaneously with the
optional prepayment by the Corporation
of the Junior Subordinated Debentures,
in each case at the applicable
Redemption Price. See "Description of
Capital Securities--Redemption."
Voting Rights ............. Holders of Capital Securities have limited
voting rights relating generally to the
modification of the Capital Securities
and the Guarantee and the exercise of
the Trust's rights as the holder of the
Junior Subordinated Debentures. Holders
of Capital Securities are not entitled
to appoint, remove or replace the
Administrators at any time. Holders of
Capital Securities are not entitled to
appoint, remove or replace the Property
Trustee or the Delaware Trustee except
upon the occurrence of a Debenture Event
of Default as described herein. See
"Description of Capital
Securities--Voting Rights; Amendment of
the Trust Agreement" and "--
14
<PAGE>
Removal of Issuer Trustees."
Ratings The New Capital Securities are expected
to be rated BB+ by Fitch Investors Service,
Inc. and BB by Standard & Poor's Ratings
Services.
Transfer Restrictions ..... The Old Capital Securities were issued and
the New Capital Securities will be issued,
and may be transferred, only in blocks
having a Liquidation Amount of not less
than $100,000 (100 Capital Securities).
See "Description of Capital
Securities--Restrictions on Transfer."
Any such transfer of Capital Securities
in a block having a Liquidation Amount
of less than $100,000 shall be deemed to
be void and of no legal effect
whatsoever.
Absence of Market
for the New Capital
Securities ................ The New Capital Securities
will be a new issue of securities for
which there currently is no market.
Although the Initial Purchaser
previously informed the Trust and the
Corporation in connection with the
offering of the Old Capital Securities
that it intended to make a market in the
Old Capital Securities, the Initial
Purchaser is not obligated to make a
market in the Capital Securities, and
any such market making may be
discontinued at any time without notice.
Moreover, there can be no assurance as
to the development or liquidity of any
market for the New Capital Securities.
The Trust and the Corporation do not
intend to apply for listing of the New
Capital Securities on any securities
exchange or for quotation through the
NASDAQ System. See "Plan of
Distribution."
15
<PAGE>
RISK FACTORS
Prior to tendering Old Capital Securities in the Exchange
Offer, holders of the Old Capital Securities should carefully
review the information contained elsewhere in this Prospectus and
should particularly consider the following matters.
Consequences of Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under
the Securities Act or any state securities laws and therefore may
not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities
Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and
restrictions. Old Capital Securities which remain outstanding
after consummation of the Exchange Offer will continue to bear a
legend reflecting such restrictions on transfer. In addition, the
Old Capital Securities provide, among other things, that if,
under certain circumstances as set forth in the Registration
Rights Agreement, the Exchange Offer is not consummated within 35
days of the effectiveness of the Registration Statement of which
this Prospectus is a part, the annual distribution rate borne by
the Old Capital Securities will increase by 0.50% until the
Exchange Offer is consummated. Upon consummation of the Exchange
Offer, holders of Old Capital Securities which remain outstanding
will not be entitled to any rights to have such Old Capital
Securities registered under the Securities Act or to any similar
rights under the Registration Rights Agreement (subject to
certain limited exceptions). The Corporation and the Trust do not
intend to register under the Securities Act any Old Capital
Securities which remain outstanding after consummation of the
Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected. In
addition, any trading market for Old Capital Securities which
remain outstanding after the Exchange Offer (including the PORTAL
market) could be adversely affected.
The New Capital Securities and any Old Capital Securities
which remain outstanding after consummation of the Exchange Offer
will constitute a single series of Capital Securities under the
Trust Agreement and, accordingly, will vote together as a single
class for purposes of determining whether holders of the
requisite percentage in outstanding liquidation amount thereof
have taken certain actions or exercised certain rights under the
Trust Agreement. See "Description of Capital Securities."
Exchange Offer Procedures
Issuance of the New Capital Securities in exchange for Old
Capital Securities pursuant to the Exchange Offer will be made
only after a timely receipt by the Exchange Agent of such Old
Capital Securities, a properly completed and duly executed Letter
of Transmittal or Agent's Message in lieu thereof and all other
required documents. Therefore, holders of the Old Capital
Securities desiring to tender such Old Capital Securities in
exchange for New Capital Securities should allow sufficient time
to ensure timely delivery. Neither the Corporation, the Trust nor
the Exchange Agent is under any duty to give notification of
defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
Ranking of Subordinated Obligations Under the Guarantee
and the Junior Subordinated Debentures
The obligations of the Corporation under the Guarantee and
the Junior Subordinated Debentures are unsecured and subordinate
and rank junior in right of payment to all Senior Indebtedness.
In addition, in the case of a bankruptcy or insolvency
proceeding, the Corporation's obligations under the Guarantee
will also rank subordinate and junior in right of payment to all
liabilities (other than Other Guarantees) of the Corporation. At
September 30, 1997, the Corporation had no Senior Indebtedness.
As a holding company, the right of the Corporation to participate
in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus
the ability of holders of the Capital Securities to benefit
indirectly from such
16
<PAGE>
distribution) is subject to the prior claims of creditors of that
subsidiary, except to the extent that the Corporation may itself
be recognized as a creditor of that subsidiary. At September 30,
1997, ALBANK, FSB, a federally chartered savings association (the
"Bank"), had an aggregate (excluding deposits and liabilities
owed to the Corporation) of approximately $238.6 million of
borrowings outstanding. Accordingly, the Junior Subordinated
Debentures are effectively subordinated to all existing and
future liabilities of the Bank and other subsidiaries of the
Corporation, and holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments on the
Junior Subordinated Debentures. In addition, the Bank is subject
to certain restrictions imposed by federal law on any loans or
extensions of credit to, investments in or asset purchases from,
the Corporation or its non-banking affiliates. Such transactions
by the Bank are generally limited in amount as to the Corporation
and as to each of such other affiliates to 10% of the Bank's
capital and surplus and as to the Corporation and all of such
other affiliates to an aggregate of 20% of the Bank's capital and
surplus. Such restrictions also prevent the Corporation and such
other affiliates from borrowing from the Bank unless the loans
are secured in specified amounts. In addition, there are federal
regulatory limitations on the payment of dividends directly or
indirectly to the Corporation from the Bank. Federal regulatory
agencies also have the authority to limit payment of dividends by
the Bank based on the capital adequacy of the Bank and the safety
and soundness of the Bank following payment of the proposed
dividend. None of the Indenture, the Guarantee or the Trust
Agreement places any limitation on the amount of indebtedness,
including Senior Indebtedness, that may be incurred by the
Corporation. See "Description of Guarantee--Status of the
Guarantee" and "Description of Junior Subordinated
Debentures--Subordination."
The ability of the Trust to pay amounts due on the Capital
Securities is solely dependent upon the Corporation making
payments on the Junior Subordinated Debentures as and when
required.
Option to Extend Interest Payment Period; Tax Considerations
So long as no Debenture Event of Default shall have
occurred and be continuing, the Corporation will have the right
under the Indenture to defer payments of interest on the Junior
Subordinated Debentures at any time or from time to time for a
period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension
Period may extend beyond the Stated Maturity Date. Upon any such
deferral, semi-annual Distributions on the Trust Securities by
the Trust will be deferred (and the amount of Distributions to
which holders of the Trust Securities are entitled will
accumulate additional Distributions thereon at the rate of 9.27%
per annum, compounded semi-annually from the relevant
Distribution Date, but not exceeding the interest rate then
accruing on the Junior Subordinated Debentures) from the
respective payment dates for such Distributions during the
relevant Extension Period.
The Corporation may extend any existing Extension Period,
provided that such extension does not cause such Extension Period
to exceed 10 consecutive semi-annual periods or to extend beyond
the Stated Maturity Date. Upon the expiration of any Extension
Period and the payment of all interest then accrued and unpaid on
the Junior Subordinated Debentures (together with interest
thereon at the annual rate of 9.27%, compounded semi-annually, to
the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period, subject to the above
requirements. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period. See
"Description of Capital Securities--Distributions" and
"Description of Junior Subordinated Debentures--Option to Extend
Interest Payment Date."
Should the Corporation exercise its right to defer payments
of interest on the Junior Subordinated Debentures, each holder of
Trust Securities will be required to accrue income (as original
issue discount ("OID")) in respect of the deferred stated
interest allocable to its Trust Securities for United States
federal income tax purposes, which will be allocated but not
distributed to holders of Trust Securities. As a result, each
holder of Capital Securities will recognize income for United
States federal income tax purposes in advance of the receipt of
cash and will not receive the cash related to such income from
the Trust if the holder disposes of the Capital Securities prior
to the record date for the payment of Distributions thereafter.
See "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount" and "--Sales of Capital Securities."
17
<PAGE>
Should the Corporation elect to exercise its right to defer
payments of interest on the Junior Subordinated Debentures in the
future, the market price of the Capital Securities is likely to
be affected. A holder that disposes of its Capital Securities
during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its
Capital Securities. In addition, merely as a result of the
existence of the Corporation's right to defer payments of
interest on the Junior Subordinated Debentures, the market price
of the Capital Securities may be more volatile than the market
prices of other securities on which OID accrues and that are not
subject to such deferrals.
Special Event Redemption
Upon the occurrence and continuation of a Special Event (as
defined under "Description of Junior Subordinated
Debentures--Special Event Prepayment"), the Corporation will have
the right to prepay the Junior Subordinated Debentures in whole
(but not in part) prior to June 6, 2007, at the Special Event
Prepayment Price within 90 days following the occurrence of such
Special Event and therefore cause a mandatory redemption of the
Trust Securities at the Special Event Redemption Price. The
exercise of such right is subject to the Corporation having
received all required regulatory approvals. See "Description of
Capital Securities--Redemption" and "--Liquidation of the Trust
and Distribution of Junior Subordinated Debentures."
Possible Adverse Effect on Market Prices
There can be no assurance as to the market prices for
Capital Securities or Junior Subordinated Debentures distributed
to the holders of Capital Securities if a termination of the
Trust were to occur. Accordingly, the Capital Securities or the
Junior Subordinated Debentures may trade at a discount from the
price that an investor paid to purchase the Old Capital
Securities. Because holders of Capital Securities may receive
Junior Subordinated Debentures in liquidation of the Trust and
because Distributions are otherwise limited to payments on the
Junior Subordinated Debentures, holders of Old Capital Securities
are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures
contained herein. See "Description of Junior Subordinated
Debentures."
Rights Under the Guarantee
The Chase Manhattan Bank acts as Guarantee Trustee and
holds the Guarantee for the benefit of the holders of the Capital
Securities. The Chase Manhattan Bank also acts as Property
Trustee and as Debenture Trustee under the Indenture. Chase
Manhattan Bank Delaware acts as Delaware Trustee under the Trust
Agreement. The Guarantee guarantees to the holders of the Capital
Securities the following payments, to the extent not paid by the
Trust: (i) any accumulated and unpaid Distributions required to
be paid on the Capital Securities, to the extent that the Trust
has funds on hand legally available therefor at such time, (ii)
the applicable Redemption Price with respect to any Capital
Securities called for redemption, to the extent that the Trust
has funds on hand legally available therefor at such time, and
(iii) upon a voluntary or involuntary termination and liquidation
of the Trust (unless the Junior Subordinated Debentures are
distributed to holders of the Capital Securities), the lesser of
(a) the aggregate of the Liquidation Amount and all accumulated
and unpaid Distributions to the date of payment, to the extent
that the Trust has funds on hand legally available therefor at
such time and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Capital Securities
at such time. The holders of a majority in 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 the Guarantee or to direct
the exercise of any trust power conferred upon the Guarantee
Trustee. Any holder of the Capital Securities may institute a
legal proceeding directly against the Corporation to enforce its
rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other
person or entity.
If the Corporation defaults on its obligation to pay
amounts payable under the Junior Subordinated Debentures, the
Trust will not have sufficient funds for the payment of
Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the
Capital Securities will not be
18
<PAGE>
able to rely upon the Guarantee for payment of such amounts.
Instead, in the event a Debenture Event of Default shall have
occurred and be continuing and such event is attributable to the
failure of the Corporation to pay the principal of (or premium,
if any) or interest on the Junior Subordinated Debentures on the
payment date on which such payment is due and payable, then a
holder of Capital Securities may institute a legal proceeding
directly against the Corporation for enforcement of payment to
such holder of the principal of (or premium, if any) or interest
on such Junior Subordinated Debentures having an aggregate
principal amount equal to the Liquidation Amount of the Capital
Securities of such holder (a "Direct Action"). Notwithstanding
any payments made to a holder of Capital Securities by the
Corporation in connection with a Direct Action, the Corporation
shall remain obligated to pay the principal of (and premium, if
any) and interest on the Junior Subordinated Debentures, and the
Corporation shall be subrogated to the rights of the holder of
such Capital Securities with respect to payments on the Capital
Securities to the extent of any payments made by the Corporation
to such holder in any Direct Action. Except as described herein,
holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Junior
Subordinated Debentures or to assert directly any other rights in
respect of the Junior Subordinated Debentures. See "Description
of Junior Subordinated Debentures--Enforcement of Certain Rights
by Holders of Capital Securities," "--Debenture Events of
Default" and "Description of Guarantee." The Trust Agreement
provides that each holder of Capital Securities by acceptance
thereof agrees to the provisions of the Indenture.
Limited Voting Rights
Holders of Capital Securities generally have limited voting
rights relating only to the modification of the Capital
Securities and the Guarantee, the dissolution or liquidation of
the Trust, and the exercise of the Trust's rights as holder of
Junior Subordinated Debentures. Holders of Capital Securities are
not entitled to vote to appoint, remove or replace the
Administrators at any time. Holders of Capital Securities are not
entitled to appoint, remove or replace the Property Trustee or
the Delaware Trustee except upon the occurrence of a Debenture
Event of Default as described herein. The Property Trustee and
the Corporation may amend the Trust Agreement without the consent
of holders of Capital Securities to ensure that the Trust will be
classified for United States federal income tax purposes as a
grantor trust and will not be required to register as an
investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act") even if such action
adversely affects the interests of such holders. See "Description
of Capital Securities--Voting Rights; Amendment of the Trust
Agreement" and "--Removal of Issuer Trustees."
Absence of Public Market
The Old Capital Securities were issued to, and the
Corporation believes the Old Capital Securities are currently
owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities
Act and are subject to transfer restrictions (including a
limitation on transfer to only blocks having a Liquidation Amount
of not less than $100,000 (100 Capital Securities)). The New
Capital Securities will also be transferable only in blocks
having a Liquidation Amount of not less than $100,000 (100
Capital Securities). Although the New Capital Securities
generally may be resold or otherwise transferred by the holders
(who are not affiliates of the Corporation or the Trust) without
compliance with the registration requirements of the Securities
Act, there is no existing market for the New Capital Securities
and there can be no assurance as to the liquidity of any markets
that may develop for the New Capital Securities, the ability of
the holders to sell their New Capital Securities or the price at
which holders of the New Capital Securities will be able to sell
their New Capital Securities, as the case may be. Future trading
prices of the Capital Securities will depend on many factors
including, among other things, prevailing interest rates, the
Corporation's operating results, and the market for similar
securities. The Initial Purchaser previously informed the Trust
and the Corporation in connection with the offering of the Old
Capital Securities that it intended to make a market in the Old
Capital Securities, and the Initial Purchaser has informed the
Trust and the Corporation that it intends to make a market in the
New Capital Securities. However, the Initial Purchaser is not
obligated to make a market in the Old Capital Securities or the
New Capital Securities and any such market making activity may be
terminated at any time without notice to the holders of the
Capital Securities. 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.
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<PAGE>
The New Capital Securities will not be listed on a
securities exchange or designated for quotation through the
NASDAQ system. Notwithstanding the registration under the
Securities Act of the New Capital Securities in the Exchange
Offer, which will generally permit such New Capital Securities to
be resold or otherwise transferred without further registration
under the Securities Act, holders who are "affiliates" of the
Corporation or the Trust within the meaning of Rule 405 under the
Securities Act may publicly offer for sale or resell the New
Capital Securities only in compliance with such registration
requirements or the provisions of Rule 144 under the Securities
Act. Each tendering holder of the Old Capital Securities will be
deemed to have made certain acknowledgments, representations and
agreements in relation to its affiliate status. In addition, each
broker-dealer that receives New Capital Securities for its own
account pursuant to the Exchange Offer, where the corresponding
Old Capital Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in connection
with any resale of such New Capital Securities. See "Plan of
Distribution."
Consequences of a Highly Leveraged Transaction
The Indenture does not contain any provisions that afford
holders of the Junior Subordinated Debentures protection in the
event of a highly leveraged transaction, including a change of
control or other similar transactions involving the Corporation
that may adversely affect such holders. See "Description of
Junior Subordinated Debentures."
20
<PAGE>
ALBANK FINANCIAL CORPORATION
General
ALBANK, through its subsidiary, ALBANK, FSB, a federally
chartered savings association (the "Bank"), serves approximately
350,000 customers in eastern and central upstate New York,
Vermont and western Massachusetts through 73 branch offices.
Headquartered in Albany, New York, ALBANK has grown significantly
in recent years, primarily through a series of acquisitions which
have expanded and strengthened its franchise and accelerated
ALBANK's shift from a traditional thrift institution to a more
bank-like financial institution.
ALBANK has completed five acquisitions in recent years.
Assets/
Deposits(1)
Acquisition (Dollars in Market
Date Acquisition in millions) Area
---- ----------- ------------ ----
09/27/96 Arrow Financial Branches $108 Vermont
01/03/96 Marble Financial Corporation 396 Vermont
06/03/95 The Dime Savings Bank Branch 18 Upstate New York
10/21/94 Ludlow Savings Bank Branches 216 Western Massachusetts
03/12/93 The Dime Savings Bank Branches 397 Upstate New York
- -------------
(1) The $396 million for the Marble Financial Corporation
acquisition represents the amount of assets acquired. All
other dollar amounts represent deposits acquired.
All of the acquisitions have been accretive to earnings per
share and have enabled ALBANK to improve operating efficiency
through the elimination of duplicative operations.
ALBANK continues to expand its banking activities,
particularly its commercial and consumer banking operations,
which generally generate higher net interest margins and fees
than those available from residential mortgage lending. From 1992
through 1996, ALBANK increased its commercial and consumer loan
portfolio from 13.1% of total loans to 18.8% of total loans, an
annual growth rate of almost 10%. Over the same period, NOW and
demand deposits have grown at an average annual rate of almost
4%, from 9.9% of total deposits to 11.4% of total deposits. The
shift in lines of business has contributed to the increase in
ALBANK's net interest margin, which was 3.91% for the year ended
December 31, 1996, compared to 3.61% for the year end December
31, 1992.
ALBANK, as a holding company, and the Bank are subject to
comprehensive regulation, examination and supervision by the
Office of Thrift Supervision, as the primary federal regulator.
At December 31, 1996, the Bank's deposits were federally insured,
with 66% insured by the SAIF and 34% treated as insured by the
Bank Insurance Fund ("BIF") of the Federal Deposit Insurance
Corporation.
The Corporation's executive offices are located at 10 North
Pearl Street, Albany, New York 12207. Its telephone number is
(518) 445-2100.
Pending and Recently Completed Acquisitions
In January 1997, ALBANK announced a definitive purchase
agreement to acquire 35 branch offices in eastern and central
upstate New York from Key Bank N.A. for a premium of
approximately 7% of total deposits acquired. Of the 35 branches
acquired, 16 operate in counties in which ALBANK currently has an
office, and the remaining 19 branches are primarily in counties
that are contiguous with its current operations. As of October 31,
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<PAGE>
1996, the 35 branches had total deposits of approximately $530
million and related small business, consumer and mortgage loans
of approximately $53 million. ALBANK consummated the Key Branch
Acquisition on November 10, 1997.
In August 1997, ALBANK announced a definitive purchase
agreement to acquire three New York state branch offices from
First Union National Bank, with total deposits of approximately
$33.5 million. All three branches acquired operate in counties in
which ALBANK currently has an office. The First Union Branch
Acquisition is subject to regulatory approval.
22
<PAGE>
ALBANK SUMMARY RESULTS
Year Ended December 31, 1996
ALBANK's net income for 1996, including the after-tax
impact of the one-time SAIF recapitalization assessment, which
the Federal Deposit Insurance Corporation levied against all
SAIF-insured institutions effective in the third quarter of 1996,
of $6.4 million, was $26.2 million, or $1.83 per fully diluted
share. Net income in 1995, including the $0.7 million after-tax
write-off of the Corporation's investment in Nationar, a special
purpose commercial bank which the NYS Banking Superintendent took
control of in February 1995, totaled $29.3 million, or $1.93 per
fully diluted share. Return on average stockholders' equity was
8.20% for 1996, compared with 9.09% in 1995, while return on
average assets amounted to 0.77% and 0.99% for the respective
years.
Excluding the aforementioned 1996 SAIF and the 1995
after-tax Nationar charge, ALBANK reported core net income of
$32.6 million for 1996, up 9% from the $30.0 million it reported
in 1995. Its 1996 core earnings per share on a fully diluted
basis were $2.28 compared with $1.98 earned in 1995, an increase
of 15%. ALBANK's return on average stockholders' equity in 1996
based on core earnings was 10.20% compared with 9.32% in 1995;
return on average assets for 1996 based on core earnings was
0.96% compared with 1.01% in 1995.
The Corporation's 1996 net interest spread increased to
3.52% from 3.40% in 1995, while its 1996 net interest margin was
3.91%, up from 1995's 3.84%. Net interest income was $125.6
million for 1996, a 16% increase from the $108.5 million earned
in 1995. ALBANK's efficiency ratio was 54.32% in 1996, compared
with 52.91% in 1995. ALBANK's loan originations in 1996 totaled
$638.4 million, a 39% increase from 1995's total of $459.2
million. Total loans receivable at December 31, 1996 were $2,566
million, up 32% from year-end 1995's total of $1,947 million. At
December 31, 1996, ALBANK's loan portfolio consisted of 74.2%
residential mortgages (including home equity loans), 9.7%
commercial loans, 9.1% consumer and other loans, 6.5% commercial
real estate loans and 0.5% construction loans. At December 31,
1996, ALBANK's deposit portfolio held 46.8% in CD's less than
$100,000, 27.4% in savings accounts, 11.4% in NOW and demand
accounts, 8.6% in money market accounts and 5.8% in CD's greater
than $100,000. Stockholders' equity was $319.1 million at
year-end 1996 versus $323.2 million at year-end 1995. During
1996, ALBANK invested $25.8 million in its ongoing stock
repurchase campaign, acquiring an additional 926,517 shares of
its outstanding common stock. Consolidated stockholders' equity
as a percentage of total assets at December 31, 1996 was 9.10%,
compared with 10.88% at December 31, 1995.
ALBANK's 1996 earnings on a cash basis (that is, core net
income plus amortization of goodwill and costs associated with
certain employee benefit plans) were $36.3 million, an increase
of 12% compared with $32.3 million in 1995. Cash basis earnings
per fully diluted share were $2.54 in 1996 compared with $2.13 in
1995. Return on tangible equity amounted to 12.95% compared with
10.65% in 1995, while return on tangible assets for 1996 was
1.09% compared with 1.10% in 1995.
At December 31, 1996, nonperforming assets totaled $33.8
million, or 0.96% of total assets; comparable figures for 1995
were $27.1 million, or 0.91% of total assets. Nonperforming loans
amounted to $29.8 million, or 1.16% of loans receivable, at
December 31, 1996, compared with $23.2 million, or 1.19% of loans
receivable, at December 31, 1995. The 1996 year-end percentage of
nonperforming assets is 0.19% lower than it was at September 30,
1996 because ALBANK sold $10.3 million of nonperforming
residential mortgage loans in December 1996. The increase in
nonperforming assets during the first three quarters of 1996 was
principally attributable to acquisitions which ALBANK made during
that period. At year-end 1996, ALBANK's loan loss reserve was
equal to 81% of nonperforming loans, up from 69% at December 31,
1995. ALBANK has shown an improvement in its asset quality, with
nonperforming assets to total assets decreasing from 1.15% at
December 31, 1992 to 0.96% at December 31, 1996. Nonperforming
loans to loans receivable also improved from 1.60% at December
31, 1992 to 1.16% at December 31, 1996. At December 31, 1996, the
Corporation had consolidated assets of $3.5 billion, deposits of
$3.0 billion, and stockholders' equity of $319 million.
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<PAGE>
Nine Months Ended September 30, 1997 (Unaudited)
Net income for the nine months ended September 30, 1997 was
$28.1 million, an increase of $10.9 million (64%) from the
comparable nine-month period last year. Primary and fully diluted
earnings per share were $2.03 and $2.02, respectively, for the
first nine months of 1997, up from $1.20 per share a year ago,
representing increases of 69% and 68%, respectively.
Net interest income increased $7.5 million (8%) from the
comparable nine-month period last year, and totaled $101.0
million for the first nine months of 1997. Noninterest income
increased $1.0 million (12%) from the comparable nine-month
period last year. Noninterest expense decreased $8.8 million
(13%) from the comparable nine-month period last year.
Noninterest income totaled $10.1 million while noninterest
expense totaled $61.1 million for the first nine months of 1997
compared with $9.0 million and $69.9 million, respectively, for
the comparable 1996 period. Return on average equity and return
on average assets for the first nine months of 1997 were 11.46%
and 1.06%, respectively. For the comparable 1996 period, return
on average equity was 7.18%, while return on average assets was
0.69%.
Core net income for the nine months ended September 30, 1997
was $28.0 million, an increase of $4.4 million (19%) from the
comparable nine-month period last year. Fully diluted core
earnings per share were $2.01 for the first nine months of 1997,
up from $1.64 per share a year ago, representing an increase of
23%. Core return on average equity and core return on average
assets for the first nine months of 1997 were 11.39% and 1.05%,
respectively. For the comparable 1996 period, core return on
average equity was 9.85%, while core return on average assets was
0.94%. The Corporation's core net income for the nine months
ended September 30, 1997 excludes the $0.2 million recovery of
the Corporation's capital investment in Nationar in April 1997;
the Corporation's core net income for the nine months ended
September 30, 1996 excludes the net after-tax effect of the $6.4
million special assessment to recapitalize the SAIF in September
1996.
Cash net income for the nine months ended September 30,
1997 was $31.8 million or $2.29 and $2.28 per share on a primary
and fully diluted basis, respectively. Cash net income for the
nine months ended September 30, 1996 was $27.4 million or $1.92
and $1.91 per share on a primary and fully diluted basis,
respectively. Cash return on tangible equity was 14.85% compared
with 12.97% for the same period last year; cash return on average
assets rose to 1.20% from 1.09% in 1996.
The Corporation's net interest margin was 3.99% in the
first nine months of 1997 versus 3.92% in the first nine months
of 1996. In addition, its net interest spread increased to 3.54%
from 3.52% a year ago. ALBANK's efficiency ratio for the first
nine months of 1997 was 50.56% compared with 54.41% for the same
period in 1996. Equity to assets at September 30, 1997 was 9.24%
compared with 8.95% at September 30, 1996.
The provision for loan losses amounted to $5.4 million for
the nine months ended September 30, 1997, compared with $4.3
million a year ago. The Corporation's allowance for loan losses
totaled $26.5 million (0.97% of loans receivable and 83.43% of
nonperforming loans) at September 30, 1997, compared with $24.1
million (0.94% of loans receivable and 80.88% of nonperforming
loans) at December 31, 1996. The increase in the allowance during
the first nine months of 1997 was the net result of a provision
for loan losses of $5.4 million reduced by net chargeoffs of $3.1
million.
At September 30, 1997, nonperforming assets totaled $34.9
million, or 0.94% of total assets compared with $40.4 million, or
1.15% of total assets at September 30, 1996. Nonperforming loans
totaled $31.7 million, or 1.17% of loans receivable at September
30, 1997 versus $34.5 million, or 1.37% of loans receivable at
September 30, 1996. At September 30, 1997, the Corporation had
consolidated assets of $3.7 billion, deposits of $3.0 billion,
and capital of $344 million.
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated
into the Corporation's consolidated financial statements, with
the Capital Securities shown in the Corporation's consolidated
balance sheet as "Corporation-Obligated Mandatorily Redeemable
Capital Securities of Subsidiary Trust Holding Solely Junior
Subordinated Debentures of the Corporation." The financial
statement footnotes of the Corporation will reflect that the sole
asset of the Trust will be $51,547,000 principal amount of the
Junior Subordinated Debentures, bearing interest at 9.27% and
maturing on June 6, 2027. See "Capitalization."
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash
proceeds from the issuance of the New Capital Securities offered
hereby. In consideration for issuing the New Capital Securities
in exchange for the Old Capital Securities as described in this
Prospectus, the Trust will receive Old Capital Securities in like
liquidation
24
<PAGE>
amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and canceled.
The proceeds to the Trust (without giving effect to
expenses of the offering payable by the Corporation) from the
offering of the Old Capital Securities was $50,000,000. All of
the proceeds from the sale of the Old Capital Securities and the
Common Securities were invested by the Trust in the Old Junior
Subordinated Debentures. The Corporation has used and intends to
use the net proceeds from the sale of the Junior Subordinated
Debentures to fund in part the capital of a new commercial bank
being established in connection with the Key Branch Acquisition
and for general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to
fixed charges of the Corporation for the respective periods
indicated.
Nine Months
Ended
September 30, Years Ended December 31,
------------ ------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
Ratio of
Earnings to
Fixed Charges:
Excluding
interest on
deposits 9.54x 13.24x 12.60x 53.92x 26.93x 35.70x 18.14x
Including
interest on
deposits 1.46x 1.31x 1.34x 1.45x 1.59x 1.50x 1.35x
For purposes of computing the ratio of earnings to fixed
charges, earnings represent net income before extraordinary items
plus applicable income taxes and fixed charges. Fixed charges
include gross interest expense (excluding or including interest
on deposits, as indicated) and the proportion deemed
representative of the interest factor of rent expense.
CAPITALIZATION
The following table sets forth the consolidated
capitalization of the Corporation as of September 30, 1997. The
following data should be read in conjunction with the financial
information incorporated herein by reference. See "Incorporation
of Certain Documents by Reference." The issuance of the New
Capital Securities in the Exchange Offer will have no effect on
the capitalization of the Company.
As of September 30, 1997
(Dollars in thousands)
Long-term debt ....................................... $20,061
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust
holding solely Junior Subordinated Debentures
of the Corporation (1) ............................. 50,000
Stockholders' equity:
Preferred stock, $.01 par value. Authorized
25,000,000 shares; none outstanding ................ --
Common stock, $.01 par value. Authorized
50,000,000 shares; 15,697,500 shares issued;
12,872,195 shares outstanding ...................... 157
Additional paid-in capital ........................... 182,328
Retained earnings, substantially restricted .......... 235,728
Treasury stock, at cost (2,825,305 shares) ........... (73,898)
Unrealized gain on securities available for
sale, net of tax ................................... 5,130
25
<PAGE>
Common stock acquired by:
Employee stock ownership plan ...................... (5,924)
Bank recognition plan .............................. (9)
Total stockholders' equity ........................... 343,512
-------
Total capitalization .................................$413,573
========
(1) This item reflects the Capital Securities. The Trust is a
wholly owned subsidiary of the Corporation and holds the
Junior Subordinated Debentures as its sole asset.
26
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table presents selected consolidated
financial information from the Corporation's audited financial
statements as of and for the five years ended December 31, 1996.
The financial data as of and for the nine months ended September
30, 1997 and 1996 has been derived from the Corporation's
unaudited quarterly financial statements, which, in the opinion
of management, include all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the
Corporation's results of operations and financial position. The
results of operations for the nine months ended September 30,
1997 are not necessarily indicative of results to be anticipated
for the entire year. The table should be read in conjunction with
the consolidated financial statements and the related notes
incorporated herein by reference.
Nine Months Ended
September 30, Year Ended December 31,
------------------- -----------------------
1997 1996 1996 1995
---- ---- ---- ----
(Dollars in thousands, except per share data)
Selected Financial
Condition Data
Total assets $3,716,954 $3,509,729 $3,506,136 $2,970,170
Loans
receivable 2,716,682 2,515,043 2,566,364 1,946,601
Securities
available
for sale 722,245 635,619 617,943 656,784
Investment
securities 74,608 125,586 109,607 153,740
Deposits 2,968,626 2,998,377 3,013,129 2,558,288
Borrowed funds 238,554 108,032 72,407 1,290
Total stockholders'
equity 343,512 314,038 319,125 323,182
Selected Operating
Data
Interest income $197,570 $184,337 $248,526 $212,502
Interest expense 96,567 90,825 122,885 104,015
------------------------------------------------
Net interest income 101,003 93,512 125,641 108,487
Provision for loan
losses 5,400 4,275 5,775 4,500
-----------------------------------------------
Net interest income
after provision
for loan losses 95,603 89,237 119,866 103,987
Net security
transactions 274 5 8 (1,198)
Other noninterest
income 9,781 9,007 12,146 10,646
Noninterest expense 61,134 69,948 90,303 65,804
------------------------------------------------
Income before
income taxes and
cumulative net
effect of changes
in accounting
principles 44,524 28,301 41,717 47,631
Income tax expense 16,388 11,107 15,510 18,348
------------------------------------------------
Income before
cumulative net
effect of changes
in accounting
principles 28,136 17,194 26,207 29,283
Cumulative net
effect of changes
in accounting
principles -- -- -- --
------------------------------------------------
Net income 28,136 17,194 26,207 29,283
Earnings per share:
(1) Primary 2.03 1.20 1.84 1.94
Fully diluted 2.02 1.20 1.83 1.93
Other Selected
Financial Data
Book value per
share (1) $26.69 $23.97 $24.72 $23.37
Tangible book
value per
share (1) 23.51 20.58 21.35 22.05
Loan originations
(including
individual loans
purchased) 468,725 484,530 638,423 459,198
Return on average
stockholders'
equity ("ROE") 11.46% 7.18% 8.20% 9.09%
Return on average
assets ("ROA") 1.06 0.69 0.77 0.99
Stockholders' equity
to total assets 9.24 8.95 9.10 10.88
Net interest spread 3.54 3.52 3.52 3.40
Net interest margin 3.99 3.92 3.91 3.84
Year Ended December 31,
----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands, except per share data)
Selected Financial
Condition Data
Total assets $2,963,843 $2,773,223 $2,482,851
Loans
receivable 1,788,400 1,540,464 1,492,618
Securities
available
for sale 167,024 51,256 49,766
Investment
securities 801,247 962,204 720,125
Deposits 2,541,962 2,381,714 2,098,891
Borrowed funds 15,300 4,200 7,600
Total stockholders'
equity 316,789 313,283 309,909
Selected Operating
Data
Interest income $186,804 $183,986 $190,699
Interest expense 82,092 86,416 104,541
-----------------------------------
Net interest income 104,712 97,570 86,158
Provision for loan
losses 4,500 4,200 4,100
-----------------------------------
Net interest income
after provision
for loan losses 100,212 93,370 82,058
Net security
transactions 14 130 278
Other noninterest
income 10,077 9,905 9,336
Noninterest expense 61,833 59,718 55,236
-----------------------------------
Income before
income taxes and
cumulative net
effect of changes
in accounting
principles 48,470 43,687 36,436
Income tax expense 19,898 18,289 14,740
-----------------------------------
Income before
cumulative net
effect of changes
in accounting
principles 28,572 25,398 21,696
Cumulative net
effect of changes
in accounting
principles -- 37 --
----------------------------------
Net income 28,572 25,435 21,696
Earnings per share:
(1) Primary 1.77 1.46 0.93(2)
Fully diluted 1.77 1.45 0.92(2)
Other Selected
Financial Data
Book value per
share (1) $21.27 $19.48 $17.48
Tangible book
value per
share (1) 19.98 19.15 17.48
Loan originations
(including
individual loans
purchased) 556,785 407,125 331,309
Return on average
stockholders'
equity ("ROE") 9.11% 8.23% 8.02%
Return on average
assets ("ROA") 1.02 0.92 0.88
Stockholders' equity
to total assets 10.69 11.30 12.48
Net interest spread 3.49 3.28 3.09
Net interest margin 3.87 3.69 3.61
27
<PAGE>
Nine Months Ended
September 30, Year Ended December 31,
------------------- -----------------------
1997 1996 1996 1995
---- ---- ---- ----
(Dollars in thousands, except per share data)
Efficiency ratio 50.56 54.41 54.32 52.91
Nonperforming loans
to loans receivable 1.17 1.37 1.16 1.19
Nonperforming assets
to total assets 0.94 1.15 0.96 0.91
Allowance for loan
losses to:
Loans receivable 0.97 1.12 0.94 0.82
Nonperforming loans 83.43 81.74 80.88 68.88
Core net income (3) $27,978 $23,571 $32,584 $30,013
Earnings per share
based on core
net income:(1)(3)
Primary 2.01 1.65 2.29 1.99
Fully diluted 2.01 1.64 2.28 1.98
ROE based on
core net
income(3) 11.39% 9.85% 10.20% 9.32%
ROA based on core
net income(3) 1.05 0.94 0.96 1.01
Noninterest expense
to average
assets (4) 2.25 2.37 2.36 2.22
Noninterest expense
less other
noninterest
income to average
assets (4) 1.88 2.01 2.00 1.86
Year Ended December 31,
----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands, except per share data)
Efficiency ratio 51.99 53.97 56.73
Nonperforming loans
to loans receivable 1.14 1.49 1.60
Nonperforming assets
to total assets 0.81 0.99 1.15
Allowance for loan
losses to:
Loans receivable 0.87 0.84 0.80
Nonperforming loans 76.39 56.67 49.77
Core net income (3) $28,572 $25,435 $21,696
Earnings per share
based on core
net income:(1)(3)
Primary 1.77 1.46 0.93(2)
Fully diluted 1.77 1.45 0.92(2)
ROE based on
core net
income(3) 9.11% 8.23% 8.02%
ROA based on core
net income(3) 1.02 0.92 0.88
Noninterest expense
to average
assets (4) 2.20 2.17 2.24
Noninterest expense
less other
noninterest
income to average
assets (4) 1.84 1.81 1.86
(1) Adjusted to reflect the 6-for-5 stock dividend paid on April 1, 1996.
(2) 1992 earnings per share are calculated for the period April 1, 1992
(the date of conversion from mutual to stock form) through December 31,
1992.
(3) Core net income excludes the net after-tax effect of the
$6.4 million special assessment to recapitalize the SAIF in
September 1996, the $0.7 million write-off of the
Corporation's capital investment in Nationar in March 1995
and the $0.2 million recovery of the Corporation's capital
investment in Nationar in April 1997.
(4) Noninterest expense excludes the pre-tax SAIF special assessment,
amounting to $10.4 million, and $1.5 million in capital securities
expense in 1997.
28
<PAGE>
ALBANK CAPITAL TRUST I
The Trust is a statutory business trust created under
Delaware law pursuant to the filing of a certificate of trust
with the Delaware Secretary of State on April 3, 1997. The Trust
exists for the exclusive purposes of (i) issuing and selling the
Trust Securities, (ii) using the proceeds from the sale of Trust
Securities to acquire the Junior Subordinated Debentures and
(iii) engaging in only those other activities necessary,
advisable or incidental thereto (such as registering the transfer
of the Trust Securities). 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 are owned by the Corporation. 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, the
rights of the Corporation as holder of the Common Securities to
payments in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the
rights of the holders of the Capital Securities. See "Description
of Capital Securities--Subordination of Common Securities." The
Corporation acquired Common Securities in a Liquidation Amount
equal to at least 3% of the total capital of the Trust. The Trust
has a term of 31 years, but may dissolve earlier as provided in
the Trust Agreement. The trustees for the Trust are The Chase
Manhattan Bank, as the Property Trustee (the "Property Trustee"),
and Chase Manhattan Bank Delaware, as the Delaware Trustee (the
"Delaware Trustee" and together with the Property Trustee, the
"Issuer Trustees"). In addition, three individuals who are
employees or officers of or affiliated with the Corporation act
as administrators with respect to the Trust (the
"Administrators"). The Chase Manhattan Bank, as Property Trustee,
acts as sole indenture trustee under the Trust Agreement. The
Chase Manhattan Bank also acts as indenture trustee under the
Guarantee and the Indenture. See "Description of Guarantee" and
"Description of Junior Subordinated Debentures." Subject to the
limitations contained in the Trust Agreement, the Trust's
business and affairs are conducted by the Property Trustee. The
Issuer Trustees and the Administrators are each appointed by the
Corporation as the holder of the Common Securities. The holder of
the Common Securities or, if an Event of Default under the Trust
Agreement has occurred and is continuing, the holders of a
majority in Liquidation Amount of the Capital Securities are
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 appoint, remove or replace
the Administrators; such voting rights are vested exclusively in
the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the Trust Agreement. The
Corporation, as issuer of the Junior Subordinated Debentures, has
agreed to pay all fees, expenses, debts and obligations (other
than the Trust's obligations to holders of Trust Securities with
respect to payments of principal, interest and premium, if any)
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 ALBANK Financial Corporation, 10 North Pearl
Street, Albany, New York 12207.
THE EXCHANGE OFFER
Purpose and Effect of Exchange Offer
In connection with the sale of the Old Capital Securities,
the Corporation and the Trust entered into the Registration
Rights Agreement with the Initial Purchaser pursuant to which the
Corporation and the Trust agreed to file and to use their best
efforts to cause to be declared effective by the Commission a
registration statement with respect to the exchange of the Old
Capital Securities for capital securities which have been
registered under the Securities Act with terms identical in all
material respects to the terms of the Old Capital Securities
(except as described below). A copy of the Registration Rights
Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual
obligations of the Corporation and the Trust under the
Registration Rights Agreement. The form and terms of the New
Capital Securities are the same in all material respects as the
form and terms of the Old Capital Securities, except that the New
Capital Securities (i) have been registered under the Securities
Act and therefore will not be subject to certain restrictions on
transfer applicable to the Old Capital Securities and (ii) will
not provide for any increase in the distribution rate thereon.
29
<PAGE>
The Old Capital Securities provide, among other things, that if,
under certain circumstances as set forth in the Registration
Rights Agreement, the Exchange Offer is not consummated within 35
days of the effectiveness of the Registration Statement of which
this Prospectus is a part, the annual distribution rate borne by
the Old Capital Securities will increase by 0.50% until the
Exchange Offer is consummated. Upon consummation of the Exchange
Offer, holders of Old Capital Securities that remain outstanding
will not be entitled to any increase in the distribution rate
thereon or any further registration rights under the Registration
Rights Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of Capital Securities."
The Exchange Offer is not being made to, nor will the Trust
or the Corporation accept tenders for exchange from, holders of
Old Capital Securities in any jurisdiction in which the Exchange
Offer or the acceptance thereof would not be in compliance with
the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder"
with respect to the Exchange Offer means any person in whose name
the Old Capital Securities are registered on the books of the
Trust or any other person who has obtained a properly completed
bond power from the registered holder, or any participant in The
Depository Trust Company ("DTC") system whose name appears on a
security position listing as the holder of Old Capital Securities
(which, for purposes of the Exchange Offer, include beneficial
interests in the Old Capital Securities held by direct or
indirect participants in DTC and Old Capital Securities held in
definitive form).
Pursuant to the Exchange Offer, the Corporation will
exchange as soon as practicable after the date hereof all of the
Old Junior Subordinated Debentures, of which $51,547,000
aggregate principal amount is outstanding, for a like aggregate
principal amount of the New Junior Subordinated Debentures. The
New Guarantee and the New Junior Subordinated Debentures have
been registered, to the extent required to be registered, under
the Securities Act.
Terms of Exchange
The Trust hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal, to exchange up to $50,000,000 aggregate
liquidation amount of New Capital Securities for a like aggregate
liquidation amount of Old Capital Securities properly tendered on
or prior to the Expiration Date and not properly withdrawn in
accordance with the procedures described below. The Trust will
issue, promptly after the Expiration Date, an aggregate
liquidation amount of up to $50,000,000 of New Capital Securities
in exchange for a like aggregate liquidation amount of
outstanding Old Capital Securities tendered and accepted in
connection with the Exchange Offer. Holders may tender their Old
Capital Securities in whole or in part in a liquidation amount of
not less than $100,000 or any integral multiple of $1,000 in
excess thereof, provided that if any Old Capital Securities are
tendered for exchange in part, the untendered liquidation amount
must be $100,000 or any integral multiple of $1,000 in excess
thereof.
The Exchange Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities being tendered. As
of the date of this Prospectus, $50,000,000 aggregate liquidation
amount of the Old Capital Securities is outstanding.
Holders of Old Capital Securities do not have any appraisal
or dissenters' rights in connection with the Exchange Offer. Old
Capital Securities which are not tendered for, or are tendered
but not accepted in connection with, the Exchange Offer will
remain outstanding and be entitled to the benefits of the Trust
Agreement, but will not be entitled to any further registration
rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors--Consequences of a
Failure to Exchange Old Capital Securities" and "Description of
Capital Securities."
If any tendered Old Capital Securities are not accepted for
exchange because of an invalid tender, the occurrence of certain
other events set forth herein or otherwise, certificates for any
such unaccepted Old Capital Securities will be returned, without
expense, to the tendering holder thereof promptly after the
Expiration Date.
30
<PAGE>
Holders who tender Old Capital Securities in connection
with this Exchange Offer will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of
Old Capital Securities in connection with the Exchange Offer. The
Corporation will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the Exchange
Offer. See "--Fees and Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE
CORPORATION, THE TRUST, NOR ANY ADMINISTRATOR OR TRUSTEE OF THE
TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL
OR ANY PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE
EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE
ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES MUST
MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL
SECURITIES TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER
OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED
ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
Expiration Date; Extension; Amendments
The term "Expiration Date" means 5:00 p.m., New York City
time, on December 29, 1997, unless the Exchange Offer is extended by
the Corporation and the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange
Offer is extended).
The Corporation and the Trust expressly reserve the right
in their sole discretion, subject to applicable law, at any time
and from time to time, (i) to delay the acceptance of the Old
Capital Securities for exchange, (ii) to terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore
been accepted for exchange) if the Corporation and the Trust
determine, in their sole discretion, that any of the events
referred to under "--Conditions to the Exchange Offer" have
occurred, (iii) to extend the Expiration Date of the Exchange
Offer, subject, however, to the right of holders of Old Capital
Securities to withdraw their tendered Old Capital Securities as
described under "--Withdrawal Rights," and (iv) to waive any
condition or otherwise amend the terms of the Exchange Offer in
any respect. If the Exchange Offer is amended in a manner
determined by the Corporation and the Trust to constitute a
material change, or if the Corporation and the Trust waive a
material condition of the Exchange Offer, the Corporation and the
Trust will promptly disclose such amendment by means of an
amended or supplemented Prospectus that will be distributed to
the registered holders of the Old Capital Securities, and the
Corporation and the Trust will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or
amendment will be followed promptly by oral (promptly confirmed
in writing) or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in
the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which
the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and
the Trust shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
Acceptance for Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the
Exchange Offer, the Trust will exchange, and will issue to the
Exchange Agent, New Capital Securities for Old Capital Securities
validly tendered and not withdrawn (pursuant to the withdrawal
rights described under "--Withdrawal Rights") promptly after the
Expiration Date.
In all cases, delivery of New Capital Securities in
exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange
31
<PAGE>
Agent of (i) Old Capital Securities or a book-entry
confirmation of a book-entry transfer of Old Capital Securities
into the Exchange Agent's account at DTC, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case
of a book-entry transfer, an Agent's Message in lieu of the
Letter of Transmittal, and (iii) any other documents required by
the Letter of Transmittal.
The term "book-entry confirmation" means a timely
confirmation of a book-entry transfer of Old Capital Securities
into the Exchange Agent's account at DTC. The term "Agent's
Message" means a message, transmitted by DTC to and received by
the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express
acknowledgment from the tendering Participant (as defined
herein), which acknowledgment states that such Participant has
received and agrees to be bound by the Letter of Transmittal and
that the Trust and the Corporation may enforce such Letter of
Transmittal against such Participant.
Subject to the terms and conditions of the Exchange Offer,
the Corporation and the Trust will be deemed to have accepted for
exchange, and thereby exchanged, Old Capital Securities validly
tendered and not withdrawn as, if and when the Trust gives oral
(promptly confirmed in writing) or written notice to the Exchange
Agent of the Corporation's and the Trust's acceptance of such Old
Capital Securities for exchange pursuant to the Exchange Offer.
The Exchange Agent will act as agent for the Corporation and the
Trust for the purpose of receiving tenders of Old Capital
Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old
Capital Securities, Letters of Transmittal and related documents
and transmitting New Capital Securities to validly tendering
holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever acceptance for exchange or the
exchange of any Old Capital Securities tendered pursuant to the
Exchange Offer is delayed (whether before or after the
Corporation's and the Trust's acceptance for exchange of Old
Capital Securities) or the Corporation and the Trust extend the
Exchange Offer or are unable to accept for exchange or exchange
Old Capital Securities tendered pursuant to the Exchange Offer,
then, without prejudice to the Corporation's and the Trust's
rights set forth herein, the Exchange Agent may, nevertheless, on
behalf of the Corporation and the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital
Securities and such Old Capital Securities may not be withdrawn
except to the extent tendering holders are entitled to withdrawal
rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in
lieu thereof, a holder of Old Capital Securities will warrant and
agree that it has full power and authority to tender, exchange,
sell, assign and transfer Old Capital Securities, that the Trust
will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities free and clear of all liens,
restrictions, charges and encumbrances, and the Old Capital
Securities tendered for exchange are not subject to any adverse
claims or proxies. The holder also will warrant and agree that it
will, upon request, execute and deliver any additional documents
deemed by the Corporation, the Trust or the Exchange Agent to be
necessary or desirable to complete the exchange, sale, assignment
and transfer of the Old Capital Securities tendered pursuant to
the Exchange Offer.
Procedures for Tendering Old Capital Securities
Valid Tender. Except as set forth below, in order for Old
Capital Securities to be validly tendered pursuant to the
Exchange Offer, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal, and any other
required documents, must be received by the Exchange Agent at its
address set forth under "--Exchange Agent" on or prior to the
Expiration Date and (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital
Securities must be tendered pursuant to the procedures for
book-entry transfer set forth below and a book-entry
confirmation, including an Agent's Message if the tendering
holder has not delivered a Letter of Transmittal, must be
received by the Exchange Agent, in each case on or prior to the
Expiration Date, or (iii) the guaranteed delivery procedures set
forth below must be complied with.
32
<PAGE>
If less than all of the Old Capital Securities are tendered,
a tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on the Letter of
Transmittal or so indicate in an Agent's Message in lieu of the
Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated. See "--Terms of
Exchange."
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND
SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF
DELIVERY IS BY MAIL, THEN REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an
account with respect to the Old Capital Securities at DTC for
purposes of the Exchange Offer within two business days after the
date of this Prospectus. Any financial institution that is a
Participant in DTC's book-entry transfer facility system may make
a book-entry delivery of the Old Capital Securities by causing
DTC to transfer such Old Capital Securities into the Exchange
Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Old Capital Securities
may be effected through book-entry transfer into the Exchange
Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in lieu of the Letter
of Transmittal, and any other required documents, must in any
case be delivered to and received by the Exchange Agent at its
address set forth under "--Exchange Agent" on or prior to the
Expiration Date, or the guaranteed delivery procedures set forth
below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital
Securities need not be endorsed and signature guarantees on the
Letter of Transmittal are unnecessary unless (i) a certificate
for the Old Capital Securities is registered in a name other than
that of the person surrendering the certificate or (ii) such
registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (i) or (ii) above, such certificates
for Old Capital Securities must be duly endorsed or accompanied
by a properly executed bond power, with the endorsement or
signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union;
(iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that
is a participant in a Securities Transfer Association (an
"Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old
Capital Securities pursuant to the Exchange Offer and the
certificates for such Old Capital Securities are not immediately
available or time will not permit all required documents to reach
the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a
timely basis, such Old Capital Securities may nevertheless be
tendered, provided that all of the following guaranteed delivery
procedures are complied with:
(i) such tenders are made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying
the Letter of Transmittal, is received by the Exchange
Agent, as provided below, on or prior to the Expiration
Date; and
(iii) the certificates (or book-entry confirmation)
representing all tendered Old Capital Securities, in proper
form for transfer, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof)
or, in the case of a book-entry transfer, an Agent's
Message in lieu
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thereof, with any required signature guarantees and any other
documents required by the Letter of Transmittal, are received by
the Exchange Agent within three New York Stock Exchange trading
days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand,
or transmitted by facsimile or mail, to the Exchange Agent, and
must include a guarantee by an Eligible Institution in the form
set forth in such notice.
Notwithstanding any other provisions hereof, the delivery
of New Capital Securities in exchange for Old Capital Securities
tendered and accepted for exchange pursuant to the Exchange Offer
will in all cases be made only after timely receipt by the
Exchange Agent of such Old Capital Securities, or of a book-entry
confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or
facsimile thereof) or, in the case of a book-entry transfer, an
Agent's Message in lieu thereof, together with any required
signature guarantees and any other documents required by the
Letter of Transmittal. Accordingly the delivery of New Capital
Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities,
book-entry confirmations with respect to Old Capital Securities
and other required documents are received by the Exchange Agent.
The Corporation's and the Trust's acceptance for exchange
of Old Capital Securities tendered pursuant to any of the
procedures described above will constitute a binding agreement
among the tendering holder, the Corporation and the Trust upon
the terms and conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of
documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tendered Old Capital Securities
will be determined by the Corporation and the Trust, in their
sole discretion, whose determination shall be final and binding
on all parties. The Corporation and the Trust reserve the
absolute right, in their sole discretion, to reject any and all
tenders determined by them not to be in proper form or the
acceptance of which may, in the view of counsel to the
Corporation or the Trust, be unlawful. The Corporation and the
Trust also reserve the absolute right, subject to applicable law,
to waive any of the conditions of the Exchange Offer as set forth
under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any
particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The interpretation by the Corporation and the Trust of the
terms and conditions of the Exchange Offer (including the Letter
of Transmittal and the instructions thereto) will be final and
binding. No tender of Old Capital Securities will be deemed to
have been validly made until all irregularities with respect to
such tender have been cured or waived. Neither the Corporation,
the Trust, any affiliates or assigns of the Corporation or the
Trust, the Exchange Agent nor any other person shall be under any
duty to give any notification of any irregularities in tenders or
incur any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power,
power of attorney or any other document required by the Letter of
Transmittal is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such
person should so indicate when signing, and, unless waived by the
Trust, proper evidence satisfactory to the Corporation and the
Trust, in their sole discretion, of such person's authority to so
act must be submitted.
A beneficial owner of Old Capital Securities that are held
by or registered in the name of a broker, dealer, commercial
bank, trust company or other nominee or custodian is urged to
contact such entity promptly if such beneficial holder wishes to
participate in the Exchange Offer.
Resales of New Capital Securities
Based on existing interpretations by the staff of the
Commission set forth in no-action letters to third parties, and
subject to the immediately following sentence, the Corporation
and the Trust believe that New Securities issued pursuant to the
Exchange Offer in exchange for Old Securities may be offered for
resale, resold and otherwise transferred by a holder thereof
without further compliance with the registration and prospectus
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delivery requirements of the Securities Act, provided that such
New Securities are acquired in the ordinary course
of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of
the Securities Act) of such New Securities. However, any holder
of Old Capital Securities who is an "affiliate" of either the
Corporation or the Trust, a broker-dealer that acquires the Old
Capital Securities in a transaction other than a part of its
market-making activities or other trading activities or other
holder who intends to participate in the Exchange Offer for the
purpose of distributing New Capital Securities (i) will not be
able to rely on the interpretations by the staff of the
Commission set forth in the above-mentioned interpretative
letters, (ii) will not be able to tender such Old Capital
Securities in the Exchange Offer, and (iii) must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of
such Old Capital Securities unless such sale is made pursuant to
an exemption from such requirements. Neither the Corporation nor
the Trust sought its own no-action letter and there can be no
assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer as it has in
such no-action letters to third parties.
Each holder of Old Capital Securities (other than a
broker-dealer) who wishes to exchange Old Capital Securities for
New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Corporation or
the Trust, (ii) any New Capital Securities to be received by it
are being acquired in the ordinary course of its business and
(iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. The Letter of
Transmittal contains the foregoing representations. In addition,
the Corporation and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the
Exchange Offer, to furnish to the Corporation and the Trust (or
an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) on behalf of whom such holder holds the Old Capital
Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives New Capital Securities pursuant to
the Exchange Offer in exchange for Old Capital Securities
acquired for its own account as a result of market-making or
other trading activities (an "Exchanging Dealer") must
acknowledge by execution of the Letter of Transmittal or, in the
case of a book-entry transfer, delivery of an Agent's Message
that it acquired the Old Capital Securities for its own account
as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with
any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a
prospectus, an Exchanging Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Commission in the
no-action letters referred to above, the Corporation and the
Trust believe that Exchanging Dealers may fulfill their
prospectus delivery requirements with respect to the New Capital
Securities received upon exchange of such Old Capital Securities
(other than Old Capital Securities which represent an unsold
allotment from the original sale of the Old Capital Securities)
with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution
with respect to the resale of such New Capital Securities.
Subject to certain provisions set forth in the Registration
Rights Agreement and to the limitations set out herein, the
Corporation and the Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by
an Exchanging Dealer in connection with resales of such New
Capital Securities for a period ending one year after the
Expiration Date (or longer, if required by the Registration
Rights Agreement). See "Plan of Distribution." However, an
Exchanging Dealer that intends to use this Prospectus in
connection with the resale of New Capital Securities received in
exchange for Old Capital Securities pursuant to the Exchange
Offer must notify the Corporation or the Trust, or cause the
Corporation or the Trust to be notified, on or prior to the
Expiration Date, that it is an Exchanging Dealer. Such notice may
be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at the
address set forth herein under "--Exchange Agent." Any person,
including any Exchanging Dealer, who is an "affiliate" of the
Corporation or the Trust may not rely on such no-action letters
and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Exchanging Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed
to have agreed, by execution of the Letter of Transmittal or
delivery of an Agent's Message in lieu thereof, that, upon
receipt of notice from the Corporation or the Trust of the
occurrence of any event or the
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discovery of any fact which makes any statement contained or
incorporated by reference in this Prospectus untrue in any
material respect or which causes this Prospectus to omit to state
a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading or of
the occurrence of certain other events specified in the
Registration Rights Agreement, such Exchanging Dealer will
suspend the sale of New Securities pursuant to this Prospectus
until the Corporation or the Trust has amended or supplemented
this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to
such Exchanging Dealer or the Corporation or the Trust has given
notice that the sale of the New Securities may be resumed, as the
case may be. If the Corporation or the Trust gives such notice to
suspend the sale of the New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as
applicable), it shall extend the one-year period referred to
above during which Exchanging Dealers are entitled to use this
Prospectus in connection with the resale of New Capital
Securities by the number of days during the period from and
including the date of the giving of such notice to and including
the date when Exchanging Dealers shall have received copies of
the amended or supplemented Prospectus necessary to permit
resales of the New Capital Securities or to and including the
date on which the Corporation or the Trust has given notice that
the sale of the New Capital Securities (or the New Guarantee or
the New Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital
Securities may be withdrawn at any time on or prior to the
Expiration Date.
In order for a withdrawal to be effective a written,
telegraphic, telex or facsimile transmission of such notice of
withdrawal must be timely received by the Exchange Agent at its
address set forth under "--Exchange Agent" on or prior to the
Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be
withdrawn, the aggregate liquidation amount of Old Capital
Securities to be withdrawn and (if certificates for such Old
Capital Securities have been tendered) the name of the registered
holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Old Capital Securities
have been delivered or otherwise identified to the Exchange
Agent, then prior to the physical release of such Old Capital
Securities, the tendering holder must submit the certificate
numbers shown on the particular Old Capital Securities to be
withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old
Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered
pursuant to the procedures for book-entry transfers set forth in
"--Procedures for Tendering Old Capital Securities," the notice
of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawal of Old Capital Securities,
in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Old Capital
Securities may not be rescinded. Old Capital Securities properly
withdrawn will not be deemed validly tendered for purposes of the
Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the
procedures described above under "--Procedures for Tendering Old
Capital Securities."
All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be
determined by the Corporation and the Trust, in their sole
discretion, whose determination shall be final and binding on all
parties. Neither the Corporation, the Trust, any affiliates or
assigns of the Corporation or the Trust, the Exchange Agent nor
any other person shall be under any duty to give notification of
any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old
Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after
withdrawal.
Distributions on New Capital Securities
Holders of Old Capital Securities whose Old Capital
Securities are accepted for exchange will not receive accumulated
distributions on such Old Capital Securities for any period from
and after the last Distribution Date
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with respect to such Old Capital Securities prior to the
original issue date of the New Capital Securities or, if no such
distributions have been made, will not receive any accumulated
distributions on such Old Capital Securities,and will be deemed
to have waived the right to receive any distributions on such Old
Capital Securities accumulated from and after such Distribution
Date or, if no such distributions have been made, from and after
June 6, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provision of the Exchange Offer,
or any extension of the Exchange Offer, the Corporation and the
Trust will not be required to accept for exchange, or to
exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore
been accepted for exchange) or may waive any conditions to or
amend the Exchange Offer, if (i) because of any change in law or
applicable interpretations thereof by the Commission, the
Corporation or the Trust determines, in its sole discretion, that
it is not permitted to effect the Exchange Offer, (ii) a stop
order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the
Registration Statement or proceedings shall have been initiated
or, to the knowledge of the Corporation or the Trust, threatened
for that purpose, or (iii) any governmental approval has not been
obtained, which approval the Corporation or the Trust shall, in
its sole discretion, deem necessary for the consummation of the
Exchange Offer.
If the Corporation and the Trust determine in their sole
discretion that any of the foregoing events have occurred, the
Corporation and the Trust may, subject to applicable law,
terminate the Exchange Offer (whether or not any Old Capital
Securities have theretofore been accepted for exchange) or may
waive any condition to the Exchange Offer or otherwise amend the
terms of the Exchange Offer in any respect. If such waiver or
amendment constitutes a material change to the Exchange Offer,
the Corporation and the Trust will promptly disclose such waiver
or amendment by means of an amended or supplemented Prospectus
that will be distributed to the registered holders of the Old
Capital Securities, and the Corporation and the Trust will extend
the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Exchange Agent
The Chase Manhattan Bank has been appointed as Exchange
Agent for the Exchange Offer. Delivery of the Letters of
Transmittal and any other required documents, questions, requests
for assistance and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
The Chase Manhattan Bank
55 Water Street
Room 234, North Building
New York, New York 10041
Attention: Carlos Esteves
Telephone: (212) 638-0828
Facsimile: (212) 638-7375/344-9367
Delivery to other than the above address or facsimile
number will not constitute a valid delivery.
Fees and Expenses
The Corporation has agreed to pay the Exchange Agent
reasonable and customary fees for its services and will reimburse
it for its reasonable and documented out-of-pocket expenses in
connection therewith. The Corporation will also pay brokerage
houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding
copies of this Prospectus and related documents to the beneficial
owners of Old Capital Securities, and in handling or tendering
for their customers.
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Holders who tender their Old Capital Securities for exchange
will not be obligated to pay any transfer taxes in connection
therewith. If, however, New Capital Securities are to be
delivered to, or are to be issued in the name of, any person
other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other
than the exchange of Old Capital Securities in connection with
the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted
with the Letter of Transmittal, the amount of such transfer taxes
will be billed to such tendering holder.
Neither the Corporation nor the Trust will make any payment
to brokers, dealers or others soliciting acceptance of the
Exchange Offer.
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the Trust Agreement, the Trust has issued the
Old Capital Securities and the Common Securities and will issue
the New Capital Securities pursuant to the Exchange Offer. The
Capital Securities represent undivided beneficial interests in
the assets of the Trust and the holders thereof are entitled to a
preference over the Common Securities in certain circumstances
with respect to Distributions and amounts payable on redemption
of the Trust Securities or liquidation of the Trust. See
"--Subordination of Common Securities." The Trust Agreement has
been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). By its terms, the Trust Agreement
incorporates certain provisions of the Trust Indenture Act, and,
upon consummation of the Exchange Offer, the Trust Agreement will
be subject to and governed by the Trust Indenture Act. This
summary of certain provisions of the Capital Securities, the
Common Securities and the Trust Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by
reference to, all of the provisions of the Trust Agreement (a
copy of which may be obtained from the Corporation or the Trust),
including the definitions therein of certain terms.
General
The Capital Securities are limited to $50,000,000 aggregate
Liquidation Amount at any one time outstanding. The New Capital
Securities will rank pari passu, and payments will be made
thereon pro rata, with the Old Capital Securities and the Common
Securities, except as described under "--Subordination of Common
Securities." Legal title to the Junior Subordinated Debentures is
held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Guarantee does not guarantee
payment of Distributions or amounts payable on redemption of the
Capital Securities or liquidation of the Trust when the Trust
does not have funds on hand legally available for such payments.
See "Description of Guarantee."
Distributions
Distributions on the Trust Securities are cumulative,
accumulate from June 6, 1997 and are payable semi-annually in
arrears on June 6 and December 6 of each year, commencing
December 6, 1997, at the annual rate of 9.27% (which is the same
rate payable on the Junior Subordinated Debentures) of the
Liquidation Amount to the holders of the Trust Securities on the
relevant record dates. The record dates are the fifteenth day
prior to the relevant Distribution Date (as defined below). The
amount of Distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months and, for
any period of less than a full calendar month, the number of days
elapsed in such month. In the event that any date on which
Distributions are payable on the Trust Securities is not a
Business Day (as defined below), payment of the Distribution
payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in
respect to any such delay), in each case with the same force and
effect as if made on such date (each date on which Distributions
are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" shall mean any day other than a Saturday
or a Sunday, or a day on which banking institutions in The City
of New York or Wilmington, Delaware are authorized or required by
law or executive order to remain closed.
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So long as no Debenture Event of Default shall have occurred
and be continuing, the Corporation will have the right under the
Indenture to defer the payment of interest on the Junior
Subordinated Debentures at any time, and from time to time, for a
period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension
Period may end on a day other than an Interest Payment Date or
extend beyond the Stated Maturity Date. Upon any such election,
semi-annual Distributions on the Trust Securities will be
deferred by the Trust during any such Extension Period.
Distributions to which holders of the Trust Securities are
entitled during any such Extension Period will accumulate
additional Distributions thereon at the rate per annum of 9.27%
thereof, compounded semi-annually from the relevant Distribution
Date, but not exceeding the interest rate then accruing on the
Junior Subordinated Debentures. The term "Distributions," as used
herein, shall include any such additional Distributions.
During any Extension Period, the Corporation may further
extend such Extension Period, provided that such extension does
not cause such Extension Period to exceed 10 consecutive
semi-annual periods or to extend beyond the Stated Maturity Date.
Upon the expiration of any Extension Period and the payment of
all amounts then due, and subject to the foregoing limitations,
the Corporation may elect to begin a new Extension Period. The
Corporation must give the Property Trustee, the Administrators
and the Debenture Trustee notice of its election of any Extension
Period or any extension thereof at least five Business Days prior
to the earlier of (i) the date the Distributions on the Trust
Securities would have been payable except for the election to
begin such Extension Period and (ii) the date the Administrators
are required to give notice to any securities exchange or to
holders of such Trust Securities of the record date or the date
such Distributions are payable but in any event not less than
five Business Days prior to such record date. There is no
limitation on the number of times that the Corporation may elect
to begin an Extension Period. See "Description of Junior
Subordinated Debentures--Option to Extend Interest Payment Date"
and "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
During any Extension Period, the Corporation may not (i)
declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to,
any of the Corporation's capital stock (which includes common and
preferred stock) or (ii) make any payment of principal of or
premium, if any, or interest on or repay, repurchase or redeem
any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of
payment to the Junior Subordinated Debentures or (iii) make any
guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the
Corporation (including any Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, capital stock of the
Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a result of a
reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional
interests in shares of the Corporation's capital stock pursuant
to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, and (f) purchases or
acquisitions of capital stock related to the issuance of capital
stock or rights under any of the Corporation's benefit plans for
its directors, officers or employees or any of the Corporation's
dividend reinvestment plans). The Corporation has no current
intention to exercise its option to defer payments of interest on
the Junior Subordinated Debentures.
The revenue of the Trust available for distribution to
holders of the Trust Securities is limited to payments under the
Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures--General." If the Corporation does not
make interest payments on the Junior Subordinated Debentures, the
Property Trustee will not have funds available to pay
Distributions on the Trust Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand
legally available for the payment of such Distributions) is
guaranteed by the Corporation on a limited basis as set forth
herein under "Description of Guarantee."
Redemption
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Upon the repayment on the Stated Maturity Date or prepayment
prior to the Stated Maturity Date of the Junior Subordinated
Debentures, the proceeds from such repayment or prepayment shall
be applied by the Property Trustee to redeem a Like Amount (as
defined below) of the Trust Securities, upon not less than 30 nor
more than 60 days' notice of a date of redemption (the
"Redemption Date"), at the applicable Redemption Price, which
shall be equal to (i) in the case of the repayment of the Junior
Subordinated Debentures on the Stated Maturity Date, the Maturity
Redemption Price, (ii) in the case of the optional prepayment of
the Junior Subordinated Debentures prior to June 6, 2007, upon
the occurrence and continuation of a Special Event, the Special
Event Redemption Price and (iii) in the case of the optional
prepayment of the Junior Subordinated Debentures on or after June
6, 2007, the Optional Redemption Price. See "Description of
Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment."
"Like Amount" means (i) with respect to a redemption of the
Trust Securities, Trust Securities having a Liquidation Amount
equal to the principal amount of Junior Subordinated Debentures
to be paid in accordance with their terms and (ii) with respect
to a distribution of Junior Subordinated Debentures upon the
liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
The Corporation has the option to prepay the Junior
Subordinated Debentures, (i) in whole or in part, on or after
June 6, 2007, at the applicable Optional Prepayment Price and
(ii) in whole but not in part, at any time prior to June 6, 2007
upon the occurrence of a Special Event, at the Special Event
Prepayment Price, in each case subject to receipt of any
regulatory approval required therefor.
Liquidation of the Trust and Distribution of Junior Subordinated
Debentures
The Corporation has the right at any time to dissolve the
Trust and, after satisfaction of liabilities to creditors of the
Trust (to the extent not satisfied by the Corporation) as
provided by applicable law, cause the Junior Subordinated
Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust. Such right is subject to
(i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to
holders of Capital Securities and (ii) receipt of any regulatory
approval required therefor.
The Trust shall automatically dissolve and its affairs
shall be wound up upon the first to occur of: (i) certain events
of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Junior Subordinated
Debentures to the holders of the Trust Securities, if the
Corporation, as Sponsor, has given written direction to the
Property Trustee to dissolve the Trust (which direction is
optional and, except as described above, wholly within the
discretion of the Corporation, as Sponsor); (iii) redemption of
all of the Trust Securities as described under "--Redemption";
(iv) expiration of the term of the Trust; and (v) the entry of an
order for the dissolution of the Trust by a court of competent
jurisdiction.
If a dissolution occurs as described in clause (i), (ii),
(iv) or (v) of the preceding paragraph, the Trust shall be
liquidated by the Issuer Trustees as expeditiously as the Issuer
Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust (to the
extent not satisfied by the Corporation) as provided by
applicable law, to the holders of the Trust Securities a Like
Amount of the Junior Subordinated Debentures, unless such
distribution is determined by the Property Trustee not to be
practicable, in which event such holders will be entitled to
receive out of the assets of the Trust legally available for
distribution to holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount
equal to the aggregate of the Liquidation Amount plus accumulated
and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If the Liquidation
Distribution can be paid only in part because the Trust has
insufficient assets on hand legally available to pay in full the
aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Securities shall be paid on a
pro rata basis, except that if a Debenture Event of Default has
occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities. See "--Subordination of
Common Securities."
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If the Corporation elects not to prepay the Junior
Subordinated Debentures prior to maturity in accordance with
their terms and either elects not to or is unable to liquidate
the Trust and distribute the Junior Subordinated Debentures to
holders of the Trust Securities, the Trust Securities will remain
outstanding until the repayment of the Junior Subordinated
Debentures on the Stated Maturity Date.
After the liquidation date fixed for any distribution of
Junior Subordinated Debentures to holders of the Trust
Securities, (i) the Trust Securities will no longer be deemed to
be outstanding, (ii) each holder of Trust Securities will receive
a registered certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution
and (iii) Trust Securities will be deemed to represent Junior
Subordinated Debentures having a principal amount equal to the
Liquidation Amount of such Trust Securities, and bearing accrued
and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Trust Securities until certificates
representing such Trust Securities are presented to the
Administrators or their agent for cancellation, whereupon the
Corporation will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the
Capital Securities or the Junior Subordinated Debentures that may
be distributed in exchange for the Trust Securities if a
dissolution and liquidation of the Trust were to occur.
Accordingly, the Capital Securities or the Junior Subordinated
Debentures may trade at a discount to the price that investors
paid to purchase the Old Capital Securities.
Redemption Procedures
If applicable, Trust Securities shall be redeemed at the
applicable Redemption Price with the proceeds from the
contemporaneous repayment or prepayment of the Junior
Subordinated Debentures. Any redemption of Trust Securities shall
be made and the applicable Redemption Price shall be payable on
the Redemption Date only to the extent that the Trust has funds
legally available for the payment of such applicable Redemption
Price. See also "--Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the
Trust Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, to the extent funds are legally available, with
respect to the Trust Securities held by DTC or its nominee, the
Property Trustee or the Paying Agent will pay the applicable
Redemption Price to DTC. See "--Form, Denomination, Book-Entry
Procedures and Transfer." With respect to the Trust Securities
held in certificated form, the Property Trustee, to the extent
funds are legally available, will pay the applicable Redemption
Price to the holders thereof upon surrender of their certificates
evidencing the Trust Securities. See "--Payment and Paying
Agency." Distributions payable on or prior to the Redemption Date
shall be payable to the holders of such Trust Securities on the
relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited
with the Property Trustee to pay the Redemption Price for the
Trust Securities called for redemption, then upon the date of
such deposit, all rights of the holders of the Capital Securities
will cease, except the right of the holders of the Trust
Securities to receive the applicable Redemption Price, but
without interest on such Redemption Price, and the Trust
Securities will cease to be outstanding. In the event that any
Redemption Date of Trust Securities is not a Business Day, then
the applicable Redemption Price payable on such date will be paid
on the next succeeding day that is a Business Day (without any
interest or other payment in respect of any such delay), in each
case with the same force and effect as if made on such date. In
the event that payment of the applicable Redemption Price is
improperly withheld or refused and not paid either by the Trust
or by the Corporation pursuant to the Guarantee as described
under "Description of Guarantee," (i) Distributions on Trust
Securities will continue to accumulate at the then applicable
rate, from the Redemption Date originally established by the
Trust to the date such applicable Redemption Price is actually
paid, and (ii) the actual payment date will be the Redemption
Date for purposes of calculating the applicable Redemption Price.
Subject to applicable law (including, without limitation,
United States federal securities law), the Corporation or its
subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or
by private agreement.
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Notice of any redemption will be mailed at least 30 days but
not more than 60 days prior to the Redemption Date to each holder
of Trust Securities at its registered address. Unless the
Corporation defaults in payment of the applicable Prepayment
Price on, or in the repayment of, the Junior Subordinated
Debentures, on and after the Redemption Date Distributions will
cease to accrue on the Trust Securities called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of,
the Trust Securities, as applicable, shall be made pro rata based
on the Liquidation Amount of the Capital Securities and Common
Securities; provided, however, that if on any Distribution Date
or Redemption Date a Debenture Event of Default shall have
occurred and be continuing, no payment of any Distribution on, or
applicable Redemption Price of, any of the Common Securities, and
no other payment on account of the redemption, liquidation or
other acquisition of the Common Securities shall be made unless
payment in full in cash of all accumulated and unpaid
Distributions on all of the outstanding Capital Securities for
all Distribution periods terminating on or prior thereto, or in
the case of payment of the applicable Redemption Price the full
amount of such Redemption Price, shall have been made or provided
for, and all funds available to the Property Trustee shall first
be applied to the payment in full in cash of all Distributions
on, or Redemption Price of, the Capital Securities then due and
payable.
In the case of any Event of Default, the Corporation as
holder of the Common Securities will be deemed to have waived any
right to act with respect to such Event of Default until the
effect of such Event of Default shall have been cured, waived or
otherwise eliminated. Until any such Event of Default has been so
cured, waived or otherwise eliminated, the Property Trustee shall
act solely on behalf of the holders of the Capital Securities and
not on behalf of the Corporation as holder of the Common
Securities, and only the holders of the Capital Securities will
have the right to direct the Property Trustee to act on their
behalf.
Events of Default; Notice
The occurrence of a Debenture Event of Default (see
"Description of Junior Subordinated Debentures--Debenture Events
of Default") constitutes an "Event of Default" under the Trust
Agreement.
Within ten Business Days after the occurrence of any Event
of Default actually known to the Property Trustee, the Property
Trustee shall transmit notice of such Event of Default to the
holders of the Capital Securities and the Corporation, as
Sponsor, unless such Event of Default shall have been cured or
waived. The Corporation, as Sponsor, and the Trust are required
to file annually with the Property Trustee a certificate as to
whether or not they are in compliance with all the conditions and
covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is
continuing, the Capital Securities shall 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."
Removal of Issuer Trustees
Any Issuer Trustee may be removed at any time by the
holders of a majority in Liquidation Amount of the outstanding
Capital Securities. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace
the Administrators, which voting rights are vested exclusively in
the Corporation as the holder of the Common Securities. No
resignation or removal of an Issuer Trustee and no appointment of
a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the
provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any entity into which the Property Trustee or the Delaware
Trustee may be merged or converted or with which it may be
consolidated, or any entity resulting from any merger, conversion
or consolidation to which such
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Issuer Trustee shall be a party, or any entity succeeding to
all or substantially all the corporate trust business of such
Issuer Trustee, shall be the successor of such Issuer Trustee
under the Trust Agreement, provided such entity shall be
otherwise qualified and eligible.
Mergers, Conversions, Consolidations, Amalgamations or Replacements
of the Trust
The Trust may not merge or convert with or into,
consolidate, amalgamate, or be replaced by, or convey, transfer
or lease its properties and assets as an entirety or
substantially as an entirety to any corporation or other Person,
except as described below or otherwise described under
"--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures." The Trust may, at the request of the
Corporation, as Sponsor, but without the consent of the holders
of the Capital Securities, merge or convert with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets as an entirety or substantially
as an entirety to a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Trust with
respect to the Trust Securities or (b) substitutes for the Trust
Securities other securities having substantially the same terms
as the Trust Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Trust Securities
rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Corporation
expressly appoints a trustee of such successor entity possessing
the same powers and duties as the Property Trustee with respect
to the Junior Subordinated Debentures, (iii) the Successor
Securities are listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities
exchange or other organization on which the Capital Securities
are then listed, if any, (iv) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Trust Securities (including any
Successor Securities) or, if the Junior Subordinated Debentures
are so rated, the Junior Subordinated Debentures (including any
Successor Debentures) to be downgraded by any nationally
recognized statistical rating organization then rating the
Capital Securities or any Successor Securities, (v) such merger,
conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect
(other than dilution of such holder's interests in the new
entity, if any), (vi) such successor entity has a purpose
substantially identical to that of the Trust, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Corporation has received an opinion from
independent counsel to the Trust experienced in such matters to
the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any
material respect (other than dilution of such holder's interests
in the new entity, if any), and (b) following such merger,
conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease, (I) neither the Trust nor such successor
entity will be required to register as an investment company
under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and (II) the Trust or such successor
entity shall be classified as a grantor trust for United States
federal income tax purposes and (viii) the Corporation or any
permitted successor or assignee owns all of the common securities
of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the
extent provided by the Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100%
in Liquidation Amount of the Trust Securities, consolidate,
amalgamate, merge or convert with or into, or be replaced by or
convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any other entity or
permit any other entity to consolidate, amalgamate, merge or
convert with or into, or replace it if such consolidation,
amalgamation, merger, conversion, replacement, conveyance,
transfer or lease would cause the Trust or the successor entity
not to be classified as a grantor trust for United States federal
income tax purposes.
Voting Rights; Amendment of the Trust Agreement
Except as provided below and under "--Mergers, Conversions,
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.
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The Trust Agreement may be amended from time to time
without the consent of the holders of the Trust Securities (i) to
cure any ambiguity, correct or supplement any provisions in the
Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, which
shall not be inconsistent with the other provisions of the Trust
Agreement, or (ii) to modify, eliminate or add to any provisions
of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that the Trust
will not be required to register as an "investment company" under
the Investment Company Act; provided, however, that in the case
of clause (i), such action shall not adversely affect in any
material respect the interests of the holders of the Trust
Securities, and any amendments of the Trust Agreement shall
become effective when notice thereof is given to the holders of
the Trust Securities. The Trust Agreement may be amended by the
Issuer Trustees and the Corporation (i) with the consent of
holders representing a majority (based upon Liquidation Amount)
of the outstanding Trust Securities, and (ii) upon receipt by the
Issuer Trustees of an opinion of a nationally recognized counsel
experienced in such matters to the effect that such amendment or
the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not affect the Trust's status
as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status as an "investment company"
under the Investment Company Act, provided that, without the
consent of each holder of Trust Securities, the Trust Agreement
may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely
affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute
suit for the enforcement of any such payment on or after such
date.
So long as any Junior Subordinated Debentures are held by
the Property Trustee, the Property Trustee shall not (i) direct
the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or executing any trust
or power conferred on such Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive certain past defaults
under the Indenture, (iii) exercise any right to rescind or annul
a declaration of acceleration of the maturity of the principal of
the Junior Subordinated Debentures or (iv) consent to any
amendment, modification or termination of the Indenture or the
Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of
the holders of a majority in Liquidation Amount of all
outstanding Capital Securities; provided, however, that where a
consent under the Indenture would require the consent of each
holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the
prior approval of each holder of the Capital Securities. The
Property Trustee shall not revoke any action previously
authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of such holders. The
Property Trustee shall notify each holder of Capital Securities
of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of
such holders of the Capital Securities, prior to taking any of
the foregoing actions, the Property Trustee shall obtain an
opinion of a nationally recognized tax counsel experienced in
such matters to the effect that the Trust will not be classified
as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
Any required approval of holders of Capital Securities may
be given at a meeting of such holders convened for such purpose
or pursuant to written consent. The Property Trustee will cause a
notice of any meeting at which holders of Capital Securities are
entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in
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
the Corporation, the Issuer Trustees or any affiliate of the
Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
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Form, Denomination, Book-Entry Procedures and Transfer
The Capital Securities will be in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital
Securities) and may be transferred or exchanged in such blocks in
the manner and at the offices described below.
The New Capital Securities initially will be represented by
one or more Capital Securities in fully registered, global form
("Global Capital Securities"). The Global Capital Securities will
be deposited upon issuance with the Property Trustee as custodian
for DTC in New York, New York, and registered in the name of DTC
or its nominee, for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, the Global Capital Securities
may be transferred, in whole and not in part, only to another
nominee of DTC or to a successor of DTC or its nominee.
Beneficial interests in the Global Capital Securities may not be
exchanged for Capital Securities in certificated form except in
the limited circumstances described below. See "--Exchange of
Book-Entry Capital Securities for Certificated Capital
Securities."
Other New Capital Securities may be issued in fully
registered, certificated (i.e., non-global) form. Certificated
Capital Securities may not be exchanged for beneficial interests
in any Global Capital Securities except in the limited
circumstances described below. See "--Exchange of Certificated
Capital Securities for Book-Entry Capital Securities."
In addition, transfer of beneficial interests in the Global
Capital Securities will be subject to the applicable rules and
procedures of DTC and its direct or indirect participants, which
may change from time to time.
Depositary Procedures
DTC has advised the Trust and the Corporation that DTC is a
limited-purpose trust company created to hold securities for its
participating organizations (collectively, the "Participants")
and to facilitate the clearance and settlement of transactions in
those securities between Participants through electronic
book-entry changes in accounts of its Participants. The
Participants include securities brokers and dealers (including
the Initial Purchaser), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's
system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interest
and transfer of ownership interest of each actual purchaser of
each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that,
pursuant to procedures established by it, (i) upon deposit of the
Global Capital Securities, DTC will credit the accounts of
Participants with portions of the Liquidation Amount of the
Global Capital Securities and (ii) ownership of such interests in
the Global Capital Securities will be shown on, and the transfer
of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other
owners of beneficial interests in the Global Capital Securities).
Investors in the Global Capital Securities may hold their
interests therein directly through DTC if they are Participants
or indirectly through organizations that are Participants. All
interests in a Global Capital Security may be subject to the
procedures and requirements of DTC. The laws of some states
require that certain persons take physical delivery in
certificated form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Capital
Security to such persons will be limited to that extent. Because
DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of
a person having beneficial interests in a Global Capital Security
to pledge such interests to persons or entities
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that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain
other restrictions on the transferability of the Capital
Securities, see "--Exchange of Book-Entry Capital Securities for
Certificated Capital Securities" and "--Exchange of Certificated
Capital Securities for Book-Entry Capital Securities."
Except as described below, owners of interests in the
Global Capital Securities will not have Capital Securities
registered in their name, will not receive physical delivery of
Capital Securities in certificated form and will not be
considered the registered owners or holders thereof under the
Trust Agreement for any purpose.
Payments in respect of a Global Capital Security registered
in the name of DTC or its nominee will be payable by the Property
Trustee to DTC in its capacity as the registered holder under the
Trust Agreement. Under the terms of the Trust Agreement, the
Property Trustee will treat the persons in whose names the
Capital Securities, including the Global Capital Securities, are
registered as the owners thereof for the purpose of receiving
such payments and for any and all other purposes whatsoever.
Consequently, neither the Property Trustee nor any agent thereof
has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interests in the Global Capital Securities,
or for maintaining, supervising or reviewing any of DTC's records
or any Participant's or Indirect Participant's records relating
to the beneficial ownership interests in the Global Capital
Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect
Participants. DTC has advised the Trust and the Corporation that
its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the
accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective
holdings in Liquidation Amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has
reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants
to the beneficial owners of Capital Securities will be governed
by standing instructions and customary practices and will be the
responsibility of the Participants or the Indirect Participants
and will not be the responsibility of DTC, the Property Trustee,
the Trust or the Corporation. Neither the Trust or the
Corporation nor the Property Trustee will be liable for any delay
by DTC or any of its Participants in identifying the beneficial
owners of the Capital Securities, and the Trust or the
Corporation and the Property Trustee may conclusively rely on and
will be protected in relying on instructions from DTC or its
nominee for all purposes.
Secondary market trading activity in interests in the
Global Capital Securities will settle in immediately available
funds, subject in all cases to the rules and procedures of DTC
and its Participants. Transfers between Participants in DTC will
be effected in accordance with DTC's procedures, and will be
settled in same-day funds.
DTC has advised the Trust and the Corporation that it will
take any action permitted to be taken by a holder of Capital
Securities only at the direction of one or more Participants to
whose account with DTC interests in the Global Capital Securities
are credited and only in respect of such portion of the
Liquidation Amount of the Capital Securities as to which such
Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Trust
Agreement, DTC reserves the right to exchange the Global Capital
Securities for legended Capital Securities in certificated form
and to distribute such Capital Securities to its Participants.
The information in this section concerning DTC and its
book-entry system has been obtained from sources that the Trust
and the Corporation believe to be reliable, but neither the Trust
nor the Corporation takes responsibility for the accuracy
thereof.
Although DTC has agreed to the foregoing procedures to
facilitate transfers of interest in the Global Capital Securities
among Participants in DTC, it is under no obligation to perform
or to continue to perform such procedures, and such procedures
may be discontinued at any time. Neither the Trust or the
Corporation nor the Property Trustee will have any responsibility
for the performance by DTC or its Participants or Indirect
Participants of its obligations under the rules and procedures
governing its operations.
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Exchange of Book-Entry Capital Securities for Certificated
Capital Securities
A Global Capital Security is exchangeable for Capital
Securities in registered certificated form if (i) DTC either (x)
notifies the Corporation that it is unwilling or unable to
continue as securities depositary for the Global Capital Security
(the "Depositary") and the Corporation thereupon fails to appoint
a successor Depositary within 90 days or (y) has ceased to be a
clearing agency registered under the Exchange Act and the
Corporation thereupon fails to appoint a successor Depositary
within 90 days, (ii) the Corporation in its sole discretion
elects to cause the issuance of the Capital Securities in
certificated form or (iii) there shall have occurred and be
continuing an Event of Default or any event which after notice or
lapse of time or both would be an Event of Default under the
Trust Agreement. In addition, beneficial interests in a Global
Capital Security may be exchanged for certificated Capital
Securities upon request but only upon at least 20 days' prior
written notice given to the Property Trustee by or on behalf of
DTC in accordance with customary procedures. In all cases,
certificated Capital Securities delivered in exchange for any
Global Capital Security or beneficial interests therein will be
registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures), unless the Property
Trustee determines otherwise in compliance with applicable law.
Exchange of Certificated Capital Securities for Book-Entry
Capital Securities
Capital Securities which are issued in certificated form
may not be exchanged for beneficial interests in any Global
Capital Security unless such exchange occurs in connection with a
transfer of such certificated Capital Securities.
Payment and Paying Agency
Payments in respect of the Capital Securities held in
global form shall be made to the Depositary, which shall credit
the relevant accounts at the Depositary on the applicable
Distribution Dates or in respect of the Capital Securities that
are not held by the Depositary, such payments shall be made by
check mailed to the address of the holder entitled thereto as
such address shall appear on the register. The paying agent (the
"Paying Agent") shall initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to
the Administrators and the Corporation. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice
to the Property Trustee and the Corporation. In the event that
the Property Trustee shall no longer be the Paying Agent, the
Property Trustee shall appoint a successor (which shall be a bank
or trust company acceptable to the Property Trustee and the
Corporation) to act as Paying Agent.
Restrictions on Transfer
The Old Capital Securities were issued, and the New Capital
Securities will be issued, and may be transferred only, in blocks
having a Liquidation Amount of not less than $100,000 (100
Capital Securities). Any such transfer of Capital Securities in a
block having a Liquidation Amount of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever. Any such
transferee shall 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
transferee shall be deemed to have no interest whatsoever in such
Capital Securities.
Registrar and Transfer Agent
The Property Trustee acts as registrar and transfer agent
for the Capital Securities. Registration of transfers of the
Capital Securities will be effected without charge by or on
behalf of the Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any
transfer or exchange. The Trust is not required to register or
cause to be registered the transfer of the Capital Securities
after they have been called for redemption.
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Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only
such duties as are specifically set forth in the Trust Agreement
and, after such Event of Default, must exercise the same degree
of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision,
the Property Trustee is under no obligation to exercise any of
the powers vested in it by the Trust Agreement at the request of
any holder of Trust Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might
be incurred thereby. If no Event of Default has occurred and is
continuing and the Property Trustee is required to decide between
alternative causes of action, construe ambiguous provisions in
the 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 is directed by the Corporation
and if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Trust
Securities and will have no liability except for its own bad
faith, negligence or willful misconduct.
Miscellaneous
The Administrators, the holders of a majority of the Common
Securities and the Property Trustee are authorized and directed
to conduct the affairs of and to operate the Trust in such a way
that the Trust will not be deemed to be an "investment company"
required to be registered under the Investment Company Act or
classified as an association taxable as a corporation for United
States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the
Corporation for United States federal income tax purposes. In
this connection, the Property Trustee and the holders of a
majority of the Common Securities are authorized, but not
obligated, to take any action, not inconsistent with applicable
law, the certificate of trust of the Trust or the Trust
Agreement, that the Property Trustee and such holders of Common
Securities determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the
Trust Securities.
Holders of the Trust Securities have no preemptive or
similar rights.
The Trust may not borrow money, issue debt, execute
mortgages or pledge any of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued, and the
New Junior Subordinated Debentures will be issued, as a separate
series under an Indenture (the "Indenture"), between the
Corporation and The Chase Manhattan Bank, as trustee (the
"Debenture Trustee"). The Indenture has been qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). By its terms, the Indenture incorporates certain
provisions of the Trust Indenture Act, and is subject to and
governed by the Trust Indenture Act. This summary of certain
terms and provisions of the Junior Subordinated Debentures and
the Indenture does not purport to be complete, and where
reference is made to particular provisions of the Indenture, such
provisions, including the definitions of certain terms, some of
which are not otherwise defined herein, are qualified in their
entirety by reference to all of the provisions of the Indenture
and those terms made a part of the Indenture by the Trust
Indenture Act.
General
Concurrently with the issuance of the Old Capital Securities
and the Common Securities, the Trust invested the proceeds
thereof in Junior Subordinated Debentures issued by the
Corporation. Pursuant to the Exchange Offer, the Corporation will
exchange the Old Junior Subordinated Debentures for a like
aggregate principal amount of the New Junior Subordinated
Debentures promptly after the Expiration Date.
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The Junior Subordinated Debentures bear interest at the
annual rate of 9.27% of the principal amount thereof, payable
semi-annually in arrears on June 6 and December 6 of each year
(each, an "Interest Payment Date"), commencing December 6, 1997,
to the person in whose name each Junior Subordinated Debenture is
registered, subject to certain exceptions, at the close of
business on the fifteenth day prior to the relevant payment date.
It is anticipated that, until the liquidation, if any, of the
Trust, each Junior Subordinated Debenture will be held in the
name of the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The amount of interest payable
for any period will be computed on the basis of a 360-day year of
twelve 30-day months and, for any period of less than one full
calendar month, the number of days elapsing in such month. In the
event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of
the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), in each case with
the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on
the amount thereof (to the extent permitted by law) at the rate
per annum of 9.27% thereof, compounded semi-annually. The term
"interest", as used herein, shall include semi-annual interest
payments, interest on semi-annual interest payments not paid on
the applicable Interest Payment Date and Additional Sums (as
defined below), as applicable.
The Old Junior Subordinated Debentures have been issued,
and the New Junior Subordinated Debentures will be issued, in
denominations of $100,000 and integral multiples of $1,000 in
excess thereof. The Junior Subordinated Debentures will mature on
June 6, 2027 (the "Stated Maturity Date").
The New Junior Subordinated Debentures will rank pari passu
with the Old Junior Subordinated Debentures and with all Other
Debentures and will be unsecured and will rank subordinate and
junior in right of payment to all Senior Indebtedness to the
extent and in the manner set forth in the Indenture. See
"--Subordination."
The Corporation is a non-operating holding company, and
substantially all of the operating assets of the Corporation and
its consolidated subsidiaries are owned by the Bank. The
Corporation is a legal entity separate and distinct from its
subsidiaries. The principal sources of the Corporation's income
are dividends and interest from the Bank and the Corporation's
nonbanking affiliates. The Corporation relies on dividends from
subsidiaries to meet its obligations. The Bank is subject to
certain restrictions imposed by federal law on any loans or
extensions of credit to, investments in, or asset purchases from,
the Corporation or its nonbanking affiliates. Such transactions
by the Bank are generally limited in amount as to the Corporation
and as to each of such other affiliates to 10% of the Bank's
capital and surplus and as to the Corporation and all of such
other affiliates to an aggregate of 20% of the Bank's capital and
surplus. Such restrictions also prevent the Corporation and such
other affiliates from borrowing from the Bank unless the loans
are secured in specified amounts.
In addition, there are federal regulatory limitations on
the payment of dividends directly or indirectly to the
Corporation from the Bank. Federal regulatory agencies also have
the authority to limit payment of dividends by the Bank based on
the capital adequacy of the Bank and the safety and soundness of
the Bank following payment of the proposed dividend.
Because the Corporation is a holding company, the right of
the Corporation to participate in any distribution of assets of
any subsidiary, upon such subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of
creditors of the subsidiary (including depositors, in the case of
the Bank), except to the extent the Corporation may itself be
recognized as a creditor of that subsidiary. Accordingly, the
Junior Subordinated Debentures are effectively subordinated to
all existing and future liabilities of the Corporation's
subsidiaries, and holders of Junior Subordinated Debentures
should not rely upon the assets of the Corporation's subsidiaries
for repayment of the Junior Subordinated Debentures. The
Indenture does not limit the incurrence or issuance of other
indebtedness of the Corporation, including Senior Indebtedness.
See "--Subordination."
Form, Registration and Transfer
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If the Junior Subordinated Debentures are distributed to
the holders of the Trust 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. For a description of DTC and the terms of
the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters,
see "Description of Capital Securities--Form, Denomination,
Book-Entry Procedures and Transfer."
Payment and Paying Agents
Payment of principal of (and premium, if any) and any
interest on Junior Subordinated Debentures will be made at the
office of the Debenture Trustee in The City of New York or at the
office of such Paying Agent or Paying Agents as the Corporation
may designate from time to time, except that at the option of the
Corporation payment of any interest may be made, except in the
case of Junior Subordinated Debentures in global form, (i) by
check mailed to the address of the Person entitled thereto as
such address shall appear in the register for Junior Subordinated
Debentures or (ii) by transfer to an account maintained by the
Person entitled thereto as specified in such register, provided
that proper transfer instructions have been received by the
relevant Record Date. Payment of any interest on any Junior
Subordinated Debenture will be made to the Person in whose name
such Junior Subordinated Debenture is registered at the close of
business on the Record Date for such interest, except in the case
of defaulted interest. The Corporation may at any time designate
additional Paying Agents or rescind the designation of any Paying
Agent; however, the Corporation will at all times be required to
maintain a Paying Agent in each place of payment for the Junior
Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any
Paying Agent, or then held by the Corporation in trust, for the
payment of the principal of (and premium, if any) or interest on
any Junior Subordinated Debenture and remaining unclaimed for two
years after such principal (and premium, if any) or interest has
become due and payable shall, at the request of the Corporation,
be repaid to the Corporation and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general
unsecured creditor, only to the Corporation for payment thereof.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and
is continuing, the Corporation will have the right under the
Indenture at any time, and from time to time, during the term of
the Junior Subordinated Debentures to defer the payment of
interest for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no
Extension Period may end on a day other than an Interest Payment
Date or extend beyond the Stated Maturity Date. At the end of any
Extension Period, the Corporation must pay all interest then
accrued and unpaid (together with interest thereon at the annual
rate of 9.27%, compounded semi-annually, to the extent permitted
by applicable law). During an Extension Period, interest will
continue to accrue and holders of Junior Subordinated Debentures
(and holders of the Trust Securities while Trust Securities are
outstanding) will be required to accrue such deferred interest
income for United States federal income tax purposes prior to the
receipt of cash attributable to such income. See "Certain Federal
Income Tax Consequences--Interest Income and Original Issue
Discount."
During any such Extension Period, the Corporation may not
(i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to,
any of the Corporation's capital stock (which includes common and
preferred stock), (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including any Other Debentures)
that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the
debt securities of any subsidiary of the Corporation (including
any Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the Junior Subordinated Debentures
(other than (a) dividends or distributions in shares of or
options, warrants or rights to subscribe for or purchase shares
of, common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders'
rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such
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rights pursuant thereto, (c) payments under the Guarantee,
(d) as a result of a reclassification of the Corporation's
capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or
series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, and (f)
purchases of common stock related to the issuance of common stock
or rights under any of the Corporation's benefit plans for its
directors, officers or employees or any of the Corporation's
dividend reinvestment plans).
Prior to the expiration of any Extension Period, the
Corporation may further extend such Extension Period, provided
that such extension does not cause such Extension Period to
exceed 10 consecutive semi-annual periods or to extend beyond the
Stated Maturity Date. Upon the expiration of any Extension Period
and the payment of all amounts then due on any Interest Payment
Date, the Corporation may elect to begin a new Extension Period,
subject to the above requirements. No interest shall be due and
payable during an Extension Period, except at the end thereof.
The Corporation must give the Property Trustee, the
Administrators and the Debenture Trustee notice of its election
of any Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the
Distributions on the Trust Securities would have been payable
except for the election to begin or extend such Extension Period
or (ii) the date the Property Trustee is required to give notice
to any securities exchange or to holders of Capital Securities of
the record date or the date such Distributions are payable, but
in any event not less than five Business Days prior to such
record date. The Debenture Trustee shall give notice of the
Corporation's election to begin or extend a new Extension Period
to the holders of the Capital Securities in accordance with the
terms of the Indenture. There is no limitation on the number of
times that the Corporation may elect to begin an Extension
Period.
Optional Prepayment
The Junior Subordinated Debentures are prepayable, in whole
or in part, at the option of the Corporation at any time and from
time to time on or after June 6, 2007 (the "Initial Optional
Prepayment Date"), subject to the Corporation having received any
required regulatory approval, at a prepayment price (the
"Optional Prepayment Price") equal to the percentage of the
outstanding principal amount of the Junior Subordinated
Debentures specified below, plus, in each case, accrued interest
thereon to the date of prepayment if redeemed during the 12-
month period beginning June 6 of the years indicated below:
Year Percentage
----
2007........................ 104.635%
2008........................ 104.172%
2009........................ 103.708%
2010........................ 103.245%
2011........................ 102.781%
2012........................ 102.318%
2013........................ 101.854%
2014........................ 101.391%
2015........................ 100.927%
2016........................ 100.464%
2017 and thereafter......... 100.000%
Special Event Prepayment
If a Special Event occurs and is continuing, the
Corporation may, at its option, and subject to receipt of any
required regulatory approval, prepay the Junior Subordinated
Debentures in whole (but not in part) at any time prior to June
6, 2007 within 90 days of the occurrence of such Special Event,
at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (i) 100% of the principal amount of such
Junior Subordinated Debentures or (ii) the sum, as determined by
a Quotation Agent, of the present values of 100% of the principal
amount thereof plus the scheduled payments of interest thereon
from the prepayment date to and
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including the Initial Optional Prepayment Date (the
"Remaining Life"), 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 a redemption under clause (i) or clause (ii), accrued and
unpaid interest thereon to the date of prepayment.
A "Special Event" means a Tax Event, a Regulatory Capital
Event or an Investment Company Event (each as defined below) as
the case may be.
A "Tax Event" means the receipt by the Corporation and the
Trust of an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that, as a result of
(a) any amendment to, clarification of or change (including any
announced prospective change) in, the laws or any regulations
thereunder of the United States or any political subdivision or
taxing authority thereof or therein, or (b) any judicial decision
or official administrative pronouncement, ruling, regulatory
procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations
(an "Administrative Action") or (c) any amendment to,
clarification of or change in the administrative position or
interpretation of any Administrative Action or judicial decision
that differs from the theretofore generally accepted position, in
each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which
amendment, clarification or change is effective or such
Administrative Action or decision is announced, in each case, on
or after the date of this Prospectus, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90
days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on
the Junior Subordinated Debentures, (ii) the interest payable by
the Corporation on the Junior Subordinated Debentures is not, or
within 90 days of the date of such opinion will not be,
deductible by the Corporation, in whole or in part, for United
States federal income tax purposes, or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to
more than a de minimis amount of other taxes, duties or other
governmental charges.
A "Regulatory Capital Event" shall occur at any time that
the Corporation becomes, or pursuant to law or regulation or any
rules, guidelines or policies of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") or any official
administrative announcement or decision interpreting such laws,
regulations, rules, policies or guidelines, will become within
180 days, subject to capital requirements under which, in the
written opinion of independent bank regulatory counsel
experienced in such matters, the Capital Securities would not
constitute Tier 1 Capital applied as if the Corporation (or its
successor) were a bank holding company (as that concept is used
in the guidelines or regulations issued by the Federal Reserve as
of the date of this Prospectus) or its then equivalent ("Tier 1
Capital").
"Investment Company Event" means the receipt by the
Corporation and the Trust of an opinion of nationally recognized
independent counsel experienced in practice under the Investment
Company Act that, as a result of the occurrence of a change in
law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in Investment Company
Act Law"), there is more than an insubstantial risk that the
Trust is or will be considered an "investment company" which is
required to be registered under the Investment Company Act, which
Change in Investment Company Act Law becomes effective on or
after the date of this Prospectus.
"Adjusted Treasury Rate" means, with respect to any
prepayment date, the rate per annum equal to (i) the yield, under
the heading which represents the average for the immediately
prior week, appearing in the most recently published statistical
release designated "H.15 (519)" or any successor publication
which is published weekly by the Federal Reserve Board and which
establishes 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 (if no maturity is within three months before
or after the maturity corresponding to the Remaining Life, yields
for the two published maturities most closely corresponding to
the Remaining Life shall be interpolated, and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month)
or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does
not contain such yields, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price
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for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price
for such prepayment date, in each case calculated on the third
Business Day preceding the prepayment date, plus in each case (a)
1.50% if such prepayment date occurs on or prior to June 6, 1998,
and (b) 0.50% in all other cases.
"Comparable Treasury Issue" means the United States
Treasury security selected by the Quotation Agent as having 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 of the Junior Subordinated
Debentures. If no United States Treasury security has a maturity
which is within a period from three months before to three months
after the Initial Optional Prepayment Date, the two most closely
corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Adjusted Treasury Rate
shall be interpolated or extrapolated on a straight-line basis,
rounding to the nearest month, using such securities.
"Quotation Agent" means the Reference Treasury Dealer,
which shall be appointed by the Corporation. "Reference Treasury
Dealer" means a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer").
"Comparable Treasury Price" means, with respect to any
prepayment date, (i) the average of five Reference Treasury
Dealer Quotations for such prepayment date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or
(ii) if the Debenture Trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any prepayment date, the
average, as determined by the Debenture Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing
to the Debenture Trustee by such Reference Treasury Dealer at
5:00 p.m., New York City time, on the third Business Day
preceding such prepayment date.
"Additional Sums" means such additional amounts as may be
necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust Securities shall
not be reduced as a result of any additional taxes, duties or
other governmental charges to which the Trust has become subject
as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days
but not more than 60 days before the redemption date to each
holder of Junior Subordinated Debentures to be prepaid at its
registered address. Unless the Corporation defaults in payment of
the prepayment price, on and after the prepayment date interest
ceases to accrue on such Junior Subordinated Debentures called
for prepayment.
If the Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event,
the Corporation will pay as additional amounts on the Junior
Subordinated Debentures the Additional Sums.
Restrictions on Certain Payments
The Corporation has also covenanted that it will not (i)
declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to,
any of the Corporation's capital stock (which includes common and
preferred stock) or (ii) make any payment of principal, interest
or premium, if any, on or repay or repurchase or redeem any debt
securities of the Corporation (including Other Debentures) that
rank pari passu with or junior in right of payment to the Junior
Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including any
Other Guarantees) if such guarantee ranks pari passu or junior in
right of payment to the Junior Subordinated Debentures (other
than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a
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dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under the Guarantee,
(d) as a result of a reclassification of the Corporation's
capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or
series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, and (f)
purchases of common stock related to the issuance of common stock
or rights under any of the Corporation's benefit plans for its
directors, officers or employees or any of the Corporation's
dividend reinvestment plans) if at such time (1) there shall have
occurred any event of which the Corporation has actual knowledge
that (a) is, or with the giving of notice or the lapse of time,
or both, would be, a Debenture Event of Default and (b) in
respect of which the Corporation shall not have taken reasonable
steps to cure, (2) if such Junior Subordinated Debentures are
held by the Trust, the Corporation shall be in default with
respect to its payment of any obligations under the Guarantee or
(3) the Corporation shall have given notice of its election of an
Extension Period as provided in the Indenture and shall not have
rescinded such notice, and such Extension Period, or any
extension thereof, shall have commenced and be continuing.
Modification of Indenture
From time to time, the Corporation and the Debenture
Trustee may, without the consent of the holders of Junior
Subordinated Debentures, amend, waive or supplement the Indenture
for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the
holders of Junior Subordinated Debentures) and qualifying, or
maintaining the qualification of, the Indenture under the Trust
Indenture Act. The Indenture contains provisions permitting the
Corporation and the Debenture Trustee, with the consent of the
holders of a majority in principal amount of Junior Subordinated
Debentures, to modify the Indenture in a manner affecting the
rights of the holders of Junior Subordinated Debentures;
provided, that no such modification may, without the consent of
the holders of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity, or reduce the principal
amount of the Junior Subordinated Debentures or amount payable
upon prepayment thereof, or reduce the rate or extend the time of
payment of interest thereon, or make the principal of, or
interest or premium on, the Junior Subordinated Debentures
payable in any coin or currency other than that provided in the
Junior Subordinated Debentures, or impair or affect the right of
any holder of Junior Subordinated Debentures to institute suit
for the payment thereof, or (ii) reduce the percentage of
principal amount of Junior Subordinated Debentures the holders of
which are required to consent to any such modification of the
Indenture.
Debenture Events of Default
The Indenture provides that any one or more of the
following described events with respect to the Junior
Subordinated Debentures constitutes a "Debenture Event of
Default" (whatever the reason for such Debenture Event of Default
and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any
administrative or governmental body):
(i) failure for 30 days to pay any interest on the Junior
Subordinated Debentures or, if such failure results in
acceleration, on any Other Debentures, when due (subject to the
deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the
Junior Subordinated Debentures or, if such failure results in
acceleration, on any Other Debentures when due whether at
maturity, upon redemption, by declaration of acceleration of
maturity or otherwise; or
(iii) failure to observe or perform in any material respect
certain other covenants contained in the Indenture for 90 days
after written notice to the Corporation from the Debenture
Trustee or the holders of at least 25% in aggregate outstanding
principal amount of Junior Subordinated Debentures; or
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(iv) certain events in bankruptcy, insolvency or reorganization
of the Corporation.
The holders of a majority in aggregate outstanding
principal amount of the Junior Subordinated Debentures have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee. The
Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the Junior Subordinated
Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default. The holders of a majority in
aggregate outstanding principal amount of the Junior Subordinated
Debentures may annul such declaration and waive the default if
the default (other than the non-payment of the principal of the
Junior Subordinated Debentures which has become due solely by
such acceleration) has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than
by acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding
principal amount of the Junior Subordinated Debentures affected
thereby may, on behalf of the holders of all of the Junior
Subordinated Debentures, waive any past default, except a default
in the payment of principal (or premium, if any) on or interest
(unless such default has been cured and a sum sufficient to pay
all matured installments of interest (and premium, if any) and
principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Indenture cannot be modified or
amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
Enforcement of Certain Rights by Holders of Capital Securities
If a Debenture Event of Default shall have occurred and be
continuing and shall be attributable to the failure of the
Corporation to pay interest (or premium, if any) on or principal
of the Junior Subordinated Debentures on the due date, a holder
of Capital Securities may institute a Direct Action. The
Corporation may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent
of the holders of all of the Capital Securities. If the right to
bring a Direct Action is removed following the Exchange Offer,
the Trust may become subject to the reporting obligations under
the Exchange Act. Notwithstanding any payments made to a holder
of Capital Securities by the Corporation in connection with a
Direct Action, the Corporation shall remain obligated to pay the
principal of (or premium, if any) or interest on the Junior
Subordinated Debentures, and the Corporation shall be subrogated
to the rights of the holder of such Capital Securities with
respect to payments on the Capital Securities to the extent of
any payments made by the Corporation to such holder in any Direct
Action.
The holders of the Capital Securities will not be able to
exercise directly any remedies, other than those set forth in the
preceding paragraph, available to the holders of the Junior
Subordinated Debentures unless there shall have been an Event of
Default under the Trust Agreement. See "Description of Capital
Securities--Events of Default; Notice."
Consolidation, Merger, Conversion, Sale of Assets and Other
Transactions
The Indenture provides that the Corporation shall not
consolidate with or merge or convert into any other Person or
convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, and no
Person shall consolidate with or merge or convert into the
Corporation or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to the
Corporation, unless: (i) in case the Corporation consolidates
with or merges or converts into another Person or conveys or
transfers its properties and assets substantially as an entirety
to any Person, the successor Person is organized under the laws
of the United States or any State or the District of Columbia,
and such successor Person expressly assumes the Corporation's
obligations on the Junior Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of
Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have
occurred and be continuing; and (iii) certain other conditions as
prescribed in the Indenture are met.
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The general provisions of the Indenture do not afford
holders of the Junior Subordinated Debentures protection in the
event of a highly leveraged or other transaction involving the
Corporation that may adversely affect holders of the Junior
Subordinated Debentures.
Satisfaction and Discharge
The Indenture provides that when, among other things, all
Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become due and
payable or (ii) will become due and payable at maturity within
one year, and the Corporation deposits or causes to be deposited
with the Debenture Trustee funds, in trust, for the purpose and
in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation, for the
principal (and premium, if any) and interest to the date of the
deposit or to the Stated Maturity Date, as the case may be, then
the Indenture will cease to be of further effect (except as to
the Corporation's obligations to pay all other sums due pursuant
to the Indenture and to provide the officers' certificates and
opinions of counsel described therein), and the Corporation will
be deemed to have satisfied and discharged the Indenture.
Subordination
The Indenture provides that the Junior Subordinated
Debentures issued thereunder are subordinate and junior in right
of payment to all Senior Indebtedness. No payment of principal
(including redemption payments), premium, if any, or interest on
the Junior Subordinated Debentures may be made at any time when
(i) any Senior Indebtedness is not paid when due and any
applicable grace period with respect to such default has ended
and such default has not been cured or waived or ceased to exist,
or (ii) the maturity of any Senior Indebtedness has been
accelerated because of a default.
Upon any distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment
for the benefit of creditors, marshaling of assets or any
bankruptcy, insolvency, debt restructuring or similar proceedings
in connection with any insolvency or bankruptcy proceeding of the
Corporation, all Senior Indebtedness must be paid in full before
the holders of the Junior Subordinated Debentures are entitled to
receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior
Subordinated Debentures due to a Debenture Event of Default, the
holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in
full before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the
Junior Subordinated Debentures.
"Senior Indebtedness" shall mean all Indebtedness for Money
Borrowed, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, unless the
terms thereof specifically provide that it is not superior in
right of payment to the Junior Subordinated Debentures, and any
deferrals, renewals or extensions of such Senior Indebtedness.
"Indebtedness for Money Borrowed" shall mean any obligation
of, or any obligation guaranteed by, the Corporation for the
repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, but shall not
include (i) any trade accounts payable in the ordinary course of
business, (ii) any such indebtedness that by its terms ranks pari
passu with or junior in right of payment to the Junior
Subordinated Debentures, (iii) all other debt securities, and
guarantees in respect of those debt securities, issued to any
other trust, or a trustee of such trust, partnership or other
entity affiliated with the Corporation that is a financing
vehicle of the Corporation (a "financing entity") in connection
with the issuance by such financing entity of equity securities
or other securities similar to the Capital Securities guaranteed
by the Corporation pursuant to an instrument that ranks pari
passu with or junior in right of payment to the Guarantee, (iv)
indebtedness to any employee of the Corporation, (v) any
indebtedness of the Corporation which when incurred was without
recourse to the Corporation, and (vi) any other indebtedness that
would otherwise qualify as "Indebtedness for Money Borrowed" to
the extent that such indebtedness by its terms ranks pari passu
with or junior in right of payment to any of the indebtedness
described in clause (i), (ii) or (iii) above.
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The Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the
Corporation. The Corporation expects from time to time to incur
additional indebtedness constituting Senior Indebtedness.
Restrictions on Transfer
The Old Junior Subordinated Debentures were issued, and the
New Junior Subordinated Debentures will be issued, and may be
transferred only, in blocks having an aggregate principal amount
of not less than $100,000. Any such transfer of Junior
Subordinated Debentures in a block having an aggregate principal
amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such 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 transferee shall be
deemed to have no interest whatsoever in such Junior Subordinated
Debentures.
Governing Law
The Indenture and the Junior Subordinated Debentures are
governed by and will be construed in accordance with the laws of
the State of New York without regard to conflict of laws
principles.
Information Concerning the Debenture Trustee
Following the Exchange Offer and the qualification of the
Indenture under the Trust Indenture Act, the Debenture Trustee
shall have and be subject to all of the duties and
responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act. Subject to such provisions, the
Debenture Trustee is under no obligation to exercise any of the
powers vested in it by the Indenture at the request of any holder
of Junior Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
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DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the
Corporation concurrently with the issuance by the Trust of the
Old Capital Securities for the benefit of the holders from time
to time of the Capital Securities. The Chase Manhattan Bank acts
as indenture trustee ("Guarantee Trustee") under the Guarantee.
Promptly after the Expiration Date, the Corporation will exchange
the Old Guarantee for the New Guarantee. The New Guarantee has
been qualified under the Trust Indenture Act. This summary of
certain provisions of the Guarantee does not purport to be
complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee, including
the definitions therein of certain terms, and the Trust Indenture
Act. The Guarantee Trustee holds the Guarantee for the benefit of
the holders of the Capital Securities.
General
The Corporation has irrevocably agreed to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee
Payments (as defined below) to the holders of the Capital
Securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the Trust may have or assert other
than the defense of payment. The following payments with respect
to the Capital Securities, to the extent not paid by or on behalf
of the Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accumulated and unpaid Distributions required
to be paid on Capital Securities, to the extent that the Trust
has funds on hand legally available therefor, (ii) the applicable
Redemption Price with respect to Capital Securities called for
redemption, to the extent that the Trust has funds on hand
legally available therefor, or (iii) upon a voluntary or
involuntary termination and liquidation of the Trust (unless the
Junior Subordinated Debentures are distributed to holders of
Capital Securities), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of the Trust remaining
available for distribution to holders of Capital Securities. The
Corporation's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the
Corporation to the holders of the Capital Securities or by
causing the Trust to pay such amounts to such holders.
The Guarantee ranks subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided
therein. See "--Status of the Guarantee." Because the Corporation
is a holding company, the right of the Corporation to participate
in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is
subject to the prior claims of creditors of that subsidiary,
except to the extent the Corporation may itself be recognized as
a creditor of that subsidiary. Accordingly, the Corporation's
obligations under the Guarantee are effectively subordinated to
all existing and future liabilities of the Corporation's
subsidiaries, and claimants should look only to the assets of the
Corporation for payments thereunder. See "Description of the
Junior Subordinated Debentures--General." The Guarantee does not
limit the incurrence or issuance of other indebtedness of the
Corporation, including Senior Indebtedness, whether under the
Indenture, any other indenture that the Corporation may enter
into in the future or otherwise.
The Corporation has, through the Guarantee, the Trust
Agreement, the Junior Subordinated Debentures and the Indenture,
taken together, fully, irrevocably and unconditionally
guaranteed, on a subordinated basis, 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 such guarantee. It is only the
combined operation of these documents that has the effect of
providing a full, irrevocable and unconditional subordinated
guarantee of the Trust's obligations under the Capital
Securities. See "Relationship Among the Capital Securities, the
Junior Subordinated Debentures and the Guarantee."
Status of the Guarantee
The Guarantee constitutes an unsecured obligation of the
Corporation and ranks subordinate and junior in right of payment
to all Senior Indebtedness in the same manner as Junior
Subordinated Debentures, except in the case of a bankruptcy or
insolvency proceeding in respect of the Corporation, in which
case the Guarantee will rank subordinate and junior in right of
payment to all liabilities (other than Other Guarantees) of the
Corporation.
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The Guarantee ranks pari passu with all Other Guarantees
issued by the Corporation. The Guarantee constitutes a guarantee
of payment and not of collection (i.e., the guaranteed party may
institute a legal proceeding directly against the Corporation to
enforce its rights under the Guarantee without first instituting
a legal proceeding against any other person or entity). The
Guarantee is held for the benefit of the holders of the Capital
Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid
by the Trust or upon distribution to the holders of the Capital
Securities of the Junior Subordinated Debentures. The Guarantee
does not place a limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional
indebtedness constituting Senior Indebtedness.
Restrictions on Certain Payments
In the Guarantee, the Corporation covenants that, so long
as any Capital Securities remain outstanding, if there shall have
occurred any event that would constitute an event of default
under the Guarantee or the Trust Agreement, then the Corporation
will not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with
respect to, any of the Corporation's capital stock (which
includes common and preferred stock), (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation (including any
Other Debentures) that rank pari passu with or junior in right of
payment to the Junior Subordinated Debentures or (iii) make any
guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the
Corporation (including any Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the
Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a result of a
reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional
interests in shares of the Corporation's capital stock pursuant
to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, and (f) purchases of
capital stock related to the issuance of capital stock or rights
under any of the Corporation's benefit plans for its directors,
officers or employees or any of the Corporation's dividend
reinvestment plans).
Events of Default
An event of default under the Guarantee will occur upon the
failure of the Corporation to perform any of its payment or other
obligations thereunder. The holders of a majority in Liquidation
Amount of the Capital Securities will have the right to direct
the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights
under the Guarantee without first instituting a legal proceeding
against the Trust, the Guarantee Trustee or any other person or
entity.
The Corporation, as guarantor, will be required to file
annually with the Guarantee Trustee a certificate as to whether
or not the Corporation is in compliance with all of the
conditions and covenants applicable to it under the 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. The manner of obtaining any such approval will be as
set forth under "Description of Capital Securities--Voting
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Rights; Amendment of the Trust Agreement." All guarantees and
agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the
Corporation and shall inure to the benefit of the holders of the
Capital Securities then outstanding.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and
effect upon full payment of the applicable Redemption Price of
the Capital Securities, upon full payment of the Liquidation
Amount payable upon liquidation of the Trust or upon distribution
of Junior Subordinated Debentures to the holders of the Capital
Securities. The Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of
the Capital Securities must restore payment of any sums paid
under the Capital Securities or the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and
continuance of a default by the Corporation in performance of the
Guarantee, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, after default with
respect to the Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the
Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Guarantee at the request of any holder
of the Capital Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might
be incurred thereby.
Governing Law
The Guarantee is governed by and will be construed in
accordance with the laws of the State of New York without regard
to conflict of laws principles.
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RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the
Capital Securities (to the extent the Trust has funds on hand
legally available for the payment of such Distributions) are
irrevocably guaranteed by the Corporation as and to the extent
set forth under "Description of Guarantee." Taken together, the
Corporation's obligations under the Junior Subordinated
Debentures, the Indenture, the Trust Agreement and the Guarantee
provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of Distributions and other amounts due on
the Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's
obligations under the Capital Securities. If and to the extent
that the Corporation does not make the required payments on the
Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including
Distributions, on the Capital Securities. The Guarantee will not
cover any such payment when the Trust does not have sufficient
funds on hand legally available therefor. In such event, the
remedy of a holder of Capital Securities is to institute a Direct
Action. The obligations of the Corporation under the Guarantee
are subordinate and junior in right of payment to all Senior
Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made
when due on the Junior Subordinated Debentures, such payments
will be sufficient to cover Distributions and other payments due
on the Capital Securities, primarily because: (i) the aggregate
principal amount or Prepayment Price of the Junior Subordinated
Debentures will be equal to the sum of the Liquidation Amount or
Redemption Price, as applicable, of the Trust Securities; (ii)
the interest rate and interest and other payment dates on the
Junior Subordinated Debentures match the Distribution rate and
Distribution and other payment dates for the Trust Securities;
(iii) the Corporation, as Sponsor, shall pay for all and any
costs, expenses and liabilities of the Trust except the Trust's
obligations to holders of Trust Securities under such Trust
Securities; and (iv) the Trust Agreement provides that the Trust
is not authorized to engage in any activity that is not
consistent with the limited purposes thereof.
Enforcement Rights of Holders of Capital Securities
A holder of any Capital Security may institute a legal
proceeding directly against the Corporation to enforce its rights
under the Guarantee without first instituting a legal proceeding
against the Guarantee Trustee, the Trust or any other person or
entity. A default or event of default under any Senior
Indebtedness would not constitute a default or Event of Default
under the Trust Agreement. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Indenture provide that no
payments may be made in respect of the Junior Subordinated
Debentures until such Senior Indebtedness has been paid in full
or any payment default thereunder has been cured or waived.
Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default under the Trust
Agreement.
Rights Upon Termination
Unless the Junior Subordinated Debentures are distributed
to holders of the Trust Securities, upon any voluntary or
involuntary termination and liquidation of the Trust, after
satisfaction of liabilities to creditors of the Trust (to the
extent not satisfied by the Corporation) as provided by
applicable law, the holders of the Trust Securities will be
entitled to receive, out of assets held by the Trust, the
Liquidation Distribution in cash. See "Description of Capital
Securities--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures." Upon any voluntary or involuntary
liquidation or bankruptcy of the Corporation, the Property
Trustee, as holder of the Junior Subordinated Debentures, would
be a subordinated creditor of the Corporation, subordinated in
right of payment to all Senior Indebtedness as set forth in the
Indenture, but entitled to receive payment in full of
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principal (and premium, if any) and interest, before any stockholders
of the Corporation receive payments or distributions. Since the
Corporation is the guarantor under the Guarantee and has agreed
to pay for all costs, expenses and liabilities of the Trust
(other than the Trust's obligations to the holders of its Trust
Securities), the positions of a holder of Trust Securities and a
holder of Junior Subordinated Debentures relative to stockholders
of the Corporation in the event of liquidation or bankruptcy of
the Corporation are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of Cleary, Gottlieb, Steen & Hamilton,
counsel to the Corporation and the Trust ("Tax Counsel"), the
following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership and
disposition of Capital Securities held as capital assets by a
United States Holder who purchased Old Capital Securities upon
initial issuance. As used herein, a "United States Holder" means
a holder of a Capital Security that is a citizen or resident of
the United States or a U.S. domestic corporation or that
otherwise will be subject to United States federal income
taxation on a net income basis in respect of the Capital
Securities. This summary does not deal with special classes of
holders such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, or persons that
will hold the Capital Securities as a position in a "straddle,"
as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as
other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency
other than the U.S. dollar or the tax consequences to
shareholders, partners or beneficiaries of a holder of Capital
Securities. Further, it does not include any description of any
alternative minimum tax consequences or the tax laws of any state
or local government or of any foreign government that may be
applicable to the Capital Securities. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations promulgated thereunder and on the
administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change, possibly on a
retroactive basis.
Exchange of Capital Securities
The exchange of the Old Capital Securities for the New
Capital Securities pursuant to the Exchange Offer will not
constitute a taxable event to United States Holders.
Consequently, (i) no gain or loss will be realized by a United
States Holder upon receipt of a New Capital Security; (ii) the
holding period of the New Capital Security will include the
holding period of the Old Capital Security exchanged therefor;
and (iii) the adjusted tax basis of the New Capital Security will
be the same as the adjusted tax basis of the Old Capital Security
exchanged therefor immediately before the exchange.
Classification of the Junior Subordinated Debentures
Under current law and assuming full compliance with the
terms of the Indenture (and certain other documents), the Junior
Subordinated Debentures will be classified for United States
federal income tax purposes as indebtedness of the Corporation.
By acceptance of a Capital Security, each holder covenants to
treat the Junior Subordinated Debentures as indebtedness and the
Capital Securities as evidence of an indirect beneficial
ownership interest in the Junior Subordinated Debentures. No
assurance can be given, however, that such position will not be
challenged by the Internal Revenue Service (the "IRS") or, if
challenged, that such a challenge will not be successful. The
remainder of this discussion assumes that the Junior Subordinated
Debentures will be classified as indebtedness of the Corporation
for United States federal income tax purposes.
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Classification of the Trust
Under current law and assuming full compliance with the
terms of the Trust Agreement and the Indenture (and certain other
documents), the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
An opinion of Tax Counsel, however, is not binding on the
IRS or the courts. Prospective investors should note that no
rulings have been or are expected to be sought from the IRS with
respect to any of these issues and no assurance can be given that
the IRS will not take contrary positions. Moreover, no assurance
can be given that the opinion expressed herein will not be
challenged by the IRS or, if challenged, that such a challenge
would not be successful.
Interest Income and Original Issue Discount
Under recently issued Treasury regulations (the
"Regulations") applicable to debt instruments issued on or after
August 13, 1996, a "remote" contingency that stated interest will
not be timely paid will be ignored in determining whether a debt
instrument is issued with OID. The Corporation believes that the
likelihood of its exercising its option to defer payments of
interest is "remote" since exercising that option would, among
other things, prevent the Corporation from declaring dividends on
any class of its equity securities. Accordingly, the Corporation
intends to take the position that the Junior Subordinated
Debentures will not be considered to be issued with OID and,
accordingly, stated interest on the Junior Subordinated
Debentures generally will be taxable to a holder as ordinary
income at the time it is paid or accrued in accordance with such
holder's method of accounting.
Under the Regulations, if the Corporation were to exercise
its option to defer payments of interest, the Junior Subordinated
Debentures would at that time be treated as issued with OID, and
all stated interest on the Junior Subordinated Debentures would
thereafter be treated as OID as long as the Junior Subordinated
Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated
Debentures would thereafter be accounted for on an economic
accrual basis regardless of such holder's method of tax
accounting, and actual distributions of stated interest would not
be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even
though the Corporation would not make actual cash payments during
an Extension Period. Moreover, under the Regulations, if the
option to defer the payment of interest was determined not to be
"remote," the Junior Subordinated Debentures would be treated as
having been originally issued with OID. In such event, all of a
holder's taxable interest income with respect to the Junior
Subordinated Debentures would be accounted for on an economic
accrual basis regardless of such holder's method of tax
accounting, and actual distributions of stated interest would not
be reported as taxable income.
The Regulations have not yet been addressed in any rulings
or other interpretations by the IRS, and it is possible that the
IRS could take a position contrary to the interpretation herein.
Because income on the Capital Securities will constitute
interest or OID, corporate holders of the Capital Securities will
not be entitled to a dividends-received deduction with respect to
any income recognized with respect to the Capital Securities.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation
of the Trust
The Corporation has the right at any time to liquidate the
Trust and cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities. Under current
law, such a distribution, for United States federal income tax
purposes, would be treated as a nontaxable event to each holder,
and each holder would receive an aggregate tax basis in the
Junior Subordinated Debentures equal to such holder's aggregate
tax basis in its Capital Securities. A holder's holding period in
the Junior Subordinated Debentures so received in liquidation of
the Trust would include the period during which the Capital
Securities were held by such holder. If, however, the Trust is
characterized for United States federal income tax purposes as an
association taxable as a
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corporation at the time of its dissolution, the distribution
of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities and a holder's holding
period in Junior Subordinated Debentures would begin on the date
such Junior Subordinated Debentures were received.
Under certain circumstances described herein (see
"Description of Capital Securities"), the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Capital
Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable
disposition of the redeemed Capital Securities, and a holder
could recognize gain or loss as if it sold such redeemed Capital
Securities for cash. See "--Sales of Capital Securities."
Sales of Capital Securities
A holder that sells Capital Securities (including any
redemption of the Capital Securities by the Corporation) will
recognize gain or loss equal to the difference between its
adjusted tax basis in the Capital Securities and the amount
realized on the sale of such Capital Securities (other than with
respect to accrued and unpaid interest which has not yet been
included in income, which will be treated as ordinary income). A
holder's adjusted tax basis in the Capital Securities generally
will be its initial purchase price increased by OID (if any)
previously includible in such holder's gross income to the date
of disposition and decreased by payments (if any) received on the
Capital Securities in respect of OID. Such gain or loss generally
will be capital gain or loss and generally will be long-term
capital gain or loss if the Capital Securities have been held by
such holder for more than one year. The Taxpayer Relief Act of
1997 generally reduces the tax rates on capital gains of
individuals in respect of capital assets held for more than 18
months. Holders are advised to consult with their own tax
advisors as to the consequences in their particular circumstances
of the capital gain provisions of the Taxpayer Relief Act of
1997.
The Capital Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with
respect to the underlying Junior Subordinated Debentures. A
holder who uses the accrual method of accounting for tax purposes
(and a cash method holder, if the Junior Subordinated Debentures
are deemed to have been issued with OID) who disposes of his
Capital Securities between record dates for payments of
distributions thereon will be required to include accrued but
unpaid interest on the Junior Subordinated Debentures through the
date of disposition in income as ordinary income (i.e., interest
or, possibly, OID), and to add such amount to his adjusted tax
basis in his pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include all
accrued but unpaid interest) a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States
federal income tax purposes.
United States Alien Holders
For purposes of this discussion, a "United States Alien
Holder" is a holder of Capital Securities that is a nonresident
alien individual or a foreign corporation. Under present United
States federal income tax laws: (i) payments by the Trust or any
of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to
United States federal withholding tax; provided that, (a) the
beneficial owner of the Capital Security does not actually or
constructively own 10 percent or more of the total combined
voting power of all classes of stock of the Corporation entitled
to vote, (b) the beneficial owner of the Capital Security is not
a controlled foreign corporation that is related to the
Corporation through stock ownership, and (c) either (A) the
beneficial owner of the Capital Security certifies to the Trust
or its agent, under penalties of perjury, that it is not a United
States Holder and provides its name and address or (B) a
securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and
holds the Capital Security in such capacity, certifies to the
Trust or its agent, under penalties of perjury, that such
statement has been received from the beneficial owner by it or by
a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy thereof; and (ii) a
United States Alien Holder of a Capital Security will generally
not be subject to United States federal withholding tax on any
gain realized upon the sale or other disposition of a Capital
Security provided the gain is not effectively connected with the
conduct of a trade or business in the United States by the United
States Alien Holder.
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<PAGE>
The exchange of the Old Capital Securities for the New
Capital Securities in the Exchange Offer should not constitute a
taxable event to United States Alien Holders.
Information Reporting to Holders
Generally, income on the Capital Securities will be
reported to holders on Forms 1099, which forms should be mailed
to holders of Capital Securities by January 31 following each
calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the
Capital Securities may be subject to a "backup" withholding tax
of 31 percent unless the holder complies with certain
identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income
tax, provided the required information is provided to the IRS.
New Withholding Regulations
On October 6, 1997, the Treasury Department issued new
regulations (the "New Regulations") which may make certain
modifications to the withholding, backup withholding and
information reporting rules described above. The New Regulations
attempt to unify certification requirements and modify reliance
standards. The New Regulations will generally be effective for
payments made after December 31, 1998, subject to certain
transition rules. Prospective investors are urged to consult
their own tax advisor regarding the New Regulations.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH
ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE
APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other
employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (a "Plan"), should
consider the fiduciary standards of ERISA in the context of the
Plan's particular circumstances before authorizing an investment
in the Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy
the prudence and diversification requirements of ERISA and would
be consistent with the documents and instruments governing the
Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit
Plans, as well as individual retirement accounts and Keogh plans
subject to Section 4975 of the Code (also "Plans"), from engaging
in certain transactions involving "plan assets" with persons who
are "parties in interest" under ERISA or "disqualified persons"
under the Code ("Parties in Interest") with respect to such
Plans. A violation of these "prohibited transaction" rules may
result in an excise tax or other liabilities under ERISA and/or
Section 4975 of the Code for such persons, unless exemptive
relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA),
certain church plans (as defined in Section 3(33) of ERISA) and
foreign plans (as described in Section 4(b)(5) of ERISA) are not
subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by
the U.S. Department of Labor (the "DOL"), the assets of the Trust
would be deemed to be "plan assets" of a Plan for purposes of
ERISA and Section 4975 of the Code if "plan assets" of the Plan
were used to acquire an equity interest in such Trust and no
exception were applicable under the Plan Assets Regulation. An
"equity interest" is defined under the Plan Assets Regulation as
any interest in an entity other than an instrument which is
treated as indebtedness under the applicable local law and which
has no substantial equity features and specifically includes a
beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets
Regulation, the assets of the Trust would not be deemed to be
"plan assets" of investing Plans if, immediately after the most
recent acquisition of any equity interest in the Trust, less than
25% of the value of each class of equity interests in the Trust
were held by Plans, other employee benefit plans not subject to
ERISA or Section 4975 of the Code (such as governmental, church
and foreign plans), and entities holding assets deemed to be
"plan assets" of any Plan (collectively, "Benefit Plan
Investors"). No assurance can be given that the value of the
Capital Securities held by Benefit Plan Investors will be less
than 25% of the total value of such Capital Securities at the
completion of the Exchange Offer or thereafter, and no monitoring
or other measures will be taken with respect to the satisfaction
of the conditions to this exception. All of the Common Securities
have been purchased and will be held by the Corporation.
Certain transactions involving the Trust could be deemed to
constitute direct or indirect prohibited transactions under ERISA
and Section 4975 of the Code with respect to a Plan if the
Capital Securities of the Trust were acquired with "plan assets"
of such Plan and assets of the Trust were deemed to be "plan
assets" of Plans investing in the Trust. For example, if the
Corporation is a Party in Interest with respect to an investing
Plan (either directly or by reason of its ownership of its
subsidiaries), extensions of credit between the Corporation and
the Trust (as represented by the Junior Subordinated Debentures
and the Guarantee) would likely be prohibited by Section
406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code,
unless exemptive relief were available under an applicable
administrative exemption (see below).
The DOL has issued five prohibited transaction class
exemptions ("PTCEs") that may provide exemptive relief for direct
or indirect prohibited transactions resulting from the purchase
or holding of the Capital Securities, assuming that assets of the
Trust were deemed to be "plan assets" of Plans investing in the
Trust (see above). Those class exemptions are PTCE 96-23 (for
certain transactions determined by in-house asset managers), PTCE
95-60 (for certain transactions involving insurance company
general accounts), PTCE 91-38 (for certain transactions involving
bank collective investment funds), PTCE 90-1 (for certain
transactions involving insurance company pooled separate
accounts), and PTCE 84-14 (for certain transactions determined by
independent qualified professional asset managers).
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Because the Capital Securities may be deemed to be equity
interests in the Trust for purposes of applying ERISA and Section
4975 of the Code, the Capital Securities may not be purchased or
held by any Plan, any entity whose underlying assets include
"plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan assets" of any
Plan, unless such purchaser or holder is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1
or 84-14. Any purchaser or holder of the Capital Securities or
any interest therein will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or
a Plan Asset Entity and is not purchasing such securities on
behalf of or with "plan assets" of any Plan or (b) is eligible
for the exemptive relief available under PTCE 96-23, 95-60,
91-38, 90-1 or 84-14 with respect to such purchase or holding.
Any purchaser or holder of the Old Capital Securities or any
interest therein will be deemed to have represented by its
exchange thereof for New Capital Securities in the Exchange Offer
that it either (a) is not a Plan or a Plan Asset Entity and the
Old Capital Securities being exchanged by it are not "plan
assets" of any Plan or (b) is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 with
respect to such exchange.
Due to the complexity of these rules and the penalties that
may be imposed upon persons involved in non-exempt prohibited
transactions, it is particularly important that fiduciaries or
other persons considering purchasing Capital Securities on behalf
of or with "plan assets" of any Plan consult with their counsel
regarding the potential consequences if the assets of the Trust
were deemed to be "plan assets" and the availability of exemptive
relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale
of such New Capital Securities. This Prospectus, as it may be
amended or supplemented from time to time, may be used by
Exchanging Dealers in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where
such Old Capital Securities were acquired as a result of
market-making activities or other trading activities. The
Corporation and the Trust have agreed that, starting on the date
on which the Exchange Offer is consummated and ending on the
close of business one year after such date, they will make this
Prospectus, as amended or supplemented, available to any
Exchanging Dealer for use in connection with any such resale. In
addition, until February 24, 1997, all dealers effecting
transactions in the New Capital Securities may be required to
deliver a prospectus.
The Corporation and the Trust will not receive any proceeds
from any sale of New Capital Securities by broker-dealers. New
Capital Securities received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on the
New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in the
form of commissions or concessions from any such broker-dealer
and/or the purchasers of any such New Capital Securities. Any
broker-dealer that resells New Capital Securities that were
received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of
such New Capital Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any
such resale of New Capital Securities and any commissions or
concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker- dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of one year after the date on which the
Exchange Offer is consummated, the Corporation and the Trust 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. The
Corporation and the Trust have agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one
counsel for the Holders of the New Capital Securities) other than
underwriting commissions or discounts of any brokers or
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<PAGE>
dealers and will indemnify the Holders of the New Capital
Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Junior Subordinated Debentures and
the New Guarantee and certain matters related thereto will be
passed upon for the Corporation and certain United States federal
income taxation matters will be passed upon for the Corporation
and the Trust by Cleary, Gottlieb, Steen & Hamilton, New York,
New York. The validity of the New Capital Securities will be
passed upon by Richards, Layton & Finger, P.A., special Delaware
Counsel to the Corporation and the Trust.
EXPERTS
The consolidated financial statements of the Corporation
and subsidiary as of December 31, 1996 and 1995, and for each of
the years in the three-year period ended December 31, 1996, have
been incorporated herein by reference to the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996,
in reliance upon the report, also incorporated by reference
herein, of KPMG Peat Marwick LLP, independent certified public
accountants, upon the authority of such firm as experts in
accounting and auditing.
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<PAGE>
=====================================================================
No dealer, salesperson or any other individual has been
authorized to give any information or to make any representations
other than those contained or incorporated by reference in this
Prospectus in connection with this Exchange Offer and, if given
or made, such information or representations must not be relied
upon as having been authorized by the Corporation or the Trust.
Neither the delivery of this Prospectus nor the accompanying
Letter of Transmittal nor any exchange made pursuant hereto shall
under any circumstance create an implication that there has been
no change in the affairs of the Corporation or the Trust since
the date hereof. This Prospectus does not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such
offer or solicitation is not qualified to do so or to anyone to
whom it is unlawful to make such offer or solicitation.
-------------------------
TABLE OF CONTENTS
Page
Available Information........................... 7
Incorporation of Certain Documents
by Reference.................................... 7
Summary......................................... 9
Risk Factors.................................... 16
ALBANK Financial Corporation.................... 21
ALBANK Summary Results.......................... 23
Accounting Treatment............................ 24
Use of Proceeds................................. 24
Ratio of Earnings to Fixed Charges.............. 25
Capitalization.................................. 25
Selected Consolidated Financial
Information..................................... 27
ALBANK Capital Trust I.......................... 29
The Exchange Offer.............................. 29
Description of Capital Securities............... 38
Description of Junior Subordinated
Debentures...................................... 48
Description of Guarantee........................ 58
Relationship Among the Capital Securities,
the Junior Subordinated Debentures
and the Guarantee............................... 61
Certain Federal Income Tax Consequences......... 62
ERISA Considerations............................ 66
Plan of Distribution............................ 67
Legal Matters................................... 68
Experts......................................... 68
$50,000,000
ALBANK Capital Trust I
9.27% Capital Securities,
Series B
fully and unconditionally guaranteed,
as described herein, by
ALBANK
Financial
Corporation
--------------------------
PROSPECTUS
DATED NOVEMBER __, 1997
--------------------------
=====================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
(i) Section 102(b)(7) of the General Corporation Law of the
State of Delaware provides that a Delaware corporation may
include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such
provision may not eliminate or limit the liability of a director
for any breach of the director's duty of loyalty to the
corporation or its stockholders, for actions or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, for the payment of unlawful dividends, or for
any transaction from which the director derived an improper
personal benefit. Article Eleventh of the Certificate of
Incorporation of ALBANK contains a provision limiting the
personal liability of a director to ALBANK and its stockholders
for monetary damages for a breach of fiduciary duty as a director
to the full extent permitted by law.
(ii) Additionally, Section 145, "Indemnification of
Officers, Directors, Employees, and Agents; Insurance", of the
General Corporation Law of the State of Delaware provides as
follows:
"(a) A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by
II-1
<PAGE>
or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of the
corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem
proper.
(c) To the extent that a director, officer, employee
or agent of a corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b) of this section, or
in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b)
of this section (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case
upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set
forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) if there
are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by
the stockholders.
(e) Expenses (including attorneys' fees) incurred by
an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding
may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections
of this section shall not be deemed exclusive of any other
rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested
II-2
<PAGE>
directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have
the power to indemnify him against such liability under
this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued,
would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at
the request of such constituent corporation as director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with
respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if
its separate existence had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the
corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes
duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan,
its participants or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be
in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit
of the heirs, executors and administrators of such a
person.
(k) The Court of Chancery is hereby vested with
exclusive jurisdiction to hear and determine all actions
for advancement of expenses or indemnification brought
under this section or under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The
Court of Chancery may summarily determine a corporation's
obligation to advance expenses (including attorneys' fees).
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<PAGE>
(iii) Article Tenth of the Amended and Restated Certificate
of Incorporation of ALBANK provides for indemnification of
directors and officers of ALBANK against liability they may incur
in their capacities as such to the full extent permitted under
Delaware law.
(iv) ALBANK maintains an insurance policy that insures the
directors and officers of ALBANK against loss arising from any
claim or claims made against such directors or officers,
individually or collectively, by reason of certain wrongful acts
such as breach of duty, neglect, error, misstatement, misleading
statement, omission or act by the directors or officers of ALBANK
in their respective capacities as such. The policy also insures
ALBANK against loss for which ALBANK has indemnified the
directors or officers pursuant to law or contract or the
Certificate of Incorporation or by-laws of ALBANK arising from
any claim against any of the directors or officers of ALBANK by
reason of the wrongful acts described above. The policy does not
insure ALBANK's directors and officers against loss in connection
with any claim relating to, among other things, any criminal or
deliberate fraudulent act or any accounting for profits for the
purchase or sale of securities of ALBANK within the meaning of
Section 16(b) of the Exchange Act.
(v) Under the Trust Agreement, ALBANK has agreed to
indemnify each of the Trustees of the Trust, and to hold the
Trustees harmless against, any loss, liability, damage, claim or
expense incurred without negligence or bad faith on the Trustees'
part, arising out of or in connection with the acceptance or
administration of the Trust Agreement, including the costs and
expenses of defending themselves against any claim or liability
in connection with the exercise or performance of any of their
powers or duties under the Trust Agreement.
Item 21. Exhibits and Financial Statement Schedules.
Exhibit No. Description
- ----------- -----------
4.1 Indenture, dated as of June 6, 1997, between ALBANK
and The Chase Manhattan Bank, as Trustee, in
respect of ALBANK's 9.27% Junior Subordinated
Debentures due 2027.*
4.2 Form of ALBANK's 9.27% Junior Subordinated Debentures due 2027
(included in the Indenture filed as Exhibit 4.1 to this
Registration Statement).*
4.3 Certificate of Trust of ALBANK Capital Trust I, dated
April 3, 1997.*
4.4 Amended and Restated Declaration of Trust of ALBANK Capital
Trust I, dated as of June 6, 1997, among ALBANK, as sponsor,
the Administrators thereof, Chase Manhattan Bank Delaware, as
Delaware Trustee, The Chase Manhattan Bank, as Property Trustee,
and the holders from time to time of undivided interests in
the assets of ALBANK Capital Trust I.*
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<PAGE>
Exhibit No. Description
- ----------- -----------
4.5 Form of Capital Security Certificate for ALBANK
Capital Trust I (included in the Amended and
Restated Declaration of Trust filed as Exhibit 4.4
to this Registration Statement).*
4.6 Series A Capital Securities Guarantee Agreement,
dated as of June 6, 1997, between ALBANK and The
Chase Manhattan Bank, as Guarantee Trustee.*
4.7 Form of Series B Capital Securities Guarantee
Agreement, dated as of ________ __, 1997, between
ALBANK and The Chase Manhattan Bank, as Guarantee
Trustee.*
4.8 Registration Rights Agreement, dated June 6, 1997,
among ALBANK, ALBANK Capital Trust I and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as
Representative of the Initial Purchasers.*
5.1 Opinion of Richards, Layton & Finger, P.A. as to
the validity of the New Capital Securities to be
issued by ALBANK Capital Trust I.**
5.2 Opinion of Cleary, Gottlieb, Steen & Hamilton as
to the validity of the New Junior Subordinated
Debentures and the New Guarantee to be issued
by ALBANK.**
8 Opinion of Cleary, Gottlieb, Steen & Hamilton
regarding certain federal income tax matters.**
12.1 Computation of ratio of earnings to fixed charges.**
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Richards, Layton & Finger, P.A.
(included in Exhibit 5.1 to this Registration
Statement).**
23.3 Consent of Cleary, Gottlieb, Steen & Hamilton
(included in Exhibit 5.2 to this Registration
Statement).**
23.4 Consent of Cleary, Gottlieb, Steen & Hamilton
(included in Exhibit 8 to this Registration
Statement).**
24 Powers of Attorney.*
25.1 Form T-1 Statement of Eligibility of The Chase
Manhattan Bank to act as trustee under the
Indenture.*
25.2 Form T-1 Statement of Eligibility of The Chase
Manhattan Bank to act as trustee under the Amended
and Restated Declaration of Trust.*
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<PAGE>
Exhibit No. Description
- ----------- -----------
25.3 Form T-1 Statement of Eligibility of The Chase
Manhattan Bank to act as trustee under the Guarantee
for the benefit of the holders of Capital Securities.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement.*
- --------
* Previously filed.
** Filed herewith.
Item 22. Undertakings.
(a) Each of the undersigned registrants hereby undertakes
that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of a registrant pursuant to the
foregoing provisions, or otherwise, each of the undersigned
registrants has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a registrant
of expenses incurred or paid by a director, officer or
controlling director, officer or controlling person of a
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, each
of the undersigned registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the act and will be governed by the final
adjudication of such issue.
(c) Each of the undersigned registrants hereby undertakes
to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13
of this Form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes
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<PAGE>
information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(d) Each of the undersigned registrants hereby undertakes
to supply by means of post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Albany,
State of New York, on November 24, 1997.
ALBANK FINANCIAL CORPORATION
(Registrant)
By /s/ Herbert G. Chorbajian
-------------------------
Herbert G. Chorbajian
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dated indicated.
Name Title Date
---- ----- ----
/s/ Herbert G. Chorbajian Chairman of the Board, November 24, 1997
- ------------------------- President and Chief
Herbert G. Chorbajian Executive Officer
(Principal Executive
Officer)
/s/ Richard J. Heller Executive Vice President November 24, 1997
- ------------------------- and Chief Financial
Richard J. Heller Officer (Principal
Financial Officer)
/s/ Michael C. Walajtys Vice President and November 24, 1997
- ------------------------- Controller (Principal
Michael C. Walajtys Accounting Officer)
/s/ William J. Barr Director November 24, 1997
- -------------------------
William J. Barr*
/s/ Henry M. Elliot, Jr. Director November 24, 1997
- -------------------------
Henry M. Elliot, Jr.*
/s/ John E. Maloy, Sr. Director November 24, 1997
- -------------------------
John E. Maloy, Sr.*
/s/ Susan J. Stabile Director November 24, 1997
- -------------------------
Susan J. Stabile, Esq.*
II-8
<PAGE>
/s/ Anthony P. Tartaglia Director November 24, 1997
- -------------------------
Anthony P. Tartaglia, M.D.*
/s/ Karen R. Hitchcock Director November 24, 1997
- -------------------------
Karen R. Hitchcock, Ph.D.*
/s/ Francis L. McKone Director November 24, 1997
- -------------------------
Francis L. McKone*
/s/ John J. Nigro Director November 24, 1997
- -------------------------
John J. Nigro*
*By /s/ Richard J. Heller
---------------------------
Richard J. Heller
Executive Vice President
and Chief Financial Officer
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Albany,
State of New York, on November 24, 1997.
ALBANK CAPITAL TRUST I
(Registrant)
By /s/ Richard J. Heller
----------------------------
Richard J. Heller
Administrator
By /s/ Barry J. Blenis
----------------------------
Barry J. Blenis
Administrator
By /s/ Freling H. Smith
----------------------------
Freling H. Smith
Administrator
II-10
[Letterhead of Richards, Layton & Finger]
November 24, 1997
ALBANK Capital Trust I
c/o ALBANK Financial Corporation
10 North Pearl Street
Albany, New York 12207
Re: ALBANK Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for ALBANK
Financial Corporation, a Delaware corporation (the "Company"),
and ALBANK Capital Trust I, a Delaware business trust (the
"Trust"), in connection with the matters set forth herein. At
your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set
forth, our examination of documents has been limited to the
examination of originals or copies of the following:
(a) The Certificate of Trust of the Trust, dated as of
April 3, 1997 (the "Certificate"), as filed in the office of the
Secretary of State of the State of Delaware (the "Secretary of
State") on April 3, 1997;
(b) The Declaration of Trust of the Trust, dated as of
April 3, 1997, by and among the Company and the trustees of the
Trust named therein;
<PAGE>
ALBANK Capital Trust I
November 24, 1997
Page 2
(c) The Amended and Restated Declaration of Trust of
the Trust, dated as of June 6, 1997 (including Annex I and
Exhibits A-1 and A-2) (the "Declaration"), among the Company, as
sponsor, the trustees of the Trust named therein, the
administrators of the Trust named therein and the holders, from
time to time, of undivided beneficial interests in the assets of
the Trust;
(d) Amendment No. 1 to the Registration Statement on
Form S-4 (the "Registration Statement"), including a preliminary
prospectus (the "Prospectus"), relating to the 9.27% Capital
Securities, Series B, of the Trust, representing undivided
beneficial interests in the assets of the Trust (each, a "Capital
Security" and collectively, the "Capital Securities"), as
proposed to be filed by the Company and the Trust with the
Securities and Exchange Commission on or about November 24, 1997;
and
(e) A Certificate of Good Standing for the Trust,
dated November 24, 1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not
otherwise defined are used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a)
through (e) above. In particular, we have not reviewed any
document (other than the documents listed in paragraphs (a)
through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that
there exists no provision in any document that we have not
reviewed that is inconsistent with the opinions stated herein. We
have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the
statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed
to be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have
assumed (i) the authenticity of all documents submitted to us as
authentic originals, (ii) the conformity with the originals of
all documents submitted to us as copies or forms, and (iii) the
genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that
the Declaration constitutes the entire agreement among the
parties thereto with respect to the subject matter thereof,
including with respect to the creation, operation and termination
of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to
the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid
existence in good
<PAGE>
ALBANK Capital Trust I
November 24, 1997
Page 3
standing of each party to the documents examined by us under the
laws of the jurisdiction governing its creation, organization or
formation, (iii) the legal capacity of natural persons who are
parties to the documents examined by us, (iv) that each of the
parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations
under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us,
(vi) the receipt by each Person to whom a Capital Security is to
be issued by the Trust (collectively, the "Capital Security
Holders") of a Capital Securities Certificate and the
consideration for the Capital Security acquired by it, in
accordance with the Declaration and the Registration Statement,
and (vii) that the Capital Securities are issued to the Capital
Security Holders in accordance with the Declaration and the
Registration Statement. We have not participated in the
preparation of the Registration Statement and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of
Delaware (excluding the securities laws of the State of
Delaware), and we have not considered and express no opinion on
the laws of any other jurisdiction, including federal laws and
rules and regulations relating thereto. Our opinions are rendered
only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of
such questions of law and statutes of the State of Delaware as we
have considered necessary or appropriate, and subject to the
assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:
1. The Trust has been duly created and is validly
existing in good standing as a business trust under the Business
Trust Act.
2. The Capital Securities will represent valid and,
subject to the qualifications set forth in paragraph 3 below,
fully paid and nonassessable undivided beneficial interests in
the assets of the Trust.
3. The Capital Security Holders, as beneficial owners
of the Trust, will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State
of Delaware. We note that Capital Security Holders may be
obligated to make payments under the Declaration.
We consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Registration Statement. In addition, we hereby consent to the use
of our name under the heading "Legal Matters" in the Prospectus.
In giving the
<PAGE>
ALBANK Capital Trust I
November 24, 1997
Page 4
foregoing consents, we do not thereby admit that we come within
the category of Persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Except as stated above, without our prior written consent, this
opinion may not be furnished or quoted to, or relied upon by, any
other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
-----------------------------------
BJK/BJ/bj
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
Writer's Direct Dial: (202) 974-1520
November 24, 1997
ALBANK Financial Corporation
10 North Pearl Street
Albany, New York 12207
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to ALBANK Financial
Corporation, a Delaware corporation (the "Company"), and Sponsor
of ALBANK Capital Trust I, a Delaware statutory business trust
(the "Trust"), in connection with the Registration Statement on
Form S-4 of the Company and the Trust (the "Registration
Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and amended today, in respect of (i) the
proposed issuance by the Trust of $50,000,000 aggregate
liquidation amount of 9.27% Capital Securities, Series B (the
"New Capital Securities") registered under the Securities Act in
exchange for up to $50,000,000 aggregate liquidation amount of
9.27% Capital Securities, Series A (the "Old Capital
Securities"); (ii) the proposed issuance by the Company to the
Trust of $51,547,000 aggregate principal amount of the Company's
9.27% Junior Subordinated Deferrable Interest Debentures due
2027, Series B (the "New Junior Subordinated Debentures")
registered under the Securities Act in exchange for up to
$51,547,000 aggregate principal amount of the Company's 9.27%
Junior Subordinated Deferrable Interest Debentures due 2027,
Series A (the "Old Junior Subordinated Debentures"); and (iii)
the Company's Guarantee of the New Capital Securities (the "New
Guarantee") registered under the Securities Act in exchange for
the Company's Guarantee of the Old Capital Securities (the "Old
Guarantee"), all as more fully described in the Registration
Statement and the Prospectus included as part of the Registration
Statement.
<PAGE>
ALBANK Financial Corporation, p. 2
The New Capital Securities will be issued pursuant to
an Amended and Restated Declaration of Trust, dated as of June 6,
1997, among the Company, as Sponsor, the Administrators thereof,
Chase Manhattan Bank Delaware, as Delaware Trustee, and The Chase
Manhattan Bank, as Property Trustee (the "Amended Declaration");
and the New Junior Subordinated Debentures will be issued
pursuant to an Indenture, dated as of June 6, 1997, between the
Company and The Chase Manhattan Bank, as trustee (the
"Indenture").
We have participated in the preparation of the
Registration Statement and have reviewed originals or copies
certified or otherwise identified to our satisfaction of such
documents and records of the Company and the Trust and such other
instruments and other certificates of public officials, officers
and representatives of the Company and the Trust and such other
persons, and we have made such investigations of law, as we have
deemed appropriate as a basis for the opinions expressed below.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that:
1. When the New Junior Subordinated Debentures, in the
form filed as an exhibit to the Registration Statement, have been
duly executed and authenticated in accordance with the Indenture,
and duly issued and delivered by the Company in exchange for an
equal principal amount of Old Junior Subordinated Debentures
pursuant to the terms of the Registration Rights Agreement, the
New Junior Subordinated Debentures will be valid and binding
obligations of the Company, entitled to the benefits of the
Indenture.
2. The New Guarantee to be issued by the Company has
been duly and validly authorized and, upon proper execution and
delivery thereof, will be a valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms.
The foregoing opinions are subject to applicable
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity.
The foregoing opinions are limited to the law of the
State of New York.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to
this firm under the heading "Legal Matters" in the Prospectus
included in the Registration Statement. In giving such consent,
we do not thereby admit that we
<PAGE>
ALBANK Financial Corporation, p. 3
are "experts" within the meaning of the Securities Act or the
rules and regulations of the Securities and Exchange Commission
issued thereunder with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ Kenneth L. Bachman
---------------------------------
Kenneth L. Bachman, a Partner
<PAGE>
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
Writer's Direct Dial: (212) 225-2540
November 24, 1997
ALBANK Financial Corporation
10 North Pearl Street
Albany, New York 12207
Ladies and Gentlemen:
We have acted as counsel to ALBANK Financial
Corporation, a Delaware corporation (the "Company"), and Sponsor
of ALBANK Capital Trust I, a Delaware statutory business trust
(the "Trust"), in connection with the Registration Statement on
Form S-4 of the Company and the Trust (the "Registration
Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and amended today, in respect of (i) the
proposed issuance by the Trust of $50,000,000 aggregate
liquidation amount of 9.27% Capital Securities, Series B (the
"New Capital Securities") registered under the Securities Act in
exchange for up to $50,000,000 aggregate liquidation amount of
9.27% Capital Securities, Series A (the "Old Capital Securities")
and (ii) the proposed issuance by the Company to the Trust of
$51,547,000 aggregate principal amount of the Company's 9.27%
Junior Subordinated Deferrable Interest Debentures due 2027,
Series B (the "New Junior Subordinated Debentures") registered
under the Securities Act in exchange for up to $51,547,000
aggregate principal amount of the Company's 9.27% Junior
Subordinated Deferrable Interest Debentures due 2027, Series A
(the "Old Junior Subordinated Debentures"), all as more fully
described in the Registration Statement and the Prospectus
included as part of the Registration Statement.
Our opinion is based on the Internal Revenue Code of
1986, as amended, U.S. Treasury regulations promulgated
thereunder, and administrative and judicial interpretations
thereof, all as of the date hereof and all of which are subject
to change, possibly on a retroactive
<PAGE>
basis. In rendering this opinion, we are expressing our views
only as to the federal income tax laws of the United States of
America.
Subject to the assumptions, qualifications and
conditions set forth herein, it is our opinion that the
discussion set forth in the Registration Statement under the
caption "Certain Federal Income Tax Consequences" fairly and
accurately summarizes the specific tax matters addressed therein,
based upon current law and the assumptions stated or referred to
therein.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement, and to the use of our name
under the heading "Certain Federal Income Tax Consequences."
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ Yaron Z. Reich
-----------------------------
Yaron Z. Reich, a Partner
2
<PAGE>
ALBANK Financial Corporation
Computation of Ratio of Earnings to Fixed Changes
($000's)
Nine Months Ended
-----------------
9/97 9/96
---- ----
Earnings:
Earnings before income taxes,
extraordinary items and
cumulative effect of changes
in accounting principles..............$44,524 $28,301
Fixed charges, excluding
interest on deposits.................. 5,213 2,312
------- -------
Earnings including fixed charges
but excluding interest on deposits .. $49,737 $30,613
======= =======
Interest on deposits ................ 91,907 89,044
Earnings including fixed charges -------- --------
and interest on deposits ............$141,644 $119,657
======== ========
Fixed Charges:
Interest Expense:
Borrowings .......................... 4,660 1,781
One-fifth of rental expense for
all operating leases (the amount
deemed representative of the
interest factor) and imputed
interest on capital lease ........... 553 531
Fixed charges excluding -------- --------
interest on deposits ................ 5,213 2,312
Interest on deposits ................ 91,907 89,044
-------- --------
Fixed charges including
interest on deposits ................ $97,120 $91,356
======== ========
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits ...... 9.54x 13.24x
Including interest on deposits ...... 1.46x 1.31x
Years ended December 31,
------------------------------------------
1996 1995 1994 1993 1992
Earnings: ---- ---- ---- ---- ----
Earnings before income taxes,
extraordinary items and
cumulative effect of changes
in accounting principles .........$41,717 $47,631 $48,470 $43,687 $36,436
Fixed charges, excluding
interest on deposits ............. 3,596 900 1,869 1,259 2,126
Earnings including fixed
charges but excluding ------- ------- ------- ------- -------
interest on deposits .............$45,313 $48,531 $50,339 $44,946 $38,562
======= ======= ======= ======= =======
Interest on deposits .............120,006 103,810 80,887 85,832 103,033
Earnings including fixed
charges and interest on -------- -------- -------- -------- --------
deposits ........................$165,319 $152,341 $131,226 $130,778 $141,595
======== ======== ======== ======== ========
Fixed Charges:
Interest Expense:
Borrowings ....................... 2,879 205 1,205 584 1,508
One-fifth of rental expense
for all operating leases
(the amount deemed
representative of the interest
factor) and imputed interest
on capital lease ................. 717 695 664 675 618
Fixed charges excluding -------- -------- -------- -------- --------
interest on deposits ............. 3,596 900 1,869 1,259 2,126
Interest on deposits .............120,006 103,810 80,887 85,832 103,033
Fixed charges including ======== ======== ======== ======== ========
interest on deposits ............$123,602 $104,710 $82,756 $87,091 $105,159
Ratio of Earnings
to Fixed Charges:
Excluding interest on deposits 12.60x 53.92x 26.93x 35.70x 18.14x
Including interest on deposits 1.34x 1.45x 1.59x 1.50x 1.35x
