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FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
FIRST STATE BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW MEXICO 85-0366665
(STATE OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
111 LOMAS AVENUE NW
ALBUQUERQUE, NEW MEXICO 87102
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
NONE
_______________________________ _______________________________
_______________________________ _______________________________
_______________________________ _______________________________
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF DEBT SECURITIES AND
IS EFFECTIVE UPON FILING PURSUANT TO GENERAL INSTRUCTIONS A.(C)(1), PLEASE CHECK
THE FOLLOWING BOX. [ ]
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF DEBT SECURITIES AND
IS TO BECOME EFFECTIVE SIMULTANEOUSLY WITH THE EFFECTIVENESS OF A CONCURRENT
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 PURSUANT TO GENERAL
INSTRUCTION A.(C)(2), PLEASE CHECK THE FOLLOWING BOX. [ ]
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2017
(TITLE OF CLASS)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The information appearing under the captions "DESCRIPTION OF THE
DEBENTURES" and "DESCRIPTION OF CAPITAL STOCK" contained in Registrant's
Amendment No. 1 to the Registration Statement on Form S-2 (Registration No. 333-
24417) (the "Registration Statement"), is hereby incorporated by reference
herein. Copies of such pages are filed as Exhibit 99 hereto. The form of
Prospectus forming a part of the Registration Statement, which will be filed by
the Registrant pursuant to Rule 424(b) under the Securities Act of 1933
subsequent to the date hereof, shall be deemed to be incorporated by reference
into this Registration Statement on Form 8-A from the date of such filing.
ITEM 2. EXHIBITS
The following exhibits (in addition to Exhibit 99 attached hereto) are
filed herewith:
1. Restated Certificate of Incorporation of Registrant. (Incorporated by
reference to Exhibit 3.1 to the Registration Statement.)
2. Form of Indenture. (Incorporated by reference to Exhibit 4.1 to the
Registration Statement.)
3. Form of Debenture. (Incorporated by reference to Exhibit 4.2 to the
Registration Statement.)
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
FIRST STATE BANCORPORATION
Date: April 25, 1997
By: /s/ BRIAN C. REINHARDT
____________________________
Name: Brian C. Reinhardt
Title: Senior Vice President and
Chief Financial Officer
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Exhibit Index
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Page
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99. The "DESCRIPTION OF THE DEBENTURES" and "DESCRIPTION 5
OF CAPITAL STOCK" sections of the Registrant's
Amendment No. 1 to the Registration Statement on
Form S-2 (Registration No. 333-24417).
1. Restated Certificate of Incorporation of Registrant.
(Incorporated by reference to Exhibit 3.1 to the
Registration Statement.)
2. Form of Indenture. (Incorporated by reference to
Exhibit 4.1 to the Registration Statement.)
3. Form of Debenture. (Incorporated by reference to
Exhibit 4.2 to the Registration Statement.)
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EXHIBIT 99
First State Bank in the future. Credit transactions with these parties are
subject to review by First State Bank's Board of Directors. All outstanding
loans and extensions of credit by First State Bank to these parties were made
in the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and in the opinion of management did not
involve more than the normal risk of collectability or present other
unfavorable features. At December 31, 1996, the aggregate balance of First
State Bank's loans and advances under existing lines of credit to these
parties was approximately $1.9 million, or 0.78% of First State Bank's total
loans. All payments of principal and interest on these loans are current.
These loans represented 9.24% of the Company's equity as of December 31, 1996.
Legal Services. Mr. DeLayo was a director of First State Bank from 1988
through January 1992, was a director of the Santa Fe Bank from March 1993 to
June 1994 and was appointed as a director of the Company in November 1993. Mr.
DeLayo acts as general counsel to the Company and First State Bank. Mr. DeLayo
and his firm, Leonard J. DeLayo, P.C., are involved in representing the
Company in numerous collection matters. The Company paid Mr. DeLayo's firm
approximately $146,000, $187,000 and $161,000 for its services in 1996, 1995
and 1994.
Santa Fe Branch Location. The Downtown Santa Fe location was constructed on
land owned by Herman Wisenteiner, a Director of the Company. The Company is
leasing the site from Mr. Wisenteiner for an initial term of 15 years
(beginning December 1995) at an initial rate of $60,000 per year. In the
opinion of management, the lease is on terms similar to other third-party
commercial transactions in the ordinary course of business.
DESCRIPTION OF THE DEBENTURES
The Debentures are to be issued under an Indenture, dated as of , 1997
(the "Indenture"), between the Company and Colorado National Bank, as Trustee
(the "Trustee"), a copy of which is filed as an exhibit to the Registration
Statement. The following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture, including the
definitions therein of certain terms. Wherever particular sections or defined
terms of the Indenture are referred to, such sections or defined terms are
incorporated herein by reference.
GENERAL
The Debentures will be unsecured subordinated obligations of the Company,
will be limited to an aggregate principal amount of $13,800,000 (including
$1,800,000 subject to the Underwriters' over-allotment option) and will mature
on . The Debentures will bear interest at the rate per annum shown on the
front cover of this Prospectus from , 1997 or from the most recent
Interest Payment Date on which interest has been paid or provided for, payable
semi-annually on and of each year, commencing , 1997, to the
Person in whose name such Debenture (or any predecessor Debenture) is
registered at the close of business on the Regular Record Date for such
interest payment, which shall be the or (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. (Sections
301 and 307) Principal of and premium, if any, and interest on the Debentures
will be payable, and the transfer of Debentures will be registrable, and the
Debentures may be presented for exchange or conversion at the offices of the
Trustee in the City of , or at such other office designated by the Company.
(Sections 301, 305 and 1002)
The Debentures will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof. (Section
302) No service charge will be made for any registration of transfer or
exchange of Debentures, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305)
Because the Company is a holding company, its rights and the rights of its
creditors, including the Holders of the Debentures, to participate in the
assets of any Subsidiary upon the latter's liquidation or recapitalization
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will be subject to the prior claims of the Subsidiary's creditors (including,
in the case of the Bank, its depositors), except to the extent that the
Company may itself be a creditor with recognized claims against the
Subsidiary. See also "The Company" and "Regulation and Supervision."
The Indenture does not contain any provisions that would provide protection
to Holders of the Debentures against a sudden and dramatic decline in credit
quality of the Company resulting from any takeover, recapitalization or
similar restructuring.
A holder of 25% or more of the outstanding Common Stock (5% or more if such
holder otherwise exercises a "controlling influence" over the Company) may be
subject to regulation as a "bank holding company" in accordance with the BHCA.
In addition, (i) any bank holding company or foreign bank with a U.S. presence
may be required to obtain the approval of the FRB under the BHCA to acquire or
retain 5% or more of the outstanding Common Stock and (ii) any person other
than a bank holding company may be required to obtain the approval of the FRB
under the Change in Bank Control Act to acquire or retain 10% or more of the
outstanding Common Stock. For purposes of the BHCA, Holders of the Debentures
may be deemed to be holders of the underlying shares of Common Stock.
SUBORDINATION OF DEBENTURES
The payment of the principal of and premium, if any, and interest on the
Debentures will, to the extent set forth in the Indenture, be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness (as
defined in the Indenture). In certain events of insolvency, the payment of the
principal of and premium and interest on the Debentures will, to the extent
set forth in the Indenture, also be effectively subordinated in right of
payment to the prior payment in full of all Other Financial Obligations. Upon
any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Indebtedness will first
be entitled to receive payment in full of all amounts due or to become due
thereon before the Holders of the Debentures will be entitled to receive any
payment in respect of the principal of or premium or interest on the
Debentures. If upon any such payment or distribution of assets to creditors,
there remain, after giving effect to such subordination provisions in favor of
the holders of Senior Indebtedness, any amounts of cash, property or
securities available for payment or distribution in respect of the Debentures
(as defined in the Indenture, "Excess Proceeds") and if, at such time, any
Entitled Persons in respect of Other Financial Obligations have not received
payment in full in respect of all amounts due or to become due on or in
respect of such Other Financial Obligations, then such Excess Proceeds first
shall be applied to pay or provide for the payment in full of such Other
Financial Obligations before any payment or distribution may be made in
respect of the Debentures. In the event of the acceleration of the maturity of
the Debentures, the holders of all Senior Indebtedness first will be entitled
to receive payment in full of all amounts due thereon before the Holders of
the Debentures will be entitled to receive any payment upon the principal of
or premium or interest on the Debentures. No payments on account of principal
of or interest on the Debentures or on account of the purchase or acquisition
of the Debentures may be made if there shall have occurred and be continuing a
default in any payment with respect to Senior Indebtedness or if any judicial
proceeding shall be pending with respect to any such default. (Article Twelve)
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of insolvency, creditors of the Company who are not
holders of Senior Indebtedness or of the Debentures may recover less, ratably,
than holders of Senior Indebtedness and may recover more, ratably, than the
Holders of the Debentures.
The Company's obligations under the Debentures shall rank pari passu in
right of payment with each other.
The Indenture does not limit or prohibit the incurrence of additional Senior
Indebtedness, which may include indebtedness that is senior to the Debentures,
but subordinate to other obligations of the Company, including obligations of
the Company in respect of Other Financial Obligations.
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CONVERSION RIGHTS
The Debentures will be convertible, at the option of the Holder, into Common
Stock of the Company at any time prior to the maturity date (subject to prior
redemption by the Company on not less than 30 days' notice and not more than
60 days' notice), initially at the conversion price stated on the cover page
hereof. The right to convert Debentures called for redemption will terminate
at the close of business on the Redemption Date and will be lost if not
exercised prior to that time. (Section 1301) For information as to notices of
redemption, see "Optional Redemption" below.
The conversion price will be subject to adjustment in certain events,
including (i) dividends (and other distributions) payable in Common Stock on
any class of capital stock of the Company, (ii) the issuance to all holders of
Common Stock of rights or warrants entitling them to subscribe for or purchase
Common Stock at less than the current market price (as defined), (iii)
subdivisions, combinations and reclassifications of Common Stock, (iv)
distributions to all holders of Common Stock of evidences of indebtedness of
the Company or assets (including securities, but excluding those dividends,
rights, warrants and distributions referred to above and any dividend or
distribution paid exclusively in cash), (v) distributions consisting
exclusively of cash (excluding any cash distributions referred to in (iv)
above) to all holders of Common Stock in aggregate amount that, together with
(A) other all-cash distributions made within the preceding 12 months and (B)
any cash and the fair market value of other consideration payable in respect
of any tender offer by the Company or a Subsidiary for the Company's Common
Stock concluded within the preceding 12 months, exceeds 12.5% of the Company's
market capitalization (being the product of the current market price (as
defined) of the Common Stock times the number of shares of Common Stock then
outstanding) on the date fixed for determination of stockholders entitled to
receive such distribution and (vi) the successful completion of a tender offer
made by the Company or any Subsidiary for the Company's Common Stock which
involves an aggregate consideration that, together with (A) any cash and other
consideration payable in respect of any tender offer by the Company or a
Subsidiary for the Company's Common Stock expiring within the 12 months
preceding the expiration of such tender offer and (B) the aggregate amount of
any all-cash distributions to all holders of the Company's Common Stock within
the 12 months preceding the expiration of such tender offer, exceeds 12.5% of
the Company's market capitalization on the expiration of such tender offer.
Generally no adjustments to the conversion price will be required to be made
until cumulative adjustments amount to 1% or more of the conversion price as
last adjusted. (Section 1304)
In the event that the Company shall distribute rights or warrants (other
than those referred to in (ii) in the preceding paragraph) pro rata to holders
of Common Stock, the Holder of any Debenture surrendered for conversion will
be entitled to receive upon such conversion in addition to the shares of
Common Stock issuable upon such conversion (the "Conversion Shares"), a number
of rights or warrants to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the holders of rights
or warrants of separate certificates evidencing such rights or warrants (the
"Distribution Date"), the same number of rights or warrants to which a holder
of a number of shares of Common Stock equal to the number of Conversion Shares
is entitled at the time of such conversion in accordance with the terms and
provisions of and applicable to the rights or warrants, and (ii) if such
conversion occurs after such Distribution Date, the same number of rights or
warrants to which a holder of the number of shares of Common Stock into which
such Debenture was convertible immediately prior to such Distribution Date
would have been entitled on such Distribution Date in accordance with the
terms and provisions of and applicable to the rights or warrants. (Section
1304)
In addition to the foregoing adjustments, the Company will be permitted to
make such reductions in the conversion price as it considers to be advisable
in order that any event treated for Federal income tax purposes as a dividend
of stock or stock rights will not be taxable to the holders of the Common
Stock. (Section 1304) In case of certain consolidations or mergers to which
the Company is a party or the transfer of substantially all of the assets of
the Company, each Debenture then outstanding would, without the consent of any
Holders of Debentures, become convertible only into the kind and amount of
securities, cash and other property receivable upon the consolidation, merger
or transfer by a holder of the number of shares of Common Stock into which
such Debenture might have been converted immediately prior to such
consolidation, merger or transfer (assuming
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such holder of Common Stock failed to exercise any rights of election and
received per share the kind and amount received per share by a plurality of
non-electing shares). (Section 1311)
Fractional shares of Common Stock are not to be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon the market
price of the Common Stock. (Section 1303) Debentures surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on
such Interest Payment Date (except Debentures called for redemption on a
Redemption Date within such period) must be accompanied by payment of an
amount equal to the interest thereon which the registered Holder is to
receive. In the case of any Debenture which has been converted after any
Regular Record Date but on or before the next Interest Payment Date (except
Debentures called for redemption on a Redemption Date within such period),
interest whose Stated Maturity is on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion, and
such interest shall be paid to the Holder of such Debenture on such Regular
Record Date. Except as described above, no interest on converted Debentures
will be payable by the Company on any Interest Payment Date subsequent to the
date of conversion. No other payment or adjustment for interest or dividends
is to be made upon conversion. (Sections 307 and 1302)
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
Federal income tax purposes (e.g., distributions of evidences of indebtedness
or assets of the Company, but generally not stock dividends or rights to
subscribe for Common Stock) and, pursuant to the antidilution provisions of
the Indenture, the conversion price of the Debentures is reduced, such
reduction may be deemed to be the payment of a taxable dividend to Holders of
Debentures. Holders of Debentures could, therefore, have taxable income as a
result of an event pursuant to which they received no cash or property that
could be used to pay the related income tax.
OPTIONAL REDEMPTION
The Debentures are to be redeemable at the election of the Company, in whole
or in part, from time to time, upon not less than 30 nor more than 60 days'
notice mailed to each Holder of Debentures to be redeemed at his address
appearing in the Security Register, on any date on or after , 2001, and
prior to maturity at the following Redemption Prices (expressed as percentages
of principal amount) plus accrued interest to the Redemption Date (subject to
the right of Holders of record on the relevant Regular Record Date to receive
interest due on an Interest Payment Date that is on or prior to the Redemption
Date): If redeemed during the 12-month period beginning ,
<TABLE>
<CAPTION>
REDEMPTION REDEMPTION
--------------------------- ---------------------------
YEAR PRICE YEAR PRICE
----- ------ ----- ------
<S> <C> <S> <C>
</TABLE>
and thereafter at 100% of principal amount. (Sections 203, 1101, 1105, and
1107)
Notwithstanding the foregoing, the Debentures may be redeemed at the option
of the Company, in whole or in part, at any time before , 2001, without
any premium if the closing sale price of the Common Stock for at least 30
consecutive trading days equals or exceeds 140% of the conversion price then
in effect.
No sinking fund is provided for the Debentures.
EVENTS OF DEFAULT AND DEFAULTS
The Indenture defines an Event of Default with respect to the Debentures as
being certain events involving the bankruptcy, insolvency or reorganization of
the Company. (Section 501) If any Event of Default with respect to the
Debentures at the time Outstanding occurs and is continuing, either the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debentures may declare the principal amount of the Debentures to
be due and payable immediately (provided that no such declaration is required
upon certain events of
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bankruptcy), but upon certain conditions such declaration may be annulled and
past defaults (except, unless theretofore cured, a default in payment of
principal of (or premium, if any), or interest on the Debentures and certain
other specified defaults) may be waived by the Holders of a majority in
principal amount of the Outstanding Debentures on behalf of the Holders of all
Debentures. (Sections 502 and 513)
The Indenture does not provide for any right of acceleration of the payment
of principal of the Debentures upon a default in the payment of principal or
interest or in the performance of any covenant or agreement in the Debentures
or in the Indenture. The Indenture defines a Default with respect to the
Debentures as any one of the following events: (A) an Event of Default; (B)
default for 30 days in payment of interest on any Debenture; (C) default in
payment of principal of (or premium, if any), on any Debenture at Maturity;
(D) failure by the Company for 60 days after due notice in performance or the
breach of any covenant or warranty in the Indenture or any Debenture; and (E)
(i) failure by the Company or the Bank to pay indebtedness for money borrowed
(including the Debentures) in an aggregate principal amount exceeding $500,000
at the later of final maturity or upon the expiration of any applicable period
of grace with respect to such principal amount; (ii) acceleration of the
maturity of any indebtedness of the Company or the Bank for borrowed money in
excess of $500,000, if such failure to pay or acceleration results from a
default under the instrument giving rise to, or securing, such indebtedness
and is not annulled within 30 days after due notice, unless such default is
contested in good faith by appropriate proceedings. In case a Default shall
occur and be continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders by appropriate judicial
proceeding as the Trustee deems most effectual. (Section 503)
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to the Debentures at the time
Outstanding, give to the Holders of the Outstanding Debentures notice of such
default known to it if uncured or not waived, provided that, except in the
case of default in the payment of principal of (or premium, if any), or
interest on any Debenture, the Trustee will be protected in withholding such
notice if the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders of the Outstanding Debentures; and,
provided further, that such notice shall not be given until 60 days after the
occurrence of a default with respect to the Debentures in the performance or
breach of a covenant in the Indenture other than for the payment of the
principal of (or premium, if any), or interest on any Debentures of such
series. The term "default" with respect to the Debentures for the purpose only
of the provision described in this paragraph means the happening of any of the
Events of Default or Defaults. (Section 602)
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will not be
under an obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable security or indemnity.
(Sections 601 and 603) The Indenture provides that the Holders of a majority
in principal amount of Outstanding Debentures may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or other power conferred on the Trustee, provided that
the Trustee may decline to act if such direction is contrary to law or the
Indenture and may take any other action deemed proper which is not
inconsistent with such directions. (Section 512)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate of no default, or specifying any default that
exists. (Section 1004)
MODIFICATION OF THE INDENTURE
Modifications to and amendments of the Indenture may be made by the Company
and the Trustee, only with the consent of the Holders of 66 2/3% in aggregate
principal amount of the Outstanding Debentures, by executing supplemental
indentures adding any provisions to or changing or eliminating any of the
provisions of the Indenture or modifying the rights of the Holders of
Debentures, except that no such supplemental indenture may, (a) change the
Stated Maturity of the principal of, or any installment of interest on, any
Debenture; (b) reduce the principal amount of, or any premium or the rate of
interest on, any Debenture; (c) change the place or currency of payment of
principal of (or premium, if any) or interest on, any Debenture; (d) impair
the
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right to institute suit for the enforcement of any payment on or with respect
to any Debenture; (e) reduce the percentage in principal amount of Debentures,
the consent of the Holders of which is required for modification or amendment
of the Indenture, for waiver of compliance with certain provisions of the
Indenture or for waiver of certain covenant defaults; (f) modify the
provisions of the Indenture relating to modification and amendment of the
Indenture; (g) adversely affect the right to convert Debentures or (h) modify
the subordination provisions in a manner adverse to the Holders of Debentures.
The Indenture provides, however, that each of the amendments and modifications
listed in clauses (a) through (h) above may be made with the consent of the
Holder of each Outstanding Debenture affected thereby. (Sections 901, 902 and
907)
The Holders of 66 2/3% in aggregate principal amount of the Outstanding
Debentures may waive compliance by the Company with certain restrictive
provisions of the Indenture. (Section 1007) The Holders of a majority in
aggregate principal amount of the Outstanding Debentures may waive any past
default under the Indenture, except a default in the payment of principal,
premium or interest. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Debentures,
may consolidate with or merge into any other Person or convey, transfer or
lease its assets substantially as an entirety to any Person, or permit any
Person to consolidate with or merge into the Company or convey, transfer or
lease the properties substantially as an entirety to the Company, provided
that, (i) if applicable, the successor is a Person, organized under the laws
of any domestic jurisdiction; (ii) the successor Person, if other than the
Company, assumes the Company's obligations on the Debentures and under the
Indenture; (iii) after giving effect to the transaction no Event of Default or
Default, and no event which, after notice or lapse of time, would become an
Event of Default or Default shall have occurred and be continuing; and (iv)
certain other conditions are met. (Section 801) Upon any consolidation or
merger into any other Person or any conveyance, transfer or lease of the
Company's assets substantially as an entirety to any Person, the successor
Person shall succeed to, and be substituted for, the Company under the
Indenture, and the Company, except in the case of a lease, shall be relieved
of all obligations and covenants under the Indenture and the Debentures to the
extent it was the predecessor Person.
OUTSTANDING DEBENTURES
The Indenture provides that, in determining whether the Holders of the
requisite principal amount of Outstanding Debentures have given any request,
demand, authorization, direction, notice, consent or waiver under the
Indenture. Debentures owned by the Company or any of its Affiliates shall not
be deemed to be Outstanding. (Section 101)
CONCERNING THE TRUSTEE
In the ordinary course of business, the Company may maintain deposits with,
and from time to time may borrow from, the Trustee.
REPORTS TO HOLDERS
The Company intends to furnish to Holders of Debentures all quarterly and
annual reports which it sends to holders of its Common Stock.
BOOK-ENTRY
The Debentures will be issued in the form of the Global Debenture deposited
with, or on behalf of, DTC and registered in the name of Cede & Co. as DTC's
partnership nominee. Owners of beneficial interests in the Debentures
represented by the Global Debenture will hold such interests pursuant to the
procedures and practices of DTC and must exercise any rights in respect of
their interests (including any right to convert) in accordance with those
procedures and practices. Such beneficial owners will not be Holders, and will
not be entitled to any
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rights under the Global Debenture or the Indenture, with respect to the Global
Debenture, and the Company and the Trustee, and any of their respective
agents, may treat DTC as the sole Holder and owner of the Global Debenture.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the Debentures represented by
a Global Debenture.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its participants are on file with the Commission.
Purchases of Debentures under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debentures on DTC's
records. The ownership interest of each actual purchaser of Debentures
("Beneficial Owner") is in turn to be recorded on the Direct or Indirect
Participant's records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners entered into the transaction.
Transfers of ownership interests in the Debentures are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Debentures, except in the event that the use of the
book-entry system for the Debentures is discontinued.
To facilitate subsequent transfers, all Debentures deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co.
The deposit of Debentures with DTC and their registration in the name of Cede
& Co. effect no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Debentures are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices with respect to the Debentures shall be sent to Cede &
Co. If less than all of the Debentures are being redeemed, DTC's practice is
to determine by lot the amount of the interest of each Direct Participant in
such securities to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Debentures. Under its usual procedures, DTC mails an "Omnibus Proxy" to the
Company as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Debentures are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
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Principal, premium, if any, and interest payments on the Debentures will be
made to DTC. DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive
payments on such payable date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the account of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participant and not of DTC or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, and interest to DTC is the responsibility of the
Company, disbursement of such payments to Direct Participants is the
responsibility of DTC and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Debentures
purchased or tendered, through its Participant, to the Trustee, and shall
effect delivery of such Debentures by causing the Direct Participant to
transfer the Participant's interest in the Global Debenture representing such
Debentures, on DTC's records, to the Trustee. The requirement for physical
delivery of tender or a mandatory purchase will be deemed satisfied when the
Debentures in connection with a demand for repayment, an optional ownership
rights in the Global Debenture representing such Debentures are transferred by
Direct Participants on DTC's records and followed by a book-entry credit of
tendered Debentures to the Trustee's account.
Except as provided herein, a Beneficial Owner in a Global Debenture will not
be entitled to receive physical delivery of Debentures. Accordingly, each
Beneficial Owner must rely on the procedures of DTC to exercise any rights
under the Debentures.
DTC may discontinue providing its services as securities depositary with
respect to the Debentures at any time by giving reasonable notice to the
Company. Under such circumstances, in the event that a successor securities
depositary is not obtained, certificates representing the Debentures will be
printed and delivered. If the Company decides to discontinue use of the system
of book-entry transfers through DTC (or a successor depositary), certificates
representing the Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. The term "control" when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which (i) national banking associations in the State of
Minnesota or (ii) banking institutions in Albuquerque, New Mexico are authorized
or obligated by law or executive order to close.
"Holder" means a Person in whose name a Debenture is registered in the
Security Register.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Debentures.
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"Maturity," when used with respect to any Debenture, means the date on which
the principal of such Debenture becomes due and payable as provided in such
Debenture or in the Indenture, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Other Financial Obligations" means all obligations of the Company to make
payments pursuant to the terms of financial instruments, such as (i)
securities contracts and foreign currency exchange contracts, (ii) derivative
instruments, such as swap agreements (including interest rate and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange rate agreements,
options, commodity futures contracts, commodity options contracts and (iii) in
the case of both (i) and (ii) above, similar financial instruments, other than
(A) obligations on account of Senior Indebtedness and (B) obligations on
account of indebtedness for money borrowed ranking pari passu with or
subordinate to the Debentures. "Entitled Persons" means any person who is
entitled to payment pursuant to the terms of Other Financial Obligations.
"Outstanding," when used with respect to Debentures, means, as of the date
of determination, all Debentures theretofore authenticated and delivered under
the Indenture, except:
(i) Debentures theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Debentures for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Debentures; provided that, if such Debentures are to be
redeemed, notice of such redemption has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Trustee has been made;
and
(iii) Debentures which have been paid pursuant to Section 306 of the
Indenture or in exchange for or in lieu of which other Debentures have been
authenticated and delivered pursuant to the Indenture, other than any such
Debentures in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debentures are held by a bona
fide purchaser in whose hands such Debentures are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver under the Indenture,
Debentures owned by the Company or any other obligor upon the Debentures or
any Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Debentures which the Trustee knows
to be so owned shall be so disregarded. Debentures so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debentures and that the pledgee is not the Company or any
other obligor upon the Debentures or any Affiliate of the Company or of such
other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debentures on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be redeemed,
means the date fixed for such redemption by or pursuant to the Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the or (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date.
"Security Register" means the register provided by the Company pursuant to
Section 305 of the Indenture for the registration of Debentures and of
transfers of Debentures.
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"Senior Indebtedness" is defined in the Indenture as (a) the principal of
(and premium, if any), and interest on all indebtedness of the Company for
money borrowed, whether outstanding on the date of execution of the Indenture
or thereafter created, assumed or incurred, except (i) such indebtedness as is
by its terms expressly stated to be junior in right of payment to the
Debentures and (ii) such indebtedness as is by its terms expressly stated to
rank pari passu with the Debentures and (b) any deferrals, renewals or
extensions of any such Senior Indebtedness. (Section 101) The term
"indebtedness for money borrowed" when used with respect to the Company is
defined to mean any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by
bonds, debentures, notes or other written instruments, and any deferred
obligation of, or any such obligation guaranteed by, the Company for the
payment of the purchase price of property or assets. (Section 101)
"Stated Maturity," when used with respect to any Debenture or any instalment
of interest thereon, means the date specified in such Debenture as the fixed
date on which the principal of such Debenture or such instalment of interest
is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
The term "voting stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.
DESCRIPTION OF CAPITAL STOCK
The following summary description of the Company's capital stock does not
purport to be complete and is subject to the more detailed provisions of the
Company's Articles and Bylaws and is qualified in its entirety by reference
thereto.
The authorized capital stock of the Company consists of 4,000,000 shares of
Common Stock, no par value, and 1,000,000 shares of preferred stock (the
"Preferred Stock"). As of March 31, 1997, the Company had 2,227,332 shares of
Common Stock issued and outstanding, and no shares of Preferred Stock were
outstanding. At the Company's 1997 Annual Meeting of Shareholders the
stockholders will be presented with a proposal to increase the number of
authorized shares of Common Stock to 20,000,000.
OMMON STOCK
Voting. The holders of Common Stock currently possess exclusive voting
rights in the Company. Shares of Preferred Stock issued in the future may be
granted voting rights at the discretion of the Board of Directors. On matters
submitted to the stockholders of the Company, the holders of the Common Stock
will be entitled to one vote for each share held. No shares have cumulative
voting rights.
Dividends. Holders of shares of Common Stock are entitled to receive any
dividends declared by the Board of Directors out of funds legally available
therefor. The ability of the Company to pay cash dividends is subject to the
ability of First State Bank to pay dividends or make other distributions to
the Company, which in turn is subject to limitations imposed by law and
regulation. See "Regulation and Supervision."
Liquidation Rights. In the event of any liquidation or dissolution of the
Company, all assets of the Company legally available for distribution after
payment or provision for payment of (i) all debts and liabilities of the
Company, (ii) any accrued dividend claims and (iii) liquidation preferences of
any outstanding Preferred Stock, and will be distributed ratably, in cash or
in kind, among the holders of Common Stock.
Common Stock Purchase Rights. On October 25, 1996, the Board of Directors
declared a dividend paid on December 18, 1996, of one right (a "Right") for
each outstanding share of Common Stock of the Company held of record at the
close of business on November 20, 1996 (the "Record Date"), or issued
thereafter and
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before the Separation Time (as hereinafter defined) and thereafter pursuant to
options and convertible securities outstanding at the Separation Time. The
Rights were issued pursuant to a Shareholder Protection Rights Agreement, dated
as of October 25, 1996 (the "Rights Agreement"), between the Company and
American Securities Transfer & Trust, Inc., as Rights Agent. Each Right entitles
its registered holder to purchase from the Company, after the Separation Time,
one share of Common Stock for $45 (the "Exercise Price"), subject to adjustment.
The Rights will be evidenced by the Common Stock certificates until the
close of business on the earlier of either (the "Separation Time"):
(1) the tenth business day after any Person (as defined in the Rights
Agreement) commences a tender or an exchange offer which, if consummated,
would result in such Person's becoming an Acquiring Person, as defined
below (or a later date as the Board of Directors of the Company may fix by
resolution adopted before the Separation Time that would otherwise have
occurred); or
(2) the tenth business day after the first date (the "Flip-in Date") of a
public announcement by the Company or any Person that such Person has
become an Acquiring Person, other than as a result of a Flip-over
Transaction or Event, as defined below (or such earlier or later date, not
beyond the thirtieth day after such acquisition, as the Board of Directors
of the Company may fix by resolution adopted before the Flip-in Date that
would otherwise have occurred);
provided, that if a tender or an exchange offer referred to in clause (1) is
canceled, terminated or otherwise withdrawn before the Separation Time without
the purchase of any shares of Common Stock pursuant thereto, such offer shall
be deemed never to have been made.
For purposes of the Rights Agreement, an Acquiring Person is any Person
having Beneficial Ownership (as defined in the Rights Agreement) of 10% or
more of the outstanding shares of Common Stock, other than:
(1) the Company, any wholly owned subsidiary of the Company or any
employee stock ownership or other employee benefit plan of the Company;
(2) any Person who becomes the Beneficial Owner of 10% or more of the
outstanding Common Stock solely through the Company's acquisition of Common
Stock, until the Person becomes the Beneficial Owner (other than through a
dividend or stock split) of any additional shares of Common Stock;
(3) any Person who becomes the Beneficial Owner of 10% or more of the
outstanding Common Stock without any plan or intent to seek or affect
control of the Company if the Person promptly enters into an irrevocable
commitment promptly to divest, and thereafter promptly divests, sufficient
securities so that such 10% or greater of Beneficial Ownership ceases; or
(4) any Person who Beneficially owns shares of Common Stock consisting
solely of (A) shares acquired pursuant to the grant or exercise of an
option granted by the Company in connection with an agreement to merge
with, or acquire, the Company entered into before a Flip-in Date; (B)
shares owned by the Person and its affiliates and associates at the time of
such grant; (C) shares, amounting to less than 1% of the outstanding Common
Stock, acquired by affiliates and associates of the Person after such
grant; and (D) shares held by the Person in trust accounts, managed
accounts and the like or otherwise held in a fiduciary capacity, that are
beneficially owned by third persons who are not affiliates or associates of
the Person or acting together with the Person to hold such shares, or which
are held by the Person in respect of a debt previously contracted.
The Rights Agreement provides that, until the Separation Time, the Rights
will be transferred only with the Common Stock. Common Stock certificates
issued after the Record Date but before the Separation Time shall evidence one
Right for each share of Common Stock represented thereby and shall contain a
legend incorporating by reference the terms of the Rights Agreement (as
amended from time to time). Notwithstanding the absence of the legend,
certificates evidencing shares of Common Stock outstanding at the Record Date
shall also evidence one Right for each share of Common Stock evidenced
thereby. Promptly following the Separation Time, separate
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certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of Common Stock at the Separation Time.
The Rights will be exercisable on the first Business Day (as defined in the
Rights Agreement) following the Separation Time. The Rights will expire on the
earliest of (1) the Exchange Time (as defined below); (2) the close of
business on October 25, 2006; (3) the date on which the Rights are redeemed as
described below; or (4) upon the merger of the Company into another
corporation pursuant to an agreement entered into before the Flip-in Date (in
any such case, the "Expiration Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution in the event of a
Common Stock dividend on, or a division or a combination into a smaller number
of shares of, Common Stock, or the issuance or distribution of any securities
or assets in respect of, in lieu of, or in exchange for Common Stock.
If before the Expiration Time a Flip-in Date occurs, the Company shall take
any necessary action to ensure and provide that each Right (other than Rights
beneficially owned by the Acquiring Person or any affiliate or associate
thereof or any transferee of any of the foregoing, which Rights shall become
void) shall constitute the right to purchase from the Company, upon the
exercise thereof in accordance with the Rights Agreement, that number of
shares of Common Stock having an aggregate Market Price (as defined in the
Rights Agreement), on the date of the public announcement of an Acquiring
Person's becoming such (the "Stock Acquisition Date") that gave rise to the
Flip-in Date, equal to twice the Exercise Price for an amount in cash equal to
the then-current Exercise Price. In addition, the Board of Directors of the
Company may, at its option, at any time on and after a Flip-in Date and before
an Acquiring Person becomes the Beneficial Owner of more than 50% of the
outstanding shares of Common Stock, elect to exchange all (but not less than
all) of the then-outstanding Rights (other than Rights beneficially owned by
the Acquiring Person or any affiliate or associate thereof, which Rights
become void) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the Separation Time (the
"Exchange Ratio"). Immediately upon such action by the Board of Directors (the
"Exchange Time"), the right to exercise the Rights will terminate, and each
Right will thereafter represent only the right to receive a number of shares
of Common Stock equal to the Exchange Ratio.
Before the Expiration Time, the Company may not enter into, consummate or
permit to occur a transaction or series of transactions after a Flip-in Date
(each, a "Flip-over Transaction or Event") in which, directly or indirectly:
(1) the Company consolidates or merges or participates in a binding share
exchange with any other Person if, at the time of the consolidation, merger
or share exchange or when the Company enters into an agreement with respect
to such consolidation, merger or share exchange, the Acquiring Person
controls the Board of Directors of the Company and either (a) any term of
or arrangement concerning the treatment of shares of capital stock in such
merger, consolidation or share exchange relating to the Acquiring Person is
not identical to the terms and arrangements relating to other holders of
Common Stock or (b) the person with whom the transaction or series of
transactions occurs is the Acquiring Person or an affiliate or associate of
the Acquiring Person, or
(2) the Company sells or otherwise transfers (or one or more of its
subsidiaries sells or otherwise transfers) assets (a) aggregating more than
50% of the assets (measured by either book value or fair market value) or
(b) generating more than 50% of the operating income or cash flow of the
Company and its subsidiaries (taken as a whole) to any other Person (other
than the Company or one or more of its wholly owned subsidiaries) or to two
or more such Persons which are affiliated or otherwise acting in concert,
if, at the time of the sale or transfer of assets or when the Company (or
any subsidiary) enters into an agreement with respect to the sale or
transfer, the Acquiring Person controls the Board of Directors of the
Company;
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in each case until it has entered into a supplemental agreement with the
Person engaging in the Flip-over Transaction or Event or the parent
corporation thereof (the "Flip-over Entity"), for the benefit of the holders
of the Rights, providing that upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter constitute the right to
purchase from the Flip-over Entity, upon exercise thereof in accordance with
the Rights Agreement, that number of shares of common stock of the Flip-over
Entity having an aggregate Market Price on the date of consummation or
occurrence of such Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the then-current Exercise Price and (ii)
the Flip-over Entity shall thereafter be liable for, and shall assume, by
virtue of the Flip-over Transaction or Event and the supplemental agreement,
all obligations and duties of the Company pursuant to the Rights Agreement. An
Acquiring Person shall be deemed to control the Company's Board of Directors
when, following a Flip-in Date, the persons who were directors of the Company
before the Flip-in Date cease to constitute a majority of the Company's Board
of Directors. For purposes of the foregoing description, the term "Acquiring
Person" shall include any Acquiring Person and its affiliates and associates
counted together as a single Person.
The Board of Directors of the Company may, at its option, at any time before
the close of business on the Flip-in Date, redeem all (but not less than all)
of the then-outstanding Rights at $0.01 per Right (the "Redemption Price"), as
provided in the Rights Agreement. Immediately upon the action of the Board of
Directors of the Company electing to redeem the Rights, without any further
action and without any notice, the right to exercise the Rights will
terminate, and each Right will thereafter represent only the right to receive
the Redemption Price in cash or securities, as determined by the Board of
Directors of the Company.
The holders of Rights will, solely by reason of their ownership of Rights,
have no rights as stockholders of the Company, including, without limitation,
the right to vote or to receive dividends.
The Rights Agreement is designed to protect stockholders in the event of an
unsolicited attempt to acquire the Company for an inadequate price and to
protect against abusive practices that do not treat all stockholders equally,
such as, among others, partial and two-tier tender offers, coercive offers and
creeping stock accumulation programs. These practices can pressure
stockholders into tendering their Common Stock before realizing the full value
or total potential of the investments. The Rights Agreement is intended to
make the cost of abusive practices prohibitive and create an incentive for a
potential acquirer to negotiate in good faith with the Company's Board of
Directors. The Rights Agreement is not intended to, and will not, prevent all
unsolicited offers to acquire the Company. If an unsolicited offer is made,
and the Board of Directors determines that it is fair and in the best interest
of the Company and its stockholders, then, pursuant to the Rights Agreement,
the Board of Directors has the authority to redeem the Rights and permit the
offer to proceed. Essentially, the Rights Agreement will allow the Board of
Directors to evaluate the fairness of any unsolicited offer and the
credibility of the bidder, and will therefore enable the Board of Directors to
represent the interests of all stockholders more effectively. Of course, in
deciding whether to redeem the Rights in connection with any unsolicited
offer, the Board of Directors will be bound by its fiduciary obligations to
act in the best interests of the Company and its stockholders.
Other Characteristics. The Common Stock is not entitled to any preemptive
right to subscribe for or receive any shares of any class of stock of the
Company (or any securities convertible into shares of stock of the Company)
issued in the future.
PREFERRED STOCK
In supplementary sections to the Articles, the Company may provide for one
or more classes of Preferred Stock, which must be separately identified. The
shares of any such class may be divided into and issued in series, with each
series separately designated to distinguish the shares thereof from the shares
of all other series and classes. The terms of each series shall be stated in a
supplementary section to the Company's Articles and may provide for, among
other things, board representation, voting rights and dividend and liquidation
preferences. All shares of the same class must be identical except as to
certain relative rights and preferences specified in the Articles, as to which
there may be variations between different series. The Preferred Stock could be
deemed to
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have an antitakeover effect in that, if a hostile takeover situation should
arise, shares of Preferred Stock could be issued to purchasers sympathetic
with the Company's management or others in such a way as to render more
difficult or to discourage a merger, tender offer, proxy contest, the
assumption of control by a holder of a large block of the Company's securities
or the removal of incumbent management.
The effects of the issuance of the Preferred Stock on the holders of Common
Stock could include, among other things, (i) reduction of the amount otherwise
available for payments of dividends on Common Stock if dividends are payable
on the series of Preferred Stock; (ii) restrictions on dividends on Common
Stock if dividends on the series of Preferred Stock are in arrears; (iii)
dilution of the voting power of Common Stock if the series of Preferred Stock
has voting rights, including a possible "veto" power if the series of
Preferred Stock has class voting rights; (iv) dilution of the equity interest
of holders of Common Stock if the series of Preferred Stock is convertible,
and is converted, into Common Stock and (v) restrictions on the rights of
holders of Common Stock to share in the Company's assets upon liquidation
until satisfaction of any liquidation preference granted to the holders of the
series of Preferred Stock.
CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's Rights Agreement and certain provisions of the Company's
Articles could make more difficult the acquisition of the Company by means of
a tender offer, a proxy contest or otherwise and the removal of incumbent
officers and directors. These are intended to discourage certain types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of the Company to negotiate first with the
Company.
The following discussion is a summary of certain material provisions of the
Company's Articles, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, which could have anti-takeover
effects.
Classified Board of Directors. Under the Articles, the Board of Directors is
classified into three classes, with the directors being elected for staggered,
three-year terms. The classification of the Company's Board of Directors will
have the effect of making it more difficult to change the composition of the
Board of Directors, because at least two annual meetings of the stockholders
would be required to change the control of the Board of Directors rather than
one. In addition, the Articles provide for the affirmative vote of two-thirds
of the outstanding Common Stock to remove directors without cause. The NMBCA
currently provides for a simple majority vote to remove directors, with or
without cause. This helps achieve the benefits of the classification since
stockholders holding a simple majority of Common Stock could not remove
without cause the two classes of directors not standing for election in a
particular year.
Advance Notice of Stockholder Proposals and Nominations. The Company's
Articles establish an advance notice procedure for stockholders to make
nominations of candidates for election as directors or bring other business
before a meeting of stockholders of the Company (the "Stockholder Notice
Procedure"). The Shareholder Notice Procedure provides that only persons who
are nominated by, or at the direction of, the Board, or by a stockholder who
has given timely written notice to the Secretary of the Company prior to the
meeting at which directors are to be elected, will be eligible for election as
directors of the Company and that, at an annual meeting, only such business
may be conducted as has been brought before the meeting by, or at the
direction of, the Board of Directors or by a stockholder who has given timely
written notice to the secretary of the Company of such stockholder's intention
to bring such business before such meeting.
Notice will be timely if the Secretary of the Company receives it not less
than 35 nor more than 50 days before the meeting, unless the Company has given
less than 45 days prior notice or public disclosure of the meeting, in which
case the stockholder will have until the 10th day after the Company gave
notice or made public disclosure of the meeting to give notice. In the case of
nominations for directors, the Articles further require that the stockholder's
notice set forth certain information concerning the stockholder and the
nominee. In the case of proposed business, the stockholder's notice shall
briefly describe the business and the reasons for considering it,
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state the stockholder's name and address, represent that the stockholder is
entitled to vote at the meeting and intends to appear in person or by proxy at
the meeting, and state any material interest of the stockholder in the
proposed business. The chairman of the meeting will have the power to receive
a notice relating to a stockholder nomination or a proposal for business and
will not accept nominations and proposals not made in accordance with these
procedures. This provision requires notices in addition to those currently
required by law to permit stockholders to make proposals at any meetings of
stockholders.
The advance notice requirements allow the Board of Directors to consider the
qualifications of the proposed nominees for the reasons for the proposed
business and, to the extent deemed necessary or desirable by the Board of
Directors, to inform stockholders about those qualifications or reasons.
Although these provisions do not give the Board of Directors any power to
approve or disapprove stockholder nominations for election of directors or
proposals for other business, they may have the effect of precluding a contest
for the election of directors or proposals for other business if the
procedures set forth in the Articles are not followed and may discourage or
deter a third party from conducting a solicitation of proxies to elect its own
slate of directors or to propose other business, without regard to whether
this might be harmful or beneficial to the Company and its stockholders.
Super-Majority Vote. The Articles require the affirmative vote of 66.6% of
the outstanding shares of the Company entitled to vote on the merger,
consolidation, sale, lease or exchange of all or substantially all of the
assets of the Company if the offeror or any affiliate of the offeror owns of
record, or owns beneficially, directly or indirectly, more than 10% of any
class of equity security of the Company.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company has agreed to sell to each of the
Underwriters named below, for whom Keefe, Bruyette & Woods, Inc. is acting as
representative (the "Representative"), and each Underwriter has severally
agreed to purchase from the Company, the principal amount of Debentures set
forth opposite its name below.
<TABLE>
<CAPTION>
UNDERWRITER
OF DEBENTURES PRINCIPAL AMOUNT
------------- ----------------
<S> <C>
Keefe, Bruyette & Woods, Inc.................................. $
-----
Total..................................................... $
=====
</TABLE>
The Purchase Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent. The Underwriters are obligated to
take and pay for all of the Debentures offered hereby (other than those
covered by the over-allotment option described below) if any are taken.
The Company has been advised by the Representative that the Underwriters
propose to offer the Debentures to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such
price less a concession not in excess of % of the principal amount of the
Debentures. The Underwriters may allow and dealers may re-allow a concession
not excess of % of the principal amount of the Debentures to certain other
dealers. After the initial public offering, the offering price and other
selling terms may be changed by the Underwriters.
Pursuant to the Purchase Agreement, the Company has granted to the
Underwriters an option, exercisable for 30 days after the date of this
Prospectus, to purchase up to an additional $1,800,000 in aggregate principal
amount of Debentures at the public offering price, less the underwriting
discount set forth on the cover page of this Prospectus, solely to cover over-
allotments, if any.
The Company and each of its directors and executive officers have agreed not
to sell, offer to sell, grant an option for the sale of, or otherwise dispose
of, (i) any debt securities similar to the Debentures or (ii) any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock, for a
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