<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 13, 1998
REGISTRATION NO. 333-64219
REGISTRATION NO. 333-64219-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO THE
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
RELIANCE BANCORP, INC. RELIANCE CAPITAL TRUST I
(Exact Name of Registrant as Specified in its Charter) (Exact Name of Registrant as Specified in its
DELAWARE Trust Agreement)
(State or Other Jurisdiction DELAWARE
of Incorporation or Organization) (State or Other Jurisdiction
6035 of Incorporation or Organization)
(Primary Standard Industrial 6719
Classification Code Number) (Primary Standard Industrial
11-3187176 Classification Code Number)
(I.R.S. Employer Identification Number) 11-3444763
585 STEWART AVENUE (I.R.S. Employer Identification Number)
GARDEN CITY, NEW YORK 11530 585 STEWART AVENUE
(516) 229-9300 GARDEN CITY, NEW YORK 11530
(Address, including Zip Code and Telephone Number, (516) 229-9300
including Area Code, of Registrant's Principle (Address, including Zip Code and Telephone
Executive Offices) Number,
RAYMOND A. NIELSEN including Area Code, of Registrant's Principle
PRESIDENT AND CHIEF EXECUTIVE OFFICER Executive Offices)
585 STEWART AVENUE RAYMOND A. NIELSEN
GARDEN CITY, NEW YORK 11530 ADMINISTRATIVE TRUSTEE
(516) 229-9300 585 STEWART AVENUE
(Name, Address, including Zip Code and Telephone Number, GARDEN CITY, NEW YORK 11530
including Area Code, of Agent for Service) (516) 229-9300
(Name, Address, including Zip Code and Telephone
Number,
including Area Code, of Agent for Service)
</TABLE>
------------------------------
COPIES TO:
THOMAS J. HAGGERTY, ESQ.
LAWRENCE M.F. SPACCASI, ESQ.
MULDOON, MURPHY & FAUCETTE
5101 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20016
(202) 362-0840
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES BEING TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED (1) PER UNIT PRICE (2) FEE (2)
<S> <C> <C> <C> <C>
8.17% Capital Securities, Series B, of Reliance
Capital Trust I................................. $50,000,000 100% $50,000,000 $14,750
8.17% Junior Subordinated Deferrable Interest
Debentures, Series B, of Reliance Bancorp,
Inc............................................. $50,000,000 100% $50,000,000 N/A
Series B Capital Securities Guarantee of Reliance
Bancorp, Inc.(3)................................ N/A N/A N/A N/A
Total............................................. $50,000,000 100% $50,000,000 $14,750
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) No separate consideration will be received for the 8.17% Junior Subordinated
Deferrable Interest Debentures, Series B, of Reliance Capital Trust I (the
"Junior Subordinated Debentures") distributed upon any liquidation of
Reliance Capital Trust I.
(3) No separate consideration will be received for the Series B Capital
Securities Guarantee of Reliance Bancorp, Inc.
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<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.
<PAGE>
PROSPECTUS
RELIANCE CAPITAL TRUST I
OFFER TO EXCHANGE ITS
8.17% CAPITAL SECURITIES, SERIES B
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.17% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
RELIANCE BANCORP, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
TIME, ON NOVEMBER 17, 1998, UNLESS EXTENDED.
------------------------
Reliance 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 8.17%
Capital Securities, Series B (the "Exchange 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
8.17% Capital Securities, Series A (the "Original Capital Securities"), of which
$50,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the
Exchange Offer, Reliance Bancorp, Inc., a Delaware corporation ("Reliance" or
the "Corporation"), is also offering to exchange (i) its guarantee of payment of
cash distributions and payments on liquidation of the Trust or redemption of the
Exchange Capital Securities (the "Exchange Guarantee") for a like guarantee in
respect of the Original Capital Securities (the "Original Guarantee") and (ii)
8.17% Junior Subordinated Deferrable Interest Debentures due May 1, 2028, Series
B (the "Exchange Junior Subordinated Debentures") for all of the outstanding
8.17% Junior Subordinated Deferrable Interest Debentures due May 1, 2028, Series
A (the "Original Junior Subordinated Debentures"), which Exchange Guarantee and
Exchange Junior Subordinated Debentures also have been registered under the
Securities Act. The Original Capital Securities, the Original Guarantee and the
Original Junior Subordinated Debentures are collectively referred to herein as
the "Original Securities" and the Exchange Capital Securities, the Exchange
Guarantee and the Exchange Junior Subordinated Debentures are collectively
referred to herein as the "Exchange Securities."
The terms of the Exchange Securities are identical in all material respects
to the respective terms of the Original Securities, except that (i) the Exchange
Securities have been registered under the Securities Act and therefore will not
be subject to certain restrictions on transfer under federal and state
securities laws applicable to the Original Securities, (ii) the Exchange Capital
Securities will not provide for any increase in the Distribution rate thereon
and (iii) the Exchange Junior Subordinated Debentures will not provide for any
increase in the interest rate thereon. See "Description of Exchange Securities"
and "Description of Original Securities." The Exchange Capital Securities are
being offered for exchange in order to satisfy certain obligations of the
Corporation and the Trust under a Registration Rights Agreement, dated as of
April 23, 1998 (the "Registration Rights Agreement"), among the Corporation, the
Trust and Sandler O'Neill & Partners, L.P. and Keefe, Bruyette & Woods, Inc.
(the "Initial Purchasers"). In the event that the Exchange Offer is consummated,
any Original Capital Securities which remain outstanding after consummation of
the Exchange Offer and the Exchange Capital Securities issued in the Exchange
Offer will vote together as a single class for purposes of determining whether
holders of the requisite percentage in outstanding Liquidation Amount thereof
have taken certain actions or exercised certain rights under the Trust Agreement
(as defined herein).
(CONTINUED ON THE FOLLOWING PAGE)
This Prospectus and the Letter of Transmittal are first being mailed to all
registered holders of Original Capital Securities on or about October 13, 1998.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER ORIGINAL CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
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
REPRESENTATIONS TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October 13, 1998.
<PAGE>
(CONTINUED FROM THE PREVIOUS PAGE)
As used herein, (i) the "Indenture" means the Indenture, dated as of April
28, 1998, between the Corporation and The Bank of New York, as Debenture Trustee
(the "Debenture Trustee"), as amended and supplemented from time to time, and
(ii) the "Trust Agreement" means the Amended and Restated Declaration of Trust
relating to the Trust among the Corporation, as Sponsor, The Bank of New York as
Property Trustee (the "Property Trustee"), The Bank of New York (Delaware), as
the Delaware Trustee (the "Delaware Trustee"), the Administrators named therein
(collectively, with the Property Trustee and the Delaware Trustee, the "Issuer
Trustees") , and the holders, from time to time, of undivided beneficial
interests in the assets of the Trust, as amended and supplemented from time to
time. In addition, as the context may require, unless otherwise expressly
stated, (i) the term "Capital Securities" means the Original Capital Securities
and the Exchange Capital Securities, (ii) the term "Trust Securities" means the
Capital Securities and the Common Securities (as defined herein), (iii) the term
"Junior Subordinated Debentures" means the Original Junior Subordinated
Debentures and the Exchange Junior Subordinated Debentures and (iv) the term
"Guarantee" means the Original Guarantee and the Exchange Guarantee.
The Exchange Capital Securities and the Original Capital Securities
represent undivided beneficial interests in the assets of the Trust. The
Corporation is the owner of all of the beneficial interests represented by
common securities of the Trust (the "Common Securities"). The Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in the Junior Subordinated Debentures. The Exchange Junior Subordinated
Debentures will mature on May 1, 2028 (the "Stated Maturity Date"). The Exchange
Capital Securities will have a preference over the Common Securities under
certain circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of Capital
Securities--Subordination of Common Securities."
Except as provided below, the Exchange Capital Securities will be
represented by a global Capital Security in fully registered form, deposited
with a custodian for and registered in the name of a nominee of The Depository
Trust Company ("DTC"). Beneficial interests in the Exchange Capital Securities
will be shown on, and transfers thereof will be effected through, records
maintained by DTC and its participants. Beneficial interests in the Exchange
Capital Securities will trade in DTC's Same-Day Funds Settlement system and
secondary market trading activity in such interests therefore will settle in
immediately available funds. The Exchange 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) and multiples of $1,000 in excess thereof. See
"Description of Capital Securities--Book Entry, Delivery and Form."
Holders of the Exchange Capital Securities as of the applicable record date,
will be entitled to receive cumulative cash distributions arising from the
payment of interest on the Exchange Junior Subordinated Debentures, payable
semi-annually in arrears on May 1 and November 1 of each year, commencing May 1,
1999, at the annual rate of 8.17% of the Liquidation Amount of $1,000 per Trust
Security ("Distributions"). Such Distributions will accumulate from the date of
the most recent Distribution payment date to which Distributions have been duly
paid or duly provided for with respect to the Exchange Capital Securities or the
Original Capital Securities which were exchanged for such Exchange Capital
Securities, or from April 28, 1998, the date of original issuance of the
Original Capital Securities. 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 Exchange Junior Subordinated
Debentures for a period not exceeding 10 consecutive semi-annual periods with
respect to each deferral period (each, an "Extension Period"), provided that an
Extension Period must end on an Interest Payment Date (as defined herein) and
may not extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Corporation may
elect to begin a new Extension Period, subject to the requirements set forth
herein. If and for so long as interest payments on the Exchange Junior
Subordinated Debentures are so deferred, Distributions on the Exchange Capital
Securities also will 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 or to make any
2
<PAGE>
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 Exchange Junior Subordinated Debentures will continue to
accrue (and the amount of Distributions to which holders of the Exchange Capital
Securities are entitled will continue to accumulate) at the rate of 8.17% per
annum, compounded semi-annually, and holders of Trust Securities will be
required to include deferred interest income in their gross income for United
States federal income tax purposes prior to the receipt of the cash attributable
to such 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 has and will, through the Guarantee, the guarantee of the
Corporation relating to the Common Securities (the "Common Guarantee"), the
Trust Agreement, the Junior Subordinated Debentures and the Indenture (taken
together), guarantee 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 will guarantee payments of Distributions and payments
upon liquidation of the Trust or redemption of the Trust Securities, but in each
case only to the extent that the Trust has funds legally available therefor and
has failed to make such payments, as described herein. See "Description of
Guarantee." If the Corporation fails to make a required payment on the Junior
Subordinated Debentures, the Trust will not have sufficient funds to make the
related payments, including Distributions, on the Trust Securities. The
Guarantee and the Common Guarantee will not cover any such payment when the
Trust does not have sufficient funds legally available therefor. In such event,
a holder of Capital Securities may institute a legal proceeding directly against
the Corporation to enforce its rights in respect of such payment. See
"Description of 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 will be
unsecured and will rank subordinate and junior in right of payment to all Senior
Indebtedness (as defined in "Description of Junior Subordinated Debentures--
Subordination"). See "Risk Factors--Ranking of Subordinated Obligations under
the Guarantee and the Junior Subordinated Debentures; Limitation on Source of
Funds."
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 May 1, 2008 (the
"Initial Optional Redemption Date"), contemporaneously with the optional
prepayment of the Junior Subordinated Debentures by the Corporation, upon the
occurrence and continuation of a Special Event (as defined herein), at a
redemption price equal to, for each Capital Security, the Special Event
Prepayment Price (as defined herein) for a corresponding $1,000 principal amount
of Junior Subordinated Debentures (the "Special Event Redemption Price"); and
(iii) in whole or in part, on or after the Initial Optional Redemption Date,
contemporaneously with the optional prepayment by the Corporation of all or part
of the Junior Subordinated Debentures, at a redemption price equal to, for each
Capital Security to be redeemed, the Optional Prepayment Price (as defined
herein) for a corresponding $1,000 principal amount of Junior Subordinated
Debentures (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 the Initial
Optional Redemption Date, in whole or in part, at a price (the "Optional
Prepayment Price") equal to 104.085% of the principal amount thereof on the
Initial Optional Redemption Date, declining ratably on each May 1 thereafter to
100% on or after May 1, 2018, plus, in each case, accrued and
3
<PAGE>
unpaid interest thereon to the date of prepayment; or (ii) at any time prior to
the Initial Optional Redemption Date, in whole but not in part, upon the
occurrence and continuation of a Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the Make-Whole Amount (as defined
below). The "Make-Whole Amount" shall be equal to the greater of: (a) 100% of
the principal amount of the Junior Subordinated Debentures; or (b) the sum, as
determined by a Quotation Agent (as defined herein), of the present values of
the remaining scheduled payments of principal and interest on the Junior
Subordinated Debentures, 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 each of clauses
(a) and (b), accrued and unpaid interest thereon, if any, 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 has the right at any time, including, without limitation,
upon the occurrence of a Tax Event (as defined herein), to dissolve the Trust
and, after satisfaction of liabilities of creditors of the Trust as required by
applicable law, to cause a Like Amount of the Junior Subordinated Debentures to
be distributed to the holders of the Trust Securities in liquidation of the
Trust, subject to: (i) the Corporation having received an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
Capital Securities; and (ii) the receipt of any required regulatory approval.
Unless the Junior Subordinated Debentures are distributed to the holders of the
Trust Securities, in the event of a dissolution 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."
The Trust is making the Exchange Offer of the Exchange Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither the Corporation nor the Trust has sought its own interpretive
letter and there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the two immediately
following sentences, the Corporation and the Trust believe that Exchange Capital
Securities issued pursuant to this Exchange Offer in exchange for Original
Capital Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Capital Securities are acquired in
the ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such Exchange Capital Securities. However, any holder of Original Capital
Securities who is an "affiliate" of the Corporation or the Trust within the
meaning of Rule 405 under the Securities Act (an "Affiliate") or who intends to
participate in the Exchange Offer for the purpose of distributing Exchange
Capital Securities, or any broker-dealer who purchased Original Capital
Securities from the Trust to resell pursuant to Rule 144A under the Securities
Act ("Rule 144A") or any other available exemption under the Securities Act, (i)
will not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be entitled to tender such Original 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 Original Capital Securities unless such sale
is made pursuant to an exemption from such requirements. In addition, as
described below, if any broker-dealer holds Original Capital Securities acquired
for its own account as a result of market-making or other trading activities (a
"Participating Broker-Dealer") and
4
<PAGE>
exchanges such Original Capital Securities for Exchange Capital Securities, then
such Participating Broker-Dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such
Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to exchange Original
Capital Securities for Exchange 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 Exchange Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such Exchange Capital Securities. In addition, the Corporation and the Trust
may require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Corporation and the Trust
(or an agent thereof) in writing information as to the number of "beneficial
owners" (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) on behalf of who such holder holds
Original Capital Securities to be exchanged in the Exchange Offer. Each
Participating Broker-Dealer that receives Exchange Capital Securities for its
own account pursuant to the Exchange Offer will be deemed to have acknowledged
by execution of the Letter of Transmittal or delivery of an Agent's Message (as
defined herein) that it acquired the Original 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 Exchange Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Corporation
and the Trust believe that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the Exchange Capital Securities
received upon exchange of such Original Capital Securities (other than Original
Capital Securities which represent an unsold allotment from the original sale of
the Original 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 Exchange Capital Securities. Accordingly, this Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer during the period referred to below in connection
with resales of Exchange Capital Securities received in exchange for Original
Capital Securities where such Original Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Corporation and the Trust have agreed that
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of such
Exchange Capital Securities for a period ending 90 days after the Expiration
Date (as defined herein) (subject to extension under certain limited
circumstances described below) or, if earlier, when all such Exchange Capital
Securities have been disposed of by such Participating Broker-Dealer. See "Plan
of Distribution." However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of Exchange Capital Securities received
in exchange for Original Capital Securities pursuant to the Exchange Offer must
notify the Corporation or the Trust, or cause the Corporation or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent (as
defined herein) at one of the addresses set forth herein under "The Exchange
Offer--Exchange Agent." Any person, including any Participating Broker-Dealer,
who is an Affiliate of the Corporation or the Trust may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer-- Resales of Exchange Capital Securities."
5
<PAGE>
In that regard, each Participating Broker-Dealer who surrenders Original
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 (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 light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of Exchange Capital Securities (or the Exchange Guarantee or the Exchange
Junior Subordinated Debentures, as applicable) pursuant to this Prospectus until
the Corporation or the Trust has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Corporation
or the Trust has given notice that the sale of the Exchange Capital Securities
(or the Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be. If the Corporation or the Trust
gives such notice to suspend the sale of the Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable), it shall extend the 90-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Capital Securities by the number of days during the
period from and including the date of the giving of such notice to and including
the date when Participating Broker-Dealers shall have received copies of the
amended or supplemented Prospectus necessary to permit resales of the Exchange
Capital Securities or to and including the date on which the Corporation or the
Trust has given notice that the sale of Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Original Capital Securities. The Exchange Capital
Securities will be a new issue of securities for which there currently is no
market. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Exchange Capital Securities. The Corporation and
the Trust currently do not intend to apply for listing of the Exchange Capital
Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.
Any Original 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
Original 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 Original Capital Securities held by them. To the extent that Original
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Original
Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Original Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York Time, on November 17, 1998 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation or the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Original Capital
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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
Original 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 provisions of the Registration Rights
Agreement. Original Capital Securities may be tendered in whole or in part
having an aggregate Liquidation Amount of not less than $100,000 (100 Capital
Securities) or any integral multiple of $1,000 Liquidation Amount (one Capital
Security) in excess thereof. The Corporation has agreed to pay all expenses of
the Exchange Offer. See "The Exchange Offer--Fees and Expenses."
The Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed with
the Commission by September 25, 1998 and declared effective by the Commission by
October 23, 1998, the Distribution rate borne by the Original Capital Securities
will increase by 0.25% until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Original Capital Securities will
not be entitled to any increase in the Distribution rate thereon or any further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Description of Original Securities."
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
THE EXCHANGE CAPITAL SECURITIES WILL BE ISSUED AND THE CAPITAL SECURITIES
MAY BE TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000 (100 CAPITAL SECURITIES) AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY
ATTEMPTED 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 PURPORTED 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 PURPORTED
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED ("CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY") AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR
ITS PURCHASE AND HOLDING OF CAPITAL SECURITIES IS NOT PROHIBITED BY SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING.
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 EITHER:
(A) IT IS NOT A PLAN SUBJECT TO ERISA; OR (B) THE ACQUISITION AND HOLDING OF
CAPITAL SECURITIES BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE OR IS EXEMPT FROM ANY SUCH PROHIBITION.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIEF UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
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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. Information on the operation
of the Public Reference Section may be obtained by calling the SEC at
1-800-SEC-0330. If available, such information also may be accessed through the
Commission's electronic data gathering, analysis and retrieval system ("EDGAR")
via electronic means, including the Commission's home page on the Internet
(http://www.sec.gov). The Corporation's common stock is traded on the Nasdaq
National Market. Such reports, proxy statements and other information concerning
the Corporation also may be inspected at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington D.C. 20006.
No separate financial statements of the Trust have been included herein. The
Corporation and the Trust do not consider that such financial statements would
be material to holders of the Capital Securities, because the Trust is a
newly-formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Junior Subordinated Debentures, issuing
the Trust Securities and engaging in incidental activities. See "Reliance
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.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Corporation and the Trust with the
Commission under the Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Corporation, the
Trust and the Exchange Securities. Any statements contained herein concerning
the provisions of any document are not necessarily complete, and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the year ended June 30,
1998.
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.
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As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits unless such exhibits are specifically incorporated by reference in
such documents). Requests for such documents should be directed to: Paul Hagan,
Chief Financial Officer, Reliance Bancorp, Inc., 585 Stewart Avenue, Garden
City, New York 11530. Mr. Hagan's telephone number is 516-222-9300.
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SUMMARY
THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED
IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION, INCLUDING "RISK FACTORS" AND
THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO, APPEARING ELSEWHERE IN,
OR INCORPORATED BY REFERENCE IN, THIS PROSPECTUS.
RELIANCE BANCORP, INC.
The Corporation is a Delaware corporation headquartered in Garden City, New
York. The Corporation became the sole stockholder of Reliance Federal Savings
Bank (the "Bank"), a federally chartered savings bank, on March 31, 1994 in
connection with the Bank's conversion from mutual to stock form. The Corporation
is a unitary savings and loan holding company which conducts its operations
primarily through the Bank. The Bank is a community-oriented savings
institution, which operates 30 full service branch offices in Nassau and Suffolk
Counties and the Borough of Queens. In addition to the branch facilities, the
Bank also operates five check cashing facilities in Manhattan. The Bank,
however, considers its primary market area to be the greater New York City
metropolitan area. As of June 30, 1998, the Corporation, on a consolidated
basis, had total assets of $2.5 billion, total liabilities of $2.3 billion,
which included $1.6 billion of total deposits, and total stockholders' equity of
$194.9 million.
RELIANCE CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law upon the
filing of a certificate of trust with the Delaware Secretary of State. The
Trust's business and affairs are conducted by the Issuer Trustees: the Property
Trustee, the Delaware Trustee and the three individual Administrative Trustees,
who are officers of the Corporation. The Trust exists for the exclusive purposes
of: (i) issuing and selling the Trust Securities; (ii) using the proceeds from
the sale of the Trust Securities to acquire the Junior Subordinated Debentures
issued by the Corporation; and (iii) engaging in only those other activities
necessary, advisable or incidental thereto, including the Exchange Offer.
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Trust, and payments under the Junior Subordinated Debentures will be the sole
revenue of the Trust. All of the Common Securities will be owned by the
Corporation.
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THE EXCHANGE OFFER
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The Exchange Offer........... Up to $50,000,000 aggregate Liquidation Amount of Exchange
Capital Securities are being offered in exchange for a like
aggregate Liquidation Amount of Original Capital Securities.
Original Capital Securities may be tendered for exchange in
whole or in part in a Liquidation Amount of $100,000 (100
Capital Securities) or any integral multiple of $1,000 (one
Capital Security) in excess thereof. The Corporation and the
Trust are making the Exchange Offer in order to satisfy
their obligations under the Registration Rights Agreement
relating to the Original Capital Securities. For a
description of the procedures for tendering Original Capital
Securities, see "The Exchange Offer--Procedures for
Tendering Original Capital Securities."
Expiration Date.............. 5:00 p.m., New York Time, on November 17, 1998, unless the
Exchange Offer is extended by the Corporation or the Trust
(in which case the Expiration Date will be the latest date
and time to which the Exchange Offer is extended). See "The
Exchange Offer--Terms of the Exchange Offer."
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain conditions, which
may be waived by the Corporation and the Trust in their sole
discretion. The Exchange Offer is not conditioned upon any
minimum Liquidation Amount of Original Capital Securities
being tendered. See "The Exchange Offer--Conditions to the
Exchange Offer."
Terms of the Exchange The Corporation and the Trust reserve the right in their
Offer...................... sole and absolute discretion, subject to applicable law, at
any time and from time to time, (i) to delay the acceptance
of the Original Capital Securities for exchange, (ii) to
terminate the Exchange Offer if certain specified conditions
have not been satisfied, (iii) to extend the Expiration Date
of the Exchange Offer and retain all Original Capital
Securities tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Original Capital
Securities to withdraw their tendered Original Capital
Securities or (iv) to waive any condition or otherwise amend
the terms of the Exchange Offer in any respect. See "The
Exchange Offer--Terms of the Exchange Offer."
Withdrawal Rights............ Tenders of Original Capital Securities may be withdrawn at
any time on or prior to the Expiration Date by delivering a
written notice of such withdrawal to the Exchange Agent (as
defined herein) with certain procedures set forth below
under "The Exchange Offer-- Withdrawal Rights."
Procedures for Tendering
Original Capital
Securities................. Certain brokers, dealers, commercial banks, trust companies
and other nominees who hold Original Capital Securities
through The Depository Trust Company ("DTC") must effect
tenders by book-entry transfer through DTC's Automated
Tender Offer Program ("ATOP"). Beneficial owners of Original
Capital Securities registered
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in the name of a broker, dealer, commercial bank, trust
company or other nominee are urged to contact such nominee
promptly if they wish to tender Original Capital Securities
pursuant to the Exchange Offer. Tendering holders of
Original Capital Securities that do not use ATOP 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 (as defined
herein), either with the certificates of the Original
Capital Securities to be tendered or in compliance with the
specified procedures for guaranteed delivery of Original
Capital Securities. Tendering holders of Original Capital
Securities that use ATOP will, by so doing, acknowledge that
they are bound by the terms of the Letter of Transmittal.
See "The Exchange Offer--Procedures for Tendering Original
Capital Securities."
Letters of Transmittal and certificates representing
Original Capital Securities should not be sent to the
Corporation or the Trust. Such documents should only be sent
to the Exchange Agent (as defined herein).
Exchange Agent............... The exchange agent with respect to the Exchange Offer is The
Bank of New York (the "Exchange Agent"). The addresses, and
telephone and facsimile numbers, of the Exchange Agent are
set forth in "The Exchange Offer--Exchange Agent") and in
the Letter of Transmittal.
Resales of Exchange Capital
Securities................. The Corporation and the Trust are making the Exchange Offer
in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in
certain interpretive letters addressed to third parties in
other transactions. However, neither the Corporation nor the
Trust has sought its own interpretive letter and there can
be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has
in such interpretive letters to third parties. Based on
these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the
two immediately following sentences, the Corporation and the
Trust believe that Exchange Capital Securities issued
pursuant to this Exchange Offer in exchange for Original
Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a
holder who is broker-dealer) without further compliance with
the registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such
holder's business and that such holder is not participating,
and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities.
However, any holder of Original Capital Securities who is an
Affiliate of the Corporation or the Trust or who intends to
participate in the Exchange Offer for the purpose of
distributing the Exchange Capital Securities, or any
broker-dealer who purchased the Original Capital Securities
from the Trust to resell pursuant to Rule
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144A or any other available exemption under the Securities
Act, (i) will not be able to rely on the interpretations of
the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive
letters, (ii) will not be permitted or entitled to tender
such Original 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 Original Capital
Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if
any broker-dealer holds Original Capital Securities acquired
for its own account as a result of market-making or other
trading activities and exchanges such Original Capital
Securities for Exchange Capital Securities, then such
broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resales of such Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to
exchange Original Capital Securities for Exchange Capital
Securities in the Exchange Offer will be required to
represent in the Letter of Transmittal or by transmission of
an Agent's Message (as defined herein) that (i) it is not an
"affiliate" of the Corporation or the Trust, (ii) any
Exchange Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it
has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities and (iv)
if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange
Capital Securities. Each Participating Broker-Dealer that
receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer will be deemed to have
acknowledged by execution of the Letter of Transmittal or
delivery of an Agent's Message (as defined herein) that it
acquired the Original 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 Exchange Capital Securities. The
Letter of Transmittal states that, by so acknowledging and
by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. Based on the
position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters
referred to above, the Corporation and the Trust believe
that Participating Broker-Dealers who acquired Original
Capital Securities for their own accounts as a result of
market-making activities or other trading activities may
fulfill their prospectus delivery requirements with respect
to the Exchange Capital Securities received upon exchange of
such Original Capital Securities (other than Original
Capital Securities which represent an unsold allotment from
the original sale of the Original Capital Securities) with a
prospectus
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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 Exchange Capital Securities.
Accordingly, this Prospectus, as it may be amended or
supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of
Exchange Capital Securities received in exchange for
Original Capital Securities where such Original Capital
Securities were acquired by such Participating Broker-Dealer
for its own account as a result of market-making or other
trading activities.
Subject to certain provisions set forth in the Registration
Rights Agreement and to the limitations described below
under "The Exchange Offer--Resales of Exchange Capital
Securities," the Corporation and the Trust have agreed that
this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer
in connection with resales of such Exchange Capital
Securities for a period ending 90 days after the Expiration
date (subject to extension under certain limited
circumstances) or, if earlier, when all such Exchange
Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution." Any
person, including any Participating Broker-Dealer, who is an
Affiliate of the Corporation or the Trust may not rely on
such interpretive letters and must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
See "The Exchange Offer--Resales of Exchange Capital
Securities."
Use of Proceeds.............. Neither the Corporation nor the Trust will receive any cash
proceeds from the issuance of the Exchange Capital
Securities offered hereby. See "Use of Proceeds."
Certain Federal Income Tax
Considerations; ERISA
Considerations............. Holders of Original Capital Securities should review the
information set forth under "Certain Federal Income Tax
Considerations" and "ERISA Considerations" prior to
tendering Original Capital Securities in the Exchange Offer.
THE EXCHANGE CAPITAL SECURITIES
Securities Offered........... Up to $50,000,000 aggregate Liquidation Amount of the
Trust's Exchange Capital Securities which have been
registered under the Securities Act (Liquidation Amount
$1,000 per Exchange Capital Security). The Exchange Capital
Securities will be issued and the Original Capital
Securities were issued under the Trust Agreement. The
Exchange Capital Securities and any Original Capital
Securities which remain outstanding after consummation of
the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have
taken certain actions or exercised certain rights under the
Trust Agreement. See "Description of Capital
Securities--Voting Rights; Amendment of the Trust
Agreement." The
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terms of the Exchange Capital Securities are identical in
all material respects to the terms of the Original Capital
Securities, except that the Exchange Capital Securities have
been registered under the Securities Act and therefore will
not be subject to certain restrictions on transfer under
federal and state securities laws and will not provide for
any increase in the Distribution rate thereon. See "The
Exchange Offer."
Distribution Dates........... May 1 and November 1 of each year.
Extension Periods............ So long as no Debenture Event of Default has occurred and is
continuing, Distributions on Capital Securities will be
deferred for the duration of any Extension Period elected by
the Corporation with respect to the payment of interest on
the Junior Subordinated Debentures. No Extension Period will
exceed 10 consecutive semi-annual periods, end on a date
other than an Interest Payment Date or extend beyond the
Stated Maturity Date. During an Extension Period, the
holders of the Capital Securities will be required to
include deferred interest income in their gross income for
United States federal income tax purposes in advance of any
corresponding cash distribution. 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 Exchange Capital Securities will rank PARI PASSU, and
payments thereon will be made PRO RATA, with the Original
Capital Securities and the Common Securities, except as
described under "Description of Capital
Securities--Subordination of Common Securities." The
Exchange Junior Subordinated Debentures will rank PARI PASSU
with the Original Junior Subordinated Debentures and all
other junior subordinated debentures, if any, issued by the
Corporation (the "Other Debentures"), which are issued and
sold (if at all) to other trusts established by the
Corporation (if any), in each case similar to the Trust
("Other Trusts"), and will constitute unsecured obligations
of the Corporation and will rank subordinate and junior in
right of payment to all Senior Indebtedness, to the extent
and in the manner set forth in the Indenture. See
"Description of Junior Subordinated Debentures." The
Exchange Guarantee will rank PARI PASSU with the Original
Guarantee and all other guarantees, if any, issued by the
Corporation with respect to capital securities, if any,
issued by Other Trusts ("Other Guarantees") and will
constitute an unsecured obligation of the Corporation and
will rank subordinate and junior in right of payment to all
Senior Indebtedness, to the extent and in the manner set
forth in the Guarantee Agreement. See "Description of
Exchange Guarantee." In addition, because the Corporation is
a savings and loan holding company, the Exchange Junior
Subordinated Debentures and the Exchange Guarantee will be
effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, including the
Banks' deposit liabilities. See "Description of Junior
Subordinated Debentures--Subordination."
Redemption................... The Trust Securities will be subject to mandatory redemption
in a Like Amount: (i) in whole but not in part, on the
Stated Maturity Date
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upon repayment of the Junior Subordinated Debentures; (ii)
in whole but not in part, at any time prior to May 1, 2008
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 May 1, 2008, contemporaneously
with the optional prepayment by the Corporation of all or
part of the Junior Subordinated Debentures, in each case at
the applicable Redemption Price. See "Description of Capital
Securities--Redemption" and "Description of Junior
Subordinated Debentures--Special Event Prepayment."
Transfer Restrictions........ The Exchange 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) and
multiples of $1,000 in excess thereof. See "Description of
Capital Securities--Restrictions on Transfer." Any such
transfer of Exchange 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
Capital Securities......... The Exchange Capital Securities will be a new issue of
securities for which there currently is no market. Although
the Initial Purchasers have informed the Trust and the
Corporation that they currently intend to make a market in
the Exchange Capital Securities, the Initial Purchasers are
not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there
can be no assurance as to the development or liquidity of
any market for the Exchange Capital Securities. The Trust
and the Corporation do not intend to apply for listing of
the Exchange Capital Securities on any securities exchange
or for quotation through the Nasdaq Stock Market. See "Plan
of Distribution."
ERISA Considerations......... Prospective purchasers must carefully consider the
restrictions on purchases set forth under "ERISA
Considerations."
Risk Factors................. For a discussion of considerations relevant to an investment
in the Capital Securities which should be carefully
considered by prospective investors, see "Risk Factors."
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RISK FACTORS
PROSPECTIVE PURCHASERS OF THE EXCHANGE CAPITAL SECURITIES SHOULD CAREFULLY
REVIEW THE INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS AND SHOULD
PARTICULARLY CONSIDER THE FOLLOWING MATTERS. INFORMATION CONTAINED IN THIS
PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS" WHICH CAN BE IDENTIFIED BY THE
USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL,"
"SHOULD," "PROJECTED," "CONTEMPLATES" OR "ANTICIPATES" OR THE NEGATIVE THEREOF
OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. NO ASSURANCE CAN BE GIVEN
THAT THE FUTURE RESULTS COVERED BY THE FORWARD-LOOKING STATEMENTS WILL BE
ACHIEVED. THE FOLLOWING MATTERS CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING
IMPORTANT FACTORS WITH RESPECT TO SUCH FORWARD-LOOKING STATEMENTS, INCLUDING
CERTAIN RISKS AND UNCERTAINTIES, THAT COULD CAUSE ACTUAL RESULTS TO VARY
MATERIALLY FROM THE FUTURE RESULTS COVERED IN SUCH FORWARD-LOOKING STATEMENTS.
OTHER FACTORS, SUCH AS THE GENERAL STATE OF THE ECONOMY, COULD ALSO CAUSE ACTUAL
RESULTS TO VARY MATERIALLY FROM THE FUTURE RESULTS COVERED IN SUCH FORWARD-
LOOKING STATEMENTS.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES; LIMITATIONS ON SOURCE OF FUNDS
The obligations of the Corporation under the Guarantee issued by it for the
benefit of the holders of Capital Securities, as well as under the Junior
Subordinated Debentures, 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 Guarantee and the Indenture, respectively. No payment may be
made of the principal of, or premium, if any, or interest on the Junior
Subordinated Debentures, or in respect of any redemption, retirement, purchase
or other acquisition of any of the Junior Subordinated Debentures, at any time
when: (i) there shall have occurred and be continuing a default in any payment
in respect of any Senior Indebtedness, or there has been an acceleration of the
maturity thereof because of a default; or (ii) in the event of the acceleration
of the maturity of the Junior Subordinated Debentures, until payment has been
made on all Senior Indebtedness. At June 30, 1998, the Corporation had no Senior
Indebtedness outstanding.
Since the Corporation is a savings and loan holding company, the right of
the Corporation to participate in any distribution of assets of any subsidiary
upon such subsidiary's liquidation or reorganization or otherwise (and thus the
ability of holders of the Capital Securities to benefit indirectly from such
distribution) is subject to the prior claims of creditors of that subsidiary,
including depositors, in the case of the Bank, except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Junior Subordinated Debentures effectively will be subordinated
to all existing and future liabilities of the Corporation's subsidiaries. At
June 30, 1998, the subsidiaries of the Corporation had total liabilities,
excluding liabilities owed to the Corporation, of $2.2 billion, which amount
includes deposit liabilities of $1.6 billion. Holders of Junior Subordinated
Debentures should look only to the assets of the Corporation for payments on the
Junior Subordinated Debentures. The Guarantee will constitute an unsecured
obligation of the Corporation and will rank subordinate and junior in right of
payment to all Senior Indebtedness in the same manner as the Junior Subordinated
Debentures. None of the Indenture, the Guarantee or the Trust Agreement places
any limitation on the amount of secured or unsecured debt, including Senior
Indebtedness, that may be incurred by the Corporation or any of its
subsidiaries. See "Description of Guarantee--Status of the Exchange Guarantee"
and "Description of Junior Subordinated Debentures--General" and
"--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.
The Corporation is a savings and loan holding company regulated by the
Office of Thrift Supervision (the "OTS"), and almost all of the operating assets
of the Corporation are owned by the Corporation's subsidiaries. The Corporation
relies primarily on dividends from the Bank to meet its obligations for payment
of principal and interest on its outstanding debt obligations and corporate
expenses. There are
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regulatory limitations (discussed in more detail below) on the payment of
dividends directly or indirectly to the Corporation from the Bank. In addition
to restrictions on the payment of dividends, the Bank is subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the Bank, unless the
loans are secured by various types of collateral. Furthermore, such secured
loans, other transactions and investments 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. As of June
30, 1998, this limitation was approximately $15.4 million.
OTS regulations impose limitations upon all capital distributions by a
savings institution, such as the payment of cash dividends by the Bank to the
Corporation. Such regulations establish three tiers of institutions, which are
based primarily on an institution's capital level. An institution that exceeds
all fully phased-in regulatory capital requirements before and after a proposed
capital distribution ("Tier 1 Institution") and has not been advised by the OTS
that it is in need of more than normal supervision, could, after prior notice
to, but without the approval of the OTS, make capital distributions during a
calendar year equal to the greater of: (i) 100% of its net earnings to date
during the calendar year plus the amount that would reduce by one-half its
"surplus capital ratio" (the excess capital over its fully phased-in capital
requirements) at the beginning of the calendar year; or (ii) 75% of its net
earnings for the previous four quarters. Any additional capital distributions
would require prior OTS approval. In the event the Bank's capital fell below its
capital requirements or the OTS notified it that it was in need of more than
normal supervision, the Bank's ability to make capital distributions could be
restricted. In addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the regulation, if the
OTS determines that such distribution would constitute an unsafe or unsound
practice. During the fiscal year ended June 30, 1998, the Bank paid $14.0
million in dividends to the Corporation, which reflected the total amount of
dividends the Bank was permitted to pay as of June 30, 1998 under existing
supervisory practices. The OTS has proposed amendments to its capital
distribution regulations. If adopted as proposed, a savings association
subsidiary of a savings and loan holding company, such as the Bank, will
continue to have to file a notice with the OTS with respect to each capital
distribution that it proposes to make, unless the specific capital distribution
requires an application. Under the proposed amendments, an application would be
required if the total amount of all capital distributions (including the
proposed capital distribution) for the applicable calendar year exceeds net
income for that year to date plus the retained net income for the preceding two
years. If this proposed rule had been in effect at June 30, 1998, the Bank could
have paid dividends of $20.1 million without obtaining prior regulatory
approval. Bank regulatory agencies have authority to prohibit the Bank or the
Corporation from engaging in an unsafe or unsound practice in conducting their
business. The payment of dividends, depending upon the financial condition of
the Bank or the Corporation, could be deemed to constitute such an unsafe or
unsound practice.
Under the Federal Deposit Insurance Act ("FDIA"), insured depository
institutions such as the Bank are prohibited from making capital distributions,
including the payment of dividends, if, after making any such distribution, the
institution would become "undercapitalized" (as such term is used in the
statute). Based on the Bank's current financial condition, the Corporation does
not expect that this provision will have any impact on its ability to obtain
dividends from the Bank.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
So long as no Debenture Event of Default has occurred and is continuing, the
Corporation will have the right under the Indenture 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 Extension Period, provided that an Extension Period must end on an Interest
Payment Date and may
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not extend beyond the Stated Maturity Date. As a consequence of 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 8.17% per annum, compounded semi-annually, but not exceeding the
interest rate then accruing on the Junior Subordinated Debentures) from the
relevant payment date for such Distributions during any such Extension Period.
During the pendency of any Extension Period, the Corporation generally will be
prohibited from declaring or paying dividends on the Corporation's capital
stock. See "Description of Capital Securities--Distributions."
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
ycause such Extension Period to exceed 10 consecutive semi-annual periods, end
on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such 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 8.17%, 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."
The Corporation has no current plan to exercise its right to defer payments
of interest on the Junior Subordinated Debentures. However, should the
Corporation exercise its right to defer payments of interest on the Junior
Subordinated Debentures, each holder of 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 deferred Distributions thereafter. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount" and "--Sales of
Capital Securities."
If the Corporation elects 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, the mere existence of the Corporation's right to defer
payments of interest on the Junior Subordinated Debentures may cause the market
price of the Capital Securities to be more volatile than the market prices of
other securities and that are not subject to such deferrals.
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event, including a Tax
Event or a Regulatory Capital Event (in each case as defined under "Description
of Junior Subordinated Debentures--Special Event Prepayment"), prior to the
Initial Optional Redemption Date, the Corporation will have the right to prepay
the Junior Subordinated Debentures, in whole but not in part, at the Special
Event Prepayment Price within 60 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 any required regulatory approval. See "Description
of Capital Securities--Redemption."
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LIQUIDATION DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
The Corporation will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. 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 the holders of
Capital Securities; and (ii) receipt of any required regulatory approval. Under
current United States federal income tax law, a distribution of Junior
Subordinated Debentures upon the dissolution of the Trust would not be a taxable
event to holders of the Capital Securities. Upon the occurrence of a Special
Event, a dissolution of the Trust in which holders of the Capital Securities
receive cash would be a taxable event to such holders. See "Certain Federal
Income Tax Considerations--Receipt of Junior Subordinated Debentures or Cash
Upon Liquidation of the Trust."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
the Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a dissolution of the Trust were to occur. Accordingly, the
Capital Securities or the Junior Subordinated Debentures may trade at a discount
from the price that the investor paid to purchase the Capital Securities offered
hereby. Because holders of Capital Securities may receive Junior Subordinated
Debentures in liquidation of the Trust and because Distributions are otherwise
limited to payments on the Junior Subordinated Debentures, prospective
purchasers of 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 Guarantee will guarantee to the holders of the Capital Securities the
following payments, to the extent not paid by or on behalf of 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 the
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 dissolution, winding up or liquidation of the Trust (unless the
Junior Subordinated Debentures are distributed to holders of the Capital
Securities), the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment, to the extent that
the Trust has funds on hand legally available therefor 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, after the satisfaction of liabilities to
creditors of the Trust as provided by applicable law.
The holders of a majority in Liquidation Amount of the Capital Securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee 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. If the
Corporation defaults on its obligation to pay amounts payable under the Junior
Subordinated Debentures, the Trust will not have sufficient funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
will not be able to rely upon the Guarantee for payment of such amounts.
Instead, in the event a Debenture Event of Default shall have occurred and be
continuing and such event is attributable to the failure of the Corporation to
pay the principal of (or premium, if any) or interest (including Additional Sums
and Compounded Interest, if any), 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
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against the Corporation for enforcement of payment to such holder of the
principal of (or premium, if any) or interest (including Additional Sums and
Compounded Interest, if any), on such Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Capital Securities of
such holder (a "Direct Action"). Notwithstanding any payments made to a holder
of Capital Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of (and premium, if any)
and interest (including Additional Sums and Compounded Interest, if any) or, 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 will provide that each holder of Capital
Securities by acceptance thereof agrees to the provisions of the Indenture. The
Bank of New York will act as Guarantee Trustee and will hold the Guarantee for
the benefit of the holders of the Capital Securities. The Bank of New York will
also act as Property Trustee and as Debenture Trustee under the Indenture. The
Bank of New York (Delaware) will act as Delaware Trustee under the Trust
Agreement.
LIMITED VOTING RIGHTS
Holders of Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and the exercise of
the Trust's rights as holder of Junior Subordinated Debentures. Holders of
Capital Securities will not be entitled to vote to appoint, remove or replace,
or to increase or decrease the number of, the Issuer Trustees, which voting
rights are vested exclusively in the holder of the Common Securities, except
upon the occurrence of certain events described herein. The Property Trustee,
the Administrative Trustees 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, even if such action adversely affects the interests of such holders.
Holders of Capital Securities will have no voting rights with respect to any
matters submitted to a vote of the Corporation's stockholders. See "Description
of Capital Securities--Voting Rights; Amendment of the Trust Agreement" and
"--Removal of Issuer Trustees."
TRADING CHARACTERISTICS OF THE CAPITAL SECURITIES
The Capital Securities may trade at a price that does not fully 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) and who disposes of its 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 its adjusted tax basis in
its 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.
See "Certain Federal Income Tax Considerations--Interest Income and Original
Issue Discount" and "--Sales of Capital Securities."
ABSENCE OF RATINGS AND PUBLIC MARKET
The Capital Securities have not been rated by any rating agency. There is no
existing market for the Capital Securities, and there can be no assurance as to
the liquidity of any markets that may develop for
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the Capital Securities, the ability of the holders to sell their Capital
Securities, or at what price holders of the Capital Securities, will be able to
sell their Capital Securities. 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 Original Capital Securities were issued to, and the Corporation believes
such securities are currently owned by, a relatively small number of beneficial
owners. The Original Capital Securities have not been registered under the
Securities Act and will continue to be subject to restrictions on resale if they
are not exchanged for the Exchange Capital Securities. Although the Exchange
Capital Securities may be resold or otherwise transferred by the holders (who
are not affiliates of the Corporation or the Trust) without compliance with the
registration requirements under the Securities Act, they constitute a new issue
of securities with no established trading market. In addition, Capital
Securities may be transferred by the holders thereof only in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital Securities). The
Initial Purchasers have informed the Corporation and the Trust that they intend
to make a market in the Exchange Capital Securities. However, the Initial
Purchasers are not obligated to do so and any such market-making activity may be
terminated at any time without notice to the holders of the Exchange 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. Accordingly, no assurance can be given that an active public or
other market will develop for the Exchange Capital Securities or the Original
Capital Securities, or as to the liquidity of or the trading market for the
Exchange Capital Securities or the Original Capital Securities. If an active
public market does not develop, the market price and liquidity of the Exchange
Capital Securities may be adversely affected.
If a public trading market develops for the Exchange Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, the Corporation's operating results, and the
market for similar securities. Depending on these and other factors, the
Exchange Capital Securities may trade at a discount.
Notwithstanding the registration of the Exchange Capital Securities offered
in the Exchange Offer, holders who are "affiliates" (as defined under Rule 405
of the Securities Act) of the Corporation or the Trust may publicly offer for
sale or resell the Exchange Capital Securities only in compliance with the
provisions of the Securities Act, including Rule 144 thereunder.
Each broker-dealer that receives Exchange Capital Securities for its own
account in exchange for Original Capital Securities, where such Original 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 Exchange Capital Securities.
See "Plan of Distribution."
CONSEQUENCES OF A FAILURE TO EXCHANGE ORIGINAL CAPITAL SECURITIES
The Original 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.
Original Capital Securities which remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Original Capital Securities which remain outstanding will not be entitled to any
rights to have such Original Capital Securities registered under the Securities
Act or to any similar rights under the Registration Rights Agreement. The
Corporation and the Trust do not intend to register under the Securities Act any
Original Capital Securities which remain outstanding after consummation of the
Exchange Offer.
Although the Original Capital Securities have been designated for trading in
the Private Offerings, Resale and Trading through Automated Linkages ("PORTAL")
market, to the extent that Original Capital
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Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Original Capital Securities which remain outstanding after
the Exchange Offer could be adversely affected.
The Exchange Capital Securities and any Original Capital Securities which
remain outstanding after consummation of the Exchange Offer will vote together
as a single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement. See "Description of
Exchange Securities" and "Description of Capital Securities--Voting Rights;
Amendment of the Trust Agreement."
The Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
September 25, 1998 and declared effective by October 23, 1998, the Distribution
rate borne by the Original Capital Securities commencing on April 17, 1998 will
increase by 0.25% per annum until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Original Capital Securities will
not be entitled to any increase in the Distribution rate thereon or any further
registration rights under the Registration Rights Agreement. The Exchange
Capital Securities will not be entitled to any such increase in the Distribution
rate thereon. See "Description of Original Capital Securities."
EXCHANGE OFFER PROCEDURES
Subject to the conditions set forth under "The Exchange Offer--Conditions to
the Exchange Offer," the issuance of the Exchange Capital Securities for
Original Capital Securities pursuant to the Exchange Offer will be made only
after a timely receipt by the Trust of a book-entry confirmation (as defined
below) evidencing the tender of such Original Capital Securities through ATOP or
certificates representing such Original Capital Securities, a properly compelled
and duly executed Letter of Transmittal, with any required signature guarantees,
and all other required documents. See "The Exchange Offer--Acceptance for
Exchange and Issuance of Capital Securities" and "-- Procedures for Tendering
Original Capital Securities." Therefore, holders of the Original Capital
Securities desiring to tender such Original Capital Securities in exchange for
Exchange Capital Securities should allow sufficient time to ensure timely
delivery. Neither the Corporation nor the Trust is under any duty to give
notification of defects or irregularities with respect to the tenders of
Original Capital Securities for exchange.
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RELIANCE CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law upon the
filing of a certificate of trust with the Delaware Secretary of State. The Trust
exists for the exclusive purposes of: (i) issuing and selling the Trust
Securities; (ii) using the proceeds from the sale of the Trust Securities to
acquire the Junior Subordinated Debentures; and (iii) engaging in only those
other activities necessary, advisable or incidental thereto, including the
Exchange Offer. The Junior Subordinated Debentures are and will be the sole
assets of the Trust, and, accordingly, payments under the Junior Subordinated
Debentures are and 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 approximately 35
years, but may dissolve earlier as provided in the Trust Agreement. The Trust's
business and affairs are conducted by the Issuer Trustees, each appointed by the
Corporation as holder of the Common Securities. The Issuer Trustees for the
Trust are The Bank of New York, as the Property Trustee, The Bank of New York
(Delaware), as the Delaware Trustee and three Administrative Trustees who are
officers of the Corporation. The Bank of New York, as Property Trustee, acts as
sole indenture trustee under the Trust Agreement. The Bank of New York also acts
as indenture trustee under the Guarantee and the Indenture. See "Description of
Guarantee" and "Description of Junior Subordinated Debentures." The holder of
the Common Securities of the Trust or, if an Event of Default under the Trust
Agreement has occurred and is continuing, the holders of not less than a
majority in Liquidation Amount of the Capital Securities 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 vote to
appoint, remove or replace the Administrative Trustees; such voting rights will
be vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the Trust Agreement. The
Corporation, as issuer of the Junior Subordinated Debentures, will pay all fees,
expenses, debts and obligations (other than the payment of principal of (and
premium, if any) and, interest, on the Trust Securities) related to the Trust
and the offering of the Capital Securities and will pay, directly or indirectly,
all ongoing costs, expenses and liabilities of the Trust. The principal
executive office of the Trust is c/o Reliance Bancorp, Inc., 585 Stewart Avenue,
Garden City, New York 11530.
RELIANCE BANCORP, INC.
The Corporation is a Delaware corporation headquartered in Garden City, New
York. The Corporation became the sole stockholder of the Bank, a federally
chartered savings bank, on March 31, 1994 in connection with the Bank's
conversion from mutual to stock form. As of June 30, 1998, the Corporation, on a
consolidated basis, had total assets, liabilities and stockholders' equity of
$2.5 billion, $2.3 billion and $194.9 million, respectively. While the
Corporation conducts most of its business through the Bank, at June 30, 1998,
the Corporation held approximately $24.4 million in securities, primarily
fixed-rate and floating-rate corporate loans.
The Bank is a community-oriented savings institution which operates 30 full
service branch offices in Nassau and Suffolk Counties and the Borough of Queens.
In addition to the branch facilities, the Bank also operates five check cashing
facilities in Manhattan. The Bank, however, considers its primary market area to
be the greater New York City Metropolitan area. The principal business of the
Bank is attracting retail deposits from the general public and investing those
deposits primarily in real estate mortgage, commercial, construction and
consumer loans. The Bank's primary lending emphasis has been the origination of
mortgage loans secured by one-to-four family and multi-family real estate and
consumer
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loans. To a lesser extent, the Bank also originates commercial real estate and
construction loans. Of the $978.7 million of total loans the Bank had
outstanding as of June 30, 1998, $449.3 million, or 51.0%, were one-to-four
family residential real estate loans, $243.1 million, or 24.8%, were
multi-family loans, and $137.9 million, or 14.1%, were consumer loans and $49.9
million or 5.1% were commercial loans. The consumer loans consisted of $94.5
million, or 9.7% of total loans, of home equity lines of credit, $19.1 million,
or 1.9% of total loans, of home equity loans, $15.3 million, or 1.5% of total
loans, of guaranteed student loans, and $9.0 million, or 1.0% of total loans, of
other consumer loans. Commercial real estate and construction loans aggregated
$48.5 million, or 5.0% of total loans, as of June 30, 1998.
During periods in which the demand for loans which meet the Bank's
underwriting, investment and interest rate risk standards is lower than the
amount of funds available for investment, the Bank invests excess funds in
securities investments, including mortgage-backed securities, debt and equity
securities and other investments permitted by federal laws and regulations. At
June 30, 1998, the Bank's securities portfolio totaled $1.3 billion, of which
$1.2 billion was invested in mortgage-backed securities, and $150.7 in other
securities.
Since the Bank's conversion to a stock institution in March 1994, the
Corporation has acquired the Bank of Westbury (August 1995), Sunrise Bancorp,
Inc. (January 1996) and Continental Bank (October 1997). As a result of these
acquisitions and the Bank's internal growth, the Corporation's consolidated
assets, liabilities and stockholders' equity have increased from $819.8 million,
$660.7 million and $159.1 million, at March 31, 1994, respectively, to $2.5
billion, $2.3 billion and $194.9 million at June 30, 1998, respectively.
Furthermore, as a result of its most recent acquisition of Continental Bank, the
Bank has begun to offer commercial loan products, which it had previously
offered on a limited basis. At June 30, 1998, the Bank had $49.9 million of
commercial loans outstanding, or 5.1% of total loans.
The Corporation, as a registered unitary savings and loan holding company,
is subject to examination and regulation by the OTS, and, as a publicly held
company whose shares of common stock are registered under the Exchange Act, is
subject to the periodic reporting and other requirements of the Commission under
the Exchange Act. The Bank, as a federally chartered savings bank, is subject to
comprehensive regulation and examination by the OTS, as its primary federal
regulator, and by the Federal Deposit Insurance Corporation, which administers
the Savings Association Insurance Fund (the "SAIF"), which insures the Bank's
deposits to the maximum extent permitted by law.
The Corporation's executive office is located at 585 Stewart Avenue, Garden
City, New York 11530-4701. Its telephone number is (516) 222-9300.
NEITHER THE EXCHANGE CAPITAL SECURITIES NOR THE EXCHANGE JUNIOR SUBORDINATED
DEBENTURES ARE OBLIGATIONS OF OR GUARANTEED BY THE BANK.
26
<PAGE>
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. The Original
Capital Securities surrendered in exchange for the Exchange Capital Securities
will be retired and cancelled.
The proceeds to the Trust from the offering of the Original Capital
Securities were $50,000,000 (without giving effect to approximately $1,250,000
of commissions and expenses paid by the Corporation). All of the proceeds from
the sale of Original Capital Securities were invested by the Trust in the
Original Junior Subordinated Debentures. The Corporation invested approximately
$18,750,000 of the net proceeds to it from its sale of the Original Junior
Subordinated Debentures in equity of the Bank. Net proceeds retained by the
Corporation has been used by the Corporation for general corporate purposes,
including the investment of funds in the Corporation's subsidiaries and may be
used for potential future acquisitions. There currently are no agreements,
arrangements or understandings with respect to any potential acquisitions.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
the Corporation on a consolidated basis for the respective periods indicated.
<TABLE>
<CAPTION>
AT JUNE 30,
------------------------------------------
1998 1997 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Ratios of Earnings to Combined Fixed Charges:
Excluding interests on deposits............................................. 2.43x 2.20x 3.05x 3.61x
Including interest on deposits.............................................. 1.39x 1.29x 1.41x 1.58x
<CAPTION>
1994
---------
<S> <C>
Ratios of Earnings to Combined Fixed Charges:
Excluding interests on deposits............................................. 6.84x
Including interest on deposits.............................................. 1.65x
</TABLE>
For purposes of computing the ratios of earnings to combined fixed charges,
earnings represents net income plus applicable income taxes (including
cummulative effect of change in accounting for income taxes of $1.2 million
during year ended June 30, 1994) and fixed charges. Fixed charges, excluding
interest on deposits, includes gross interest expense other than on deposits.
Fixed charges, including gross interest on deposits, includes all interest
expense.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust is treated as a subsidiary of
the Corporation, and, accordingly, the accounts of the Trust are included in the
consolidated financial statements of the Corporation. The Capital Securities
will be presented as a separate line item in the consolidated balance sheets of
the Corporation, entitled "Corporation-Obligated Mandatorily Redeemable Capital
Securities of Subsidiary Trust Holding Solely Parent Company Debenture" and
appropriate disclosures about the Capital Securities, the Guarantee and the
Junior Subordinated Debentures are intended to be included in the notes to the
consolidated financial statements of the Corporation. For financial reporting
purposes, the Corporation will record Distributions payable on the Capital
Securities as interest expense in its consolidated statements of income.
27
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Corporation, on a
consolidated basis, as of June 30, 1998, and as adjusted to give effect to
consummation of the Exchange Offer. The issuance of the Exchange Captial
Securities in the Exchange Offer will have no effect on the Capitalization of
the Corporation. This table should be read in conjunction with the consolidated
financial statements of the Corporation, including the related notes thereto and
discussion thereof, which are incorporated herein by reference. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
AT JUNE 30, 1998
-----------------------
AS
ACTUAL ADJUSTED
---------- -----------
<S> <C> <C>
(IN THOUSANDS)
LONG TERM BORROWINGS:
FHLB advances........................................................................ $ 182,136 $ 182,136
Securities sold under agreements to repurchase....................................... 398,070 398,070
---------- -----------
Total long-term borrowings....................................................... $ 580,206 $ 580,206
---------- -----------
Corporation-Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trust
Holding Solely Parent Company Debentures (1)........................................... 50,000 50,000
---------- -----------
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 4,000,000 shares authorized; none issued................ -- --
Common stock, $.01 par value, 20,000,000 shares authorized; 10,750,820 shares issued;
(9,564,981 outstanding)................................................................ 108 108
Additional paid-in capital............................................................... 117,909 117,909
Retained earnings, substantially restricted.............................................. 102,305 102,305
Unrealized appreciation on securities available-for-sale, net of taxes................... 4,212 4,212
Less:
Unallocated common stock held by ESOP................................................ (4,554) (4,554)
Unearned common stock held by RRP.................................................... (713) (713)
Unearned common stock held by SERP................................................... (373) (373)
Treasury stock, at cost (1,185,832 shares)........................................... (24,030) (24,030)
Total stockholders' equity....................................................... 194,864 194,864
---------- -----------
Total long-term borrowings, minority interest in subsidiary
and stockholders' equity...............................................................
$ 825,070 $ 825,070
---------- -----------
</TABLE>
- ------------------------
(1) Reflects the Original Capital Securities. As described herein, the sole
assets of the Trust, which is a subsidiary of the Corporation, are
$51,547,000 aggregate principal amount of the 8.17% Junior Subordinated
Debentures, Series A, which will mature on May 1, 2028. The Corporation owns
all of the Common Securities issued by the Trust. See "Description of Junior
Subordinated Debentures."
28
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE CORPORATION
Set forth below are the selected consolidated financial and other data of
the Corporation. This financial data is derived in part from, and it should be
read in conjunction with the Corporation's consolidated financial statements and
related notes. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
AT JUNE 30,
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
------------ ------------ ------------ ---------- ----------
SELECTED FINANCIAL DATA:
Total assets................................. $ 2,485,729 $ 1,976,764 $ 1,782,550 $ 931,436 $ 830,501
Loans receivable, net........................ 969,797 909,321 817,746 332,080 330,720
Debt and equity securities available-for-
sale....................................... 134,907 26,909 13,271 23,880 37,588
Debt and equity securities held-to-
maturity................................... 40,189 46,026 48,330 23,890 39,492
Mortgage-backed securities available-
for-sale................................... 940,347 721,819 591,740 104,453 --
Mortgage-backed securities held-to-
maturity................................... 249,347 159,356 184,492 413,762 394,199
Excess of cost over fair value of net assets
acquired................................... 58,936 45,463 49,429 -- --
Real estate owned, net....................... 755 450 1,564 1,558 2,911
Deposits..................................... 1,682,298 1,436,037 1,345,626 670,317 587,221
FHLB advances................................ 182,136 40,000 3,000 40,000 78,000
Securities sold under agreements to
repurchase................................. 398,070 311,913 263,160 57,035 --
Total stockholders' equity(1)................ 194,864 162,670 153,619 153,733 157,851
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
---------- ------------ ------------ --------- ---------
SELECTED OPERATING DATA:
Interest income.................................. $ 153,819 $ 133,289 $ 100,372 $ 61,260 $ 47,224
Interest expense................................. 86,828 71,653 52,985 28,361 20,024
---------- ------------ ------------ --------- ---------
Net interest income.............................. 66,991 61,636 47,387 32,899 27,200
Less provision for loan losses................... 1,650 950 725 400 393
---------- ------------ ------------ --------- ---------
Net interest income after provision for loan
losses......................................... 65,341 60,686 46,662 32,499 26,807
Non-interest income.............................. 7,859 3,412 3,110 1,257 1,119
General and administrative expenses.............. 35,225 30,987 25,596 17,597 13,814
Real estate operations, net...................... 218 383 579 (385) 1,080
Amortization of excess of cost over fair value of
net assets acquired............................ 4,218 3,404 1,928 -- --
SAIF recapitalization charge..................... -- 8,250 -- -- --
---------- ------------ ------------ --------- ---------
Total non-interest expense....................... 39,661 43,024 28,103 17,212 14,894
---------- ------------ ------------ --------- ---------
Income before income taxes and cumulative effect
of change in accounting principle.............. 33,539 21,074 21,669 16,544 13,032
Income tax expense............................... 14,810 10,138 9,946 6,842 5,538
---------- ------------ ------------ --------- ---------
Income before cumulative effect of change in
accounting principle........................... 18,729 10,936 11,723 9,702 7,494
Cumulative effect of change in accounting
principle(2)................................... -- -- -- -- 1,200
---------- ------------ ------------ --------- ---------
Net income................................... $ 18,729 $ 10,936 $ 11,723 $ 9,702 $ 8,694
---------- ------------ ------------ --------- ---------
---------- ------------ ------------ --------- ---------
PER SHARE DATA:(3)
Earnings per share (basic)....................... $ 2.11 $ 1.32 $ 1.36 $ 1.04 $ 0.22
Earnings per share (diluted)..................... 1.99 1.25 1.32 1.03 0.22
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED JUNE 30,
---------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
PERFORMANCE RATIOS:
Return on average assets(2)................................. 0.86% 0.58% 0.83% 1.08% 1.15%
Return on average stockholders' equity (2)(4)............... 10.42 7.02 7.58 6.17 9.82
Return on average tangible stockholders' equity (2)(4)...... 15.14 10.10 9.18 6.17 9.82
Core deposits to total deposits............................. 36.95 37.40 41.68 36.12 49.08
Net interest spread......................................... 2.98 3.22 3.17 3.11 3.36
Net interest margin (5)..................................... 3.28 3.47 3.52 3.77 3.69
General and administrative expenses to average assets....... 1.62 1.66 1.81 1.97 1.82
Operating income to average assets (6)...................... 0.29 0.17 0.16 0.14 0.15
Average interest-earning assets to average interest-bearing
liabilities............................................... 1.07x 1.06x 1.09x 1.20x 1.12x
PERFORMANCE RATIOS, EXCLUDING SAIF RECAPITALIZATION
ASSESSMENT:
Return on average assets (2)................................ 0.86% 0.84% 0.83% 1.08% 1.15%
Return on average stockholders' equity (2)(4)............... 10.42 10.12 7.58 6.17 9.82
Return on average tangible stockholders' equity (2)(4)...... 15.14 14.56 9.18 6.17 9.82
CAPITAL RATIOS (AT PERIOD END):
Average stockholders' equity to average assets.............. 8.45 8.24 10.92 17.60 11.68
Stockholders' equity to total assets........................ 7.84 8.23 8.62 16.51 19.01
Tangible stockholders' equity to tangible assets............ 5.60 6.07 6.01 16.51 19.01
Tangible capital (Bank only)................................ 6.10 5.60 5.60 13.20 13.90
Core capital (Bank only).................................... 6.10 5.60 5.60 13.20 13.90
Risk-based capital (Bank only).............................. 15.30 15.20 14.70 38.20 38.80
ASSET QUALITY RATIOS (AT PERIOD END):
Non-performing loans to total loans (7)..................... 0.95% 1.61% 1.58% 1.10% 1.08%
Non-performing loans to total assets........................ 0.37 0.75 0.73 0.39 0.43
Non-performing assets to total assets (8)................... 0.40 0.77 0.82 0.56 0.78
Net loans charged off to average loans...................... 0.07 0.03 0.03 0.03 0.09
Allowance for loan losses to total loans.................... 0.91 0.57 0.55 0.52 0.43
Allowance for loan losses to non-performing loans........... 96.12 35.18 34.63 47.10 39.38
</TABLE>
- ------------------------------
(1) At June 30, 1998, 1997, 1996, 1995 and 1994, amount includes retained
earnings of $101.0 million, $89.7 million, $84.0 million, $76.2 million and
$70.1 million, respectively, substantially restricted.
(2) Reflects the cumulative effect of the Corporation's adoption of Statement of
Financial Accounting Standard No. 109, "Accounting for Income Taxes," in the
fiscal year ended June 30, 1994.
(3) All earnings per share calculations reflect the adoption of Statement of
Financial Accounting Standard No. 128. Earnings per share for fiscal year
ended June 30, 1994 is based on net income from March 31, 1994 to June 30,
1994.
(4) For purposes of these calculations, average stockholders' equity and average
stockholders' tangible equity exclude the effect of changes in the
unrealized appreciation (depreciation) on securities available for sale, net
of taxes.
(5) Calculation is based upon net interest income before provision for loan
losses divided by average interest-earning assets.
(6) Operating income represents total non-interest income less net gain on sale
of debt and equity securities.
(7) Non-performing loans consist of all loans 90 days or more past due and any
other loans, or any portion thereof, that have been determined to be
doubtful of collection.
(8) Non-performing assets consist of non-performing loans and real estate owned.
31
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Original 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 reasonable best efforts to cause to be declared effective
by the Commission a registration statement with respect to the exchange of the
Exchange Capital Securities for Original Capital Securities with terms identical
in all material respects to the terms of the Original Capital Securities. A copy
of the Registration Rights Agreement has been filed as an Exhibit to the
Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Trust under the Registration Rights Agreement. The form
and terms of the Exchange Capital Securities are the same as the form and terms
of the Original Capital Securities except that the Exchange Capital Securities
(i) have been registered under the Securities Act and therefore will not be
subject to certain restrictions on transfer under federal and state securities
laws and (ii) will not provide for any increase in the Distribution Rate
thereon. In that regard, the Original Capital Securities provide, among other
things, that, if a registration statement relating to the Exchange Offer has not
been filed by September 25, 1998, and declared effective by October 23, 1998,
the Distribution Rate borne by the Original Capital Securities will increase by
0.25% per annum until the Exchange Offer is consummated. Upon consummation of
the Exchange Offer, holders of Original Capital Securities will not be entitled
to any increase in the Distribution Rate thereon or any further registration
rights under the Registration Rights Agreement. See "Risk Factors--Consequences
of a Failure to Exchange Original Capital Securities" and "Description of
Capital Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Original 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 Original 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 DTC system whose name appears on a security position listing as the holder
of such Original Capital Securities and who desires to deliver such Original
Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Exchange Guarantee for the Original
Guarantee and the Exchange Junior Subordinated Debentures, in an amount
corresponding to the Original Capital Securities accepted for exchange, for a
like aggregate principal amount of the Original Junior Subordinated Debentures.
The Exchange Guarantee and the Exchange Junior Subordinated Debentures have been
registered under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $50,000,000 aggregate Liquidation Amount of Exchange Capital
Securities for a like aggregate Liquidation Amount of Original 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 Exchange Capital Securities in exchange for a like aggregate
Liquidation Amount of outstanding Original Capital Securities tendered and
accepted in connection with the Exchange Offer. Holders may tender their
Original Capital Securities in whole or in part in a Liquidation Amount of not
less than $100,000 (100 Capital Securities) or any integral multiple of $1,000
32
<PAGE>
Liquidation Amount (one Capital Security) in excess thereof, provided that if
any Original Capital Securities are tendered in exchange for 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 minium Liquidation Amount of
Original Capital Securities being tendered. As of the date of this Prospectus,
$50,000,000 aggregate Liquidation Amount of the Original Capital Securities is
outstanding.
Holders of Original Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original 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. See "Risk
Factors--Consequences of a Failure to Exchange Original Capital Securities" and
"Description of Original Securities."
If any tendered Original 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 Original Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Original Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Original 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 BOARD OF DIRECTORS OF THE CORPORATION NOR ANY ISSUER TRUSTEE OF
THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF ORIGINAL CAPITAL SECURITIES AS
TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR
ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE
HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF ORIGINAL CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF ORIGINAL CAPITAL SECURITIES
TO TENDER BASED ON SUCH HOLDERS OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York Time, on November 17,
1998 unless the Exchange Offer is extended by the Corporation or the Trust (in
which case the term "Expiration Date" shall mean the latest date and time which
the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at anytime and from time to
time, (i) to delay the acceptance of the Original Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Original
Capital Securities have theretofore been accepted for exchange) if the
Corporation and the Trust determine, in their sole and absolute discretion, that
any of the events or conditions referred to under "--Conditions to the Exchange
Offer" have occurred or exist or have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all Original Capital Securities
tendered pursuant to the Exchange Offer, subject, however, to the right of
holders of Original Capital Securities to withdraw their tendered Original
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
33
<PAGE>
disclose such amendment by means of a Prospectus supplement that will be
distributed to the registered holders of the Original Capital Securities, and
the Corporation and the Trust will extend the Exchange Offer to the extent
required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York 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 EXCHANGE 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, Exchange Capital
Securities for Original Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of Exchange Capital Securities in exchange for
Original Capital Securities tendered and accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of a
book-entry confirmation (as defined below) evidencing the tender of such
Original Capital Securities through ATOP or certificates representing such
Original Capital Securities, a properly completed and duly executed Letter of
Transmittal, with any required signature guarantees, and all other required
documents.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Original 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, 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, Original Capital Securities validly tendered and not withdrawn as, if
and when the Trust gives oral or written notice to the Exchange Agent of the
Corporation's and the Trust's acceptance of such Original Capital Securities for
exchange pursuant to the Exchange Offer. The Exchange Agent will act as agent
for the Trust for the purpose of receiving tenders of Original Capital
Securities, Letters of Transmittal and related documents and transmitting
Exchange 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 Original Capital Securities
tendered pursuant to the Exchange Offer is delayed (whether before or after the
Trust's acceptance for exchange of Original Capital Securities) or the
Corporation and the Trust extend the Exchange Offer or are unable to accept for
exchange or exchange Original 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 subject to Rule 14e-1(c) under the Exchange Act,
retain tendered Original Capital Securities and such Original 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 Original Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Original Capital Securities, that the Trust will acquire
good, marketable and unencumbered title to the tendered Original Capital
Securities, free and clear of all liens, restrictions,
34
<PAGE>
charges and encumbrances, and the Original 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 Original Capital Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING ORIGINAL CAPITAL SECURITIES
VALID TENDER. Except as set forth below, in order for Original 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 a Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth under "--Exchange Agent," and (i) tendered Original Capital Securities
must be received by the Exchange Agent,(ii) such Original 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.
If less than all of the Original Capital Securities are tendered, a
tendering holder should fill in the amount of Original 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 and the untendered
Liquidation Amount must be $100,000 or any integral multiple of $1,000 in excess
thereof. The entire amount of Original Capital Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN-RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Original 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 Original Capital Securities by causing DTC
to transfer such Original Capital Securities into the Exchange Agent's account
at DTC in accordance with DTC's procedures for transfers. However, although
delivery of Original 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 procedure
set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Original Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Original Capital Securities is
registered in a name other than that of the person surrendering the certificate
or
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(ii) such 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 Original 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 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Original Capital
Securities pursuant to the Exchange Offer and the certificates for such Original
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Original 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 a book-entry confirmation) representing all
tendered Original Capital Securities, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), or Agent's Message in lieu thereof, with any required
signature guarantees and any other documents required by the Letter of
Transmittal, are received by the Exchange Agent within three New York Stock
Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Exchange Capital
Securities in exchange for Original 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 Original Capital Securities, or of a
book-entry confirmation with respect to such Original Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), or 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 Exchange Capital Securities might not
be made to all tendering holders at the same time, and will depend upon when
Original Capital Securities, book-entry confirmation with respect to Original
Capital Securities and other required documents are received by the Exchange
Agent.
The Corporation and the Trust's acceptance for exchange of Original Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement between the tendering holder, the Corporation and
the Trust upon the terms and subject to the conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Original Capital Securities will be determined by the Corporation
and the Trust, in their sole discretion, whose determination shall be final and
binding of all parties. The Corporation and the Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of
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<PAGE>
which, or exchange for, may, in the opinion of counsel to the Corporation and
the Trust, be unlawful. The Corporation and the Trust also reserve the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer as set for thereunder "--Conditions to the Exchange Offer" or any
condition or irregularity in any tender of Original 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 Original Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. None of the Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and unless waived by the Corporation and the
Trust, proper evidence satisfactory to the Corporation and the Trust, in their
sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Original 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 EXCHANGE CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Exchange Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Corporation nor the
Trust sought its own interpretive letter and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance of the Commission, and subject to
the two immediately following sentences, the Corporation and the Trust believe
that Exchange Capital Securities issued pursuant to this Exchange Offer in
exchange for Original Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. However, any holder of
Original Capital Securities who is an Affiliate of the Corporation or the Trust
or who intends to participate in the Exchange Offer for the purpose of
distributing Exchange Capital Securities, or any broker-dealer who purchased
Original Capital Securities from the Trust to resell pursuant to Rule 144A or
any other available exemption under the Securities Act (i) will not be able to
rely on the interpretations of the staff of the Division of Corporation Finance
of the Commission set forth in the above-mentioned interpretive letters, (ii)
will not be permitted or entitled to tender such Original 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 Original Capital Securities, unless such sale is made pursuant
to an exemption from such requirements. In addition, as described below,
Participating Broker-Dealers must deliver a prospectus meeting the requirements
of the Securities Act in connection with any resales of Exchange Capital
Securities.
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Each holder of Original Capital Securities who wishes to exchange Original
Capital Securities for Exchange 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 Exchange Capital Securities to be received by it are being
acquired in the ordinary course of business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such Exchange 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 Capital Securities to be exchange in the Exchange Offer. Each
Participating Broker-Dealer will be deemed to have acknowledged by execution of
the Letter of Transmittal or delivery of an Agent's Message that it acquired the
Original Capital Securities for its own account as the result of market-making
activities or their 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 Exchange Capital Securities. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, the Corporation and the Trust believe that Participating
Broker-Dealers who acquired Original Capital Securities for their own accounts
as a result of market-making activities or other trading activities may fulfill
their prospectus delivery requirements with respect to the Exchange Capital
Securities received upon exchange of such Original Capital Securities (other
than Original Capital Securities which represent an unsold allotment from the
original sale of the Original 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 Exchange Capital Securities. Accordingly,
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer during the period referred to below in
connection with resales of Exchange Capital Securities received in exchange for
Original Capital Securities where such Original Capital Securities were acquired
by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such Exchange Capital Securities for a period ending 90-days after the
Expiration Date (subject to extension under certain limited circumstances
described below) or, if earlier, when all such Exchange Capital Securities have
been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of Exchange Capital Securities received
in exchange for Original Capital Securities pursuant to the Exchange Offer must
notify the Corporation or the Trust, or cause the Corporation or the Trust to be
so notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "--Exchange Agent." Any person, including
any Participating Broker-Dealer, who is an Affiliate of the Corporation or the
Trust may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Original
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 discovery of any fact which makes any
statement contained or incorporated
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<PAGE>
by reference in this Prospectus untrue in any material respect or which causes
this Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of Exchange Capital Securities
(or the Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) pursuant to this Prospectus or until the Corporation or the Trust
has amended or supplemented this Prospectus to correct such misstatement or
omission and has furnished copies of the amended or supplemented Prospectus to
such Participating Broker-Dealer or the Corporation or the Trust has given
notice that the sale of the Exchange Capital Securities (or the Exchange
Guarantee or the Exchange Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be. If the Corporation or the Trust gives such notice
to suspend the sale of the Exchange Capital Securities (or the Exchange
Guarantee or the Exchange Junior Subordinated Debentures, as applicable), it
shall extend the 90-day period referred to above during which Participating
Broker-Dealers are entitled to use this Prospectus in connection with the resale
of Exchange Capital Securities by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the Exchange Capital
Securities or to and including the date on which the Corporation or the Trust
has given notice that the sale of Exchange Capital Securities (or the Exchange
Guarantee or the Exchange Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Original Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth under "-- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Original Capital Securities to be withdrawn,
the aggregate principal amount of Original Capital Securities to be withdrawn,
and (if certificates for such Original Capital Securities have been tendered)
the name of the registered holder of the Original Capital Securities as set
forth on the Original Capital Securities, if different from that of the person
who tendered such Original Capital Securities. If Original Capital Securities
have been delivered or otherwise identified to the Exchange Agent, then prior to
the physical release of such Original Capital Securities, the tendering holder
must submit the certificate numbers shown on the particular Original 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 Original Capital
Securities tendered for the account of an Eligible Institution. If Original
Capital Securities have been tendered pursuant to the procedures for book-entry
transfer set forth in "-- Procedures for Tendering Original Capital Securities,"
the notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of Original Capital Securities, in which case
a notice of withdrawal will be effective if delivered to the Exchange Agent by
written or facsimile transmission. Withdrawals of tenders of Original Capital
Securities may not be rescinded. Original 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 Original 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. None of the Corporation, the Trust, any affiliates or
assigns of the Corporation or the Trust, the Exchange Agent or any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
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notification. Any Original Capital Securities which have been tendered but which
are withdrawn will be returned to the holder thereof promptly after withdrawal.
DISTRIBUTIONS ON EXCHANGE CAPITAL SECURITIES
Holders of the Exchange Capital Securities as of the applicable record date
will be entitled to receive Distributions payable semi-annually in arrears on
May 1 and November 1 of each year, commencing May 1, 1999. Such Distributions
will accumulate from the later of the most recent Distribution payment date to
which Distributions have been duly paid or duly provided for with respect to the
Exchange Capital Securities or the Original Capital Securities which were
exchanged for such Exchange Capital Securities, or from April 28, 1998, the date
of the original issuance of the Original Capital Securities.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Corporation and the Trust will not be required to
accept for exchange, or to exchange, any Original Capital Securities for any
Exchange Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Original Capital Securities have theretofore been
accepted for exchange) or may waive any conditions to or amend the Exchange
Offer, if any of the following conditions have occurred or exists or have not
been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Capital Securities issued
pursuant to the Exchange Offer in exchange for Original Capital Securities
to be offered for resale, resold and otherwise transferred by holders
thereof (other than broker-dealers and any such holder which is an Affiliate
of the Corporation or the Trust) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such
Exchange Capital Securities are acquired in the ordinary course of such
holders' business and such holders have no arrangement or understanding with
any person to participate in the distribution of such Exchange Capital
Securities; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Corporation or the Trust, would
reasonably be expected to impair its ability to proceed with the Exchange
Offer;
(c) any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect to
the Exchange Offer, which in the Corporation's and the Trust's judgment,
would reasonably be expected to impair its ability to proceed with the
Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Maryland or New York state authorities which, in the
Corporation's and the Trust's judgment, would reasonably be expected to
impair the ability of the Trust or the Corporation to proceed with the
Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Corporation's
and the Trust's judgment, would reasonably be expected to impair the ability
of the Corporation or the Trust to proceed with the Exchange Offer; or
(f) 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 any
governmental approval which either the Corporation or the Trust shall, in
its sole discretion, deem necessary for the consummation of the Exchange
Offer as contemplated hereby has not been obtained.
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If the Corporation and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Corporation and the Trust may, subject to
applicable law, terminate the Exchange Offer (whether or not any Original
Capital Securities have theretofore been accepted for exchange) or may waive any
such condition or otherwise amend the terms of the Exchange Offer in any
respect. If such waiver or amendment constitutes a material change to the
Exchange Offer, the Corporation and the Trust will promptly disclose such waiver
or amendment by means of a Prospectus supplement that will be distributed to the
registered holders of the Original Capital Securities and will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letter 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:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street--7E 101 Barclay Street--21 West
New York, New York 10286 Corporate Trust Services Window
Attention: Noriko Miyazaki, Ground Level
Reorganization Section New York, New York 10286
Attention: Noriko Miyazaki,
Reorganization Section
</TABLE>
Confirm by Telephone
or for Information call:
(212) 815-6333
Facsimile Transmission:
(Eligible Institutions Only)
(212) 815-6339
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Original Capital Securities,
and in handling or tendering for their customers.
Holders who tender their Original Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however,
Exchange 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 Original Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF EXCHANGE SECURITIES; COMPARISON TO ORIGINAL SECURITIES
The terms of the Exchange Securities are identical in all material respects
to the Original Securities, except that (i) the Original Securities have not
been registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the applicable Registration
Rights Agreement (which rights will terminate upon consummation of the Exchange
Offer, except under limited circumstances); (ii) the Exchange Capital Securities
will not contain certain restrictions on transfer applicable to Original Capital
Securities; (iii) the Exchange Capital Securities will not provide for any
increase in the Distribution rate thereon; and (iv) the Exchange Junior
Subordinated Debentures will not provide for any increase in the interest rate
thereon. The Original Securities provide that, in the event that a registration
statement relating to the Exchange Offer has not been filed by September 25,
1998 and been declared effective by October 23, 1998, or, in certain limited
circumstances, in the event a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Original Capital
Securities is not declared effective by the time required by the Registration
Rights Agreement, then liquidated damages will accrue at the rate of 0.25% per
annum on the principal amount of the Original Junior Subordinated Debentures and
Distributions will accrue at the rate of 0.25% per annum on the Liquidation
Amount of the Original Capital Securities, for the period from the occurrence of
such event until such time as such registration statement has been filed or
declared effective, as the case may be. The Exchange Securities are not, and
upon consummation of the Exchange Offer the Original Securities will not be,
entitled to any such additional interest or Distributions. Accordingly, holders
of Original Capital Securities should review the information set forth under
"Risk Factors--Consequences of a Failure to Exchange Original Capital
Securities."
DESCRIPTION OF CAPITAL SECURITIES
The Original Capital Securities represent and the Exchange Capital
Securities will represent beneficial interests in the Trust, and the holders
thereof will be entitled to a preference over the Common Securities in certain
circumstances with respect to Distributions and amounts payable on redemption of
the Trust Securities or liquidation of the Trust. See "--Subordination of Common
Securities." The Trust Agreement will not be qualified under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), except upon effectiveness
of the Exchange Offer Registration Statement or the Shelf Registration
Statement. See "Exchange Offer; Registration Rights." By its terms, however, the
Trust Agreement will incorporate certain provisions of the Trust Indenture Act,
and, upon consummation of the Exchange Offer or effectiveness of the Shelf
Registration Statement, the Trust Agreement will be subject to and governed by
the Trust Indenture Act. 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 the provisions of the Trust Agreement, including the definitions therein of
certain terms.
GENERAL
The Capital Securities (including the Original Capital Securities and the
Exchange Capital Securities) are limited to $50,000,000 aggregate Liquidation
Amount at any one time outstanding. The Capital Securities rank PARI PASSU, and
payments will be made thereon pro rata, with 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."
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DISTRIBUTIONS
Distributions on the Capital Securities are cumulative, accumulate from
April 28, 1998 and are payable semi-annually in arrears on May 1 and November 1
of each year, commencing November 1, 1998, at the annual rate of 8.17% of the
Liquidation Amount to the holders of the Capital Securities on the relevant
record dates. The record dates will be the 15th day of the month immediately
preceding the month in which the relevant payment occurs. Holders of the
Exchange Capital Securities as of the applicable record date will be entitled to
receive Distributions payable semi-annually in arrears on May 1 and November 1
of each year, commencing May 1, 1999. Such distributions will accumulate from
the later of the most recent Distribution payment date to which Distributions
have been duly paid or duly provided for with respect to the Exchange Capital
Securities or the Original Capital Securities which were exchanged for such
Exchange Capital Securities, or April 28, 1998, the date of issuance of the
Original Capital Securities. 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
Capital Securities is not a Business Day (as defined below), payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect to any
such delay), except that if such next succeeding Business Day falls in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date (each date on which Distributions are payable in accordance with
the foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than a Saturday or a Sunday or a day on which banking institutions in the City
of New York are authorized or required by law or executive order to remain
closed.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to elect to
defer the payment 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
shall end on a date other than an Interest Payment Date, or extend beyond the
Stated Maturity Date. Upon any such election, semi-annual Distributions on the
Capital Securities will be deferred by the Trust during such Extension Period.
Distributions to which holders of the Capital Securities are entitled during any
such Extension Period will accumulate additional Distributions thereon at the
rate per annum of 8.17% 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.
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, to end
on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date, the Corporation may elect
to begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Corporation must give the Property Trustee, the Administrative Trustees and
the Debenture Trustee notice of its election of any such Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of: (i) the
date the Distributions on the Capital Securities would have been payable except
for the election to begin such Extension Period; and (ii) the date the
Administrative Trustees are required to give notice to any securities exchange
or automated quotation system or to holders of such Capital Securities of the
record date or the date such Distributions are payable, but in any event not
less than five Business Days prior to such record date. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period. See "Description of Junior Subordinated Debentures--Option to Extend
Interest Payment Date" and "Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount."
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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;
(ii) make any payment of principal of 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 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 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). 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
Capital Securities is limited to payments under the Junior Subordinated
Debentures in which the Trust has invested the proceeds from the issuance and
sale of the Trust Securities. 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 Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) will be guaranteed by the
Corporation on a limited basis as set forth herein under "Description of
Guarantee."
REDEMPTION
Upon the repayment on the Stated Maturity Date or prepayment, in whole or in
part, prior to the Stated Maturity Date of the Junior Subordinated Debentures
(other than following the distribution of the Junior Subordinated Debentures to
the holders of the Trust Securities), the proceeds from such repayment or
prepayment shall be applied by the Property Trustee (subject to the Property
Trustee having received written notice no later than 45 days prior to such
repayment) 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 (equal to the principal of,
and accrued and unpaid interest on, the Junior Subordinated Debentures); (ii) in
the case of the optional prepayment of the Junior Subordinated Debentures before
the Initial Optional Redemption Date 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 the
Initial Optional Redemption Date, the Optional Redemption Price. See
"Description of Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment." If less than all of the Junior Subordinated
Debentures are to be prepaid on a Redemption Date, then the proceeds of such
prepayment shall be allocated pro rata to the Trust Securities.
"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
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Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.
The Corporation will have the option to prepay the Junior Subordinated
Debentures: (i) in whole or in part, on or after the Initial Optional Redemption
Date, at the applicable Optional Prepayment Price; and (ii) in whole but not in
part, at any time prior to the Initial Optional Redemption Date, upon the
occurrence of a Special Event, at the Special Event Prepayment Price, in each
case subject to the receipt of any required regulatory approval. See
"Description of Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment."
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
The Corporation will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. 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 required regulatory approval.
The Trust shall automatically dissolve 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)
above, 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 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 such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets on hand legally available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Securities shall be paid on a pro rata basis,
except that if a Debenture Event of Default has occurred and is continuing, the
Capital Securities shall have a priority over the Common Securities. See
"--Subordination of Common Securities."
If the Corporation elects not to prepay the Junior Subordinated Debentures
prior to maturity in accordance with their terms and either elects not to or is
unable to liquidate the Trust and distribute the Junior Subordinated Debentures
to holders of the Trust Securities, the Trust Securities will remain outstanding
until the repayment of the Junior Subordinated Debentures on the Stated Maturity
Date.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities: (i) the Trust
Securities will no longer be deemed to be outstanding; (ii) DTC or its nominee
will receive, in respect of each registered global certificate, if any,
representing Trust Securities and held by it, a registered global certificate or
certificates representing the Junior Subordinated Debentures to be delivered
upon such distribution; and (iii) any certificates representing Trust Securities
not held by DTC or its nominee will be deemed to represent Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of such
Trust Securities, and bearing accrued and unpaid interest in an amount equal to
the accumulated and unpaid Distributions on such Trust Securities until such
certificates are presented to the Administrative Trustees or their agent for
cancellation, whereupon the
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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 that an investor may purchase, or the
Junior Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Capital Securities offered hereby.
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 Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are legally available, with respect to the Capital Securities
held by DTC or its nominees, the Property Trustee will deposit or cause the
Paying Agent (as defined herein) to deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price. See "--Form, Denomination,
Book-Entry Procedures and Transfer." With respect to the Capital Securities held
in certificated form, the Property Trustee, to the extent funds are legally
available, will irrevocably deposit with the paying agent for the Capital
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the applicable
Redemption Price to the holders thereof upon surrender of their certificates
evidencing the Capital Securities. See "--Payment and Paying Agency."
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of such Capital Securities on
the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of the Capital Securities called
for redemption will cease, except the right of the holders of such Capital
Securities to receive the applicable Redemption Price, but without interest on
such Redemption Price, and such Capital Securities will cease to be outstanding.
In the event that any Redemption Date of Capital Securities is not a Business
Day, then the applicable Redemption Price payable on such date will be paid on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such next
succeeding Business Day falls in the next calendar year, such payment shall be
made on the immediately preceding Business Day. In the event that 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 Capital 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.
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
Redemption Price, 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.
Subject to applicable law (including, without limitation, United States
federal securities laws), 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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SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Trust
Securities, as applicable, shall be made PRO RATA based on the Liquidation
Amount of the Trust Securities; 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 constitutes an "Event of
Default" under the Trust Agreement. See "Description of Junior Subordinated
Debentures--Debenture Events of Default."
Within 10 Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Sponsor, unless such Event of
Default shall have been cured or waived. The Corporation, as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the 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
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person
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resulting from any merger, conversion or consolidation to which such Issuer
Trustee shall be a party, or any Person 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 Person shall be
otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate or be replaced
by, or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise described under "--Liquidation of the Trust and
Distribution of Junior Subordinated Debentures." The Trust may, at the request
of the Corporation, as Sponsor, with the consent of the Administrative Trustees
but without the consent of the holders of the Capital Securities, merge 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 Trust Securities are then
listed or quoted, if any; (iv) if the Capital Securities (including any
Successor Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) or, if the Junior
Subordinated Debentures are so rated, the Junior Subordinated Debentures, to be
downgraded by any such nationally recognized statistical rating organization;
(v) 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; (vi) such successor entity has a purpose 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 any dilution of such holders' interests in the new
entity), and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"); and
(viii) the Corporation or any permitted successor or assignee owns all of the
common securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee and the Common 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 with
or into, or be replaced by or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease would cause the Trust or the successor entity not to be
classified as a grantor trust for United States federal income tax purposes. In
addition, the Property Trustee will be required pursuant to the Indenture to
exchange, as part of the Exchange Offer, the Junior Subordinated Debentures for
the Exchange Debentures, which will have terms substantially identical to the
Junior Subordinated Debentures. See "Exchange Offer; Registration Rights."
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VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "--Mergers, Consolidations, Amalgamations
or Replacements of the Trust" and "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the Corporation, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities: (i) to cure any ambiguity, correct or
supplement any provisions in the 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; (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; or (iii) to modify,
eliminate or add any provisions of the Trust Agreement to such extent as shall
be necessary to enable the Trust or the Corporation to conduct an Exchange Offer
in the manner contemplated by the Registration Rights Agreement; PROVIDED,
HOWEVER, that in the case of clauses (i) and (iii) such action shall not
adversely affect in any material respect the interests of the holders of the
Trust Securities. Any amendments of the Trust Agreement pursuant to the
foregoing 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 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 Issuer Trustees shall not: (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Debenture Trustee with respect to
the Junior Subordinated Debentures; (ii) waive certain past defaults under the
Indenture; (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures; or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Capital Securities;
PROVIDED, HOWEVER, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior approval
of each holder of the Capital Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of default
with respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of 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
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meeting at which holders of Capital Securities are entitled to vote 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 Trustee, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
Exchange Capital Securities may be represented by one or more Capital
Securities in registered, global form (collectively, the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance with
the Property Trustee as custodian for DTC, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
In the event that Exchange Capital Securities are issued in certificated
form, the Exchange Capital Securities will be in blocks having a Liquidation
Amount of not less than $100,000 (100 Capital Securities), or any integral
multiple of $1,000 Liquidation Amount (one Capital Security) in excess thereof,
and may be transferred or exchanged in such blocks in the manner described
herein.
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 Certified Capital Securities."
DEPOSITARY PROCEDURES
DTC has advised the Trust and the Corporation that DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was 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, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers
(including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Indirect 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 designated by the Initial
Purchasers 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
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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
will 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 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 the Global Capital Security registered in the name of
DTC, or its nominee, will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the 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. None of the Trust, the Corporation or the Property
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the 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 settle 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 (including, without
limitation, the presentation of Capital Securities for exchange as described
below) only at the direction of one or more Participants to whose account with
DTC
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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. None of the Trust, the
Corporation or 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.
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 (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90 days
or (y) has ceased to be a clearing agency registered under the Exchange Act and
the Trust 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 by
or on behalf of DTC for certificated Capital Securities upon request by DTC, but
only upon at least 20 days prior written notice given to the Property Trustee in
accordance with DTC's 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) and will bear the restrictive legend referred to in
"Notice to Investors," unless the Property Trustee determines otherwise in
compliance with applicable law.
EXCHANGE OF CERTIFICATED CAPITAL SECURITIES FOR BOOK-ENTRY CAPITAL SECURITIES
Certificated Capital Securities, which will be 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 Other Capital
Securities and the transferor first delivers to the Property Trustee a written
certificate (in the form provided in the Trust Agreement) to the effect that
such transfer will comply with the appropriate transfer restrictions applicable
to such 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 Administrative Trustees and the Corporation. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days notice to the Property
Trustee, the Administrative Trustees and the Corporation. In the event that the
Property Trustee shall no longer be the
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Paying Agent, the Administrative Trustees shall appoint a successor (which shall
be a bank or trust company acceptable to the Administrative Trustees and the
Corporation) to act as Paying Agent.
RESTRICTIONS ON TRANSFER
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) and multiples of $1,000 in excess thereof. Any attempted sale,
transfer or other disposition of Capital Securities in a block having a
Liquidation Amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such purported transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such purported
transferee shall be deemed to have no interest whatsoever in such Capital
Securities.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
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 will not be required to register or cause to be registered
the transfer of the Capital Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, will undertake to perform only such duties as are specifically
set forth in the Trust Agreement and, during the existence of an Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of Trust
Securities, unless it is offered reasonable indemnity 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 Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that: (i) the Trust will not
be deemed to be an "investment company" required to be registered under the
Investment Company Act; (ii) the Trust will be classified as a grantor trust for
United States federal income tax purposes; and (iii) the Junior Subordinated
Debentures will be treated as indebtedness of the Corporation for United States
federal income tax purposes. The Corporation and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that the Corporation
and the Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust Securities.
The Trust Agreement provides that (i) holders of the Trust Securities have
no preemptive or similar rights to subscribe for any additional Trust Securities
and (ii) the issuance of Trust Securities is not subject to preemptive rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Original Junior Subordinated Debentures were issued and the Exchange
Junior Subordinated Debentures are to be issued under an Indenture, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the Corporation and The Bank of New York, as trustee (the "Debenture Trustee").
The Indenture will be qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Indenture will incorporate certain
provisions of the Trust Indenture Act, and will be 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 Original Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in Original Junior Subordinated
Debentures issued by the Corporation. Pursuant to the Exchange Offer, the
Corporation will exchange the Exchange Junior Subordinated Debentures in an
amount corresponding to the Original Junior Subordinated debentures accepted for
exchange, for a like amount of Original Junior Subordinated Debentures as soon
as practicable after the date hereof. Holders of Exchange Junior Subordinated
Degentures as of the appliable record date will be entitled to receive
Distributions payable semi-annually in arrears on May 1 and November 1 of each
year, commencing May 1, 1999. Such Distributions will accumulate from the later
of the most recent Distribution payment date to which Distributions have been
duly paid or duly provided for with respect to the Exchange Junior Subordinated
Debentures or the Original Junior Subordinated Debentures which were exchanged
for such Exchange Junior Subordinated Debentures, or from April, 1998, the date
of original issuance of the Original Junior Subordinated Debentures. The record
dates will be the 15th day of the month immediately preceding the month in which
the relevant payment occurs. It is anticipated that, until the liquidation, if
any, of the Trust, the Junior Subordinated Debentures 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 a full calendar month, the number of days elapsed 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), except that if such
next succeeding Business Day falls in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date. 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 8.17% 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 Junior Subordinated Debentures will be issued in denominations of
$100,000 and multiples of $1,000 in excess thereof. The Junior Subordinated
Debentures will mature on May 1, 2028 (the "Stated Maturity Date").
The Exchange Junior Subordinated Debentures will rank PARI PASSU with the
Original Junior Subordinated Debentures and all Other Debentures, 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."
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<PAGE>
The Corporation is a savings and loan holding company regulated by the OTS
and almost all of the operating assets of the Corporation are owned by the
Corporation's subsidiaries. The Corporation is a legal entity separate and
distinct from its subsidiaries. Holders of Junior Subordinated Debentures should
look only to the Corporation for payments on the Junior Subordinated Debentures.
The principal sources of the Corporation's income are dividends, interest and
fees from its subsidiaries. The Corporation relies primarily on dividends from
the Bank to meet its obligations for payment of principal and interest on its
outstanding debt obligations and corporate expenses. There are regulatory
limitations, discussed in more detail below, on the payment of dividends
directly or indirectly to the Corporation from the Bank. In addition to
restrictions on the payment of dividends, the Bank is subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the Bank unless the
loans are secured by various types of collateral. Furthermore, such secured
loans, other transactions and investments 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.
OTS regulations impose limitations upon all capital distributions by a
savings institution, such as cash dividends. Such regulations establish three
tiers of institutions, which are based primarily on an institution's capital
level. An institution that exceeds all fully phased-in regulatory capital
requirements before and after a proposed capital distribution ("Tier 1
Institution") and has not been advised by the OTS that it is in need of more
than normal supervision, could, after prior notice to, but without the approval
of the OTS, make capital distributions during a calendar year equal to the
greater of: (i) 100% of its net earnings to date during the calendar year plus
the amount that would reduce by one-half its "surplus capital ratio" (the excess
capital over its fully phased-in capital requirements) at the beginning of the
calendar year; or (ii) 75% of its net earnings for the previous four quarters.
Any additional capital distributions would require prior OTS approval. In the
event the Bank's capital fell below its capital requirements or the OTS notified
it that it was in need of more than normal supervision, the Bank's ability to
make capital distributions could be restricted. In addition, the OTS could
prohibit a proposed capital distribution by any institution, which would
otherwise be permitted by the regulation, if the OTS determines that such
distribution would constitute an unsafe or unsound practice. During the fiscal
year ended June 30, 1998, the Bank paid $ million in dividends to the
Corporation, which reflected the total amount of dividends the Bank was
permitted to pay as of June 30, 1998 under existing supervisory practices. The
OTS has proposed amendment to its capital distribution regulations. If adopted
as proposed, a savings association subsidiary of a savings and loan holding
company, such as the Bank, will continue to have to file a notice with the OTS
with respect to each capital distribution that it proposes to make, unless the
specific capital distribution requires an application. Under the proposed
amendments, an application would be required if the total amount of all capital
distributions (including the proposed capital distribution) for the applicable
calendar year exceeds net income for that year to date plus the retained net
income for the preceding two years. If this proposed rule had been in effect at
June 30, 1998 , the Bank could have paid dividends of $ million without
obtaining prior regulatory approval. Bank regulatory agencies have authority to
prohibit the Bank or the Corporation from engaging in an unsafe or unsound
practice in conducting their business. The payment of dividends, depending upon
the financial condition of the Bank or the Corporation, could be deemed to
constitute such an unsafe or unsound practice.
Under the FDIA, insured depository institutions such as the Bank are
prohibited from making capital distributions, including the payment of
dividends, if, after making such distribution, the institution would become
"undercapitalized" (as such term is used in the statute). Based on the Bank's
current financial condition, the Corporation does not expect that this provision
will have any impact on its ability to obtain dividends from the Bank.
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<PAGE>
In addition to limitations on dividends, the Bank is limited in the amount
of loans and other extensions of credit that may be extended to the Corporation,
and any such loans or extensions of credit are subject to collateral security
requirements. Generally, up to 10% of the Bank's regulatory capital, surplus,
undivided profits, allowance for loan losses and contingency reserves may be
loaned to the Corporation. There are other restrictions applicable to the
transactions between the Bank and the Corporation. As of June 30, 1998, this
limitation was approximately $ .
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 (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary (including
depositors, in the case of the Bank), except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries At June 30, 1998 the
subsidiaries of the Corporation had total liabilities, excluding liabilities
owed to the Corporation, of $ , including the subsidiaries' deposit
liabilities, and all liabilities of any future subsidiaries of the Corporation.
The Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of the Corporation or any subsidiary, including Senior
Indebtedness. See "--Subordination."
FORM, REGISTRATION AND TRANSFER
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 & Corporation., 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 interest on the 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.
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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 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 shall end on a date
other than an Interest Payment Date or extend beyond the Stated Maturity Date.
At the end of such Extension Period, the Corporation must pay all interest then
accrued and unpaid (together with interest thereon at the annual rate of 8.17%,
compounded semi-annually, to the extent permitted by applicable law). During an
Extension Period, interest will continue to accrue and, if the Junior
Subordinated Debentures have been distributed to holders of the Trust
Securities, holders of Junior Subordinated Debentures (or 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;
(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 common stock of the
Corporation 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). The Corporation has no current
intention to exercise its option to defer payments of interest on the Junior
Subordinated Debentures.
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. Upon the termination of any such Extension Period and the payment of all
amounts then due, the Corporation may elect to begin a new Extension Period,
subject to the requirements set forth herein. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Corporation
must give the Property Trustee, the Administrative Trustees and the Debenture
Trustee notice of its election of any Extension Period (or an extension thereof)
at least five Business Days prior to the earlier of: (i) the date the
Distributions on the Trust Securities would have been payable except for the
election to begin or extend such Extension Period; or (ii) the date the
Administrative Trustees are required to give notice to any securities exchange
or to holders of Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than five Business Days
prior to such record date. The Debenture Trustee shall give notice of the
Corporation's election to begin or extend a new Extension Period to the holders
of the Capital Securities. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period.
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OPTIONAL PREPAYMENT
The Junior Subordinated Debentures will be prepayable, in whole or in part,
at the option of the Corporation on or after the Initial Optional Redemption
Date, subject to the Corporation having received any required regulatory
approval, at a 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 and unpaid interest thereon to the
date of prepayment if prepaid during the 12-month period beginning May 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2008.............................................................................. 104.085%
2009.............................................................................. 103.677%
2010.............................................................................. 103.268%
2011.............................................................................. 102.860%
2012.............................................................................. 102.451%
2013.............................................................................. 102.043%
2014.............................................................................. 101.634%
2015.............................................................................. 101.226%
2016.............................................................................. 100.817%
2017.............................................................................. 100.409%
2018 and thereafter............................................................... 100.000%
</TABLE>
SPECIAL EVENT PREPAYMENT
Prior to the Initial Optional Redemption Date, if a Special Event has
occurred 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 within 60 days of the
occurrence of such Special Event, at a prepayment price (the "Special Event
Prepayment Price") equal to the Make-Whole Amount. The "Make-Whole Amount" shall
be an amount equal to the greater of (x) 100% of the principal amount of the
Junior Subordinated Debentures or (y) the sum, as determined by a Quotation
Agent, of the present values of the remaining scheduled payments of principal
and interest on the Junior Subordinated Debentures from the prepayment date to
the Stated Maturity Date, discounted to the prepayment date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate, plus, in the case of each of clauses (x) and (y),
accrued and unpaid interest thereon, to the date of prepayment. If, following
the occurrence of a Special Event, the Corporation exercises its option to
prepay the Junior Subordinated Debentures, then the proceeds of that prepayment
must be applied to redeem a Like Amount of Trust Securities at the Special Event
Redemption Price. See "Description of Capital Securities--Redemption."
A "Special Event" means a Tax Event or a Regulatory Capital Event, as the
case may be.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Trust Securities, there is more than an insubstantial risk that:
(i) the Trust is, or will be within 90 days of the date of such opinion, subject
to United States federal income tax with respect to income received or accrued
on the Junior Subordinated Debentures; (ii) interest payable by the Corporation
on the Junior Subordinated Debentures is not, or within 90 days of the date of
such opinion will not be, deductible by the Corporation, in whole or in part,
for United States federal income tax purposes; or
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(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a DE MINIMIS amount of other taxes, duties or other
governmental charges.
A "Regulatory Capital Event" means the receipt by the Corporation of an
opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (i) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any rules, guidelines or policies of an applicable
regulatory agency or (ii) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or which pronouncement or decision is announced on or after
the date of original issuance of the Trust Securities, the Capital Securities do
not constitute, or within 90 days of such opinion will not constitute, Tier 1
Capital (or its then equivalent if the Corporation were subject to such capital
requirement), applied as if the Corporation (or its successors) were a bank
holding company for purposes of the capital adequacy guidelines of the Federal
Reserve Board (or any successor regulatory authority with jurisdiction over bank
holding companies), or any capital adequacy guidelines as then in effect and
applicable to the Corporation; PROVIDED, HOWEVER, that the distribution of the
Junior Subordinated Debentures in connection with the liquidation of the Trust
by the Corporation shall not in and of itself constitute a Regulatory Capital
Event, unless such liquidation shall have occurred in connection with a Tax
Event.
"Adjusted Treasury Rate" means, with respect to a 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 Board of Governors of the Federal Reserve System 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, as defined below (if no
maturity is within three months before or three months after the maturity
corresponding to the Remaining Life, yields for the two published maturities
most closely corresponding to the Remaining Life shall be determined, and the
Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month), or (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 to the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such prepayment date, in each case calculated on the third Business Day
preceding the prepayment date, plus in each case (a) 2.15% if such prepayment
occurs on or prior to April 28, 1999 and (b) 1.60% 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. If no United States Treasury security has a maturity which is within a
period from three months before to three months after the Remaining Life, the
two most closely corresponding United States Treasury securities, as selected by
the Quotation Agent, shall be used as the Comparable Treasury Issue, and the
Treasury Rate shall be interpolated or extrapolated on a straight-line basis,
rounding to the nearest month, using such securities.
"Comparable Treasury Price" means, with respect to a prepayment date: (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities"; or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such prepayment date,
after excluding the highest and lowest
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such Reference Treasury Dealer Quotations, or (B) if the Debenture Trustee
obtains fewer than three such Reference Treasury Dealer Quotations, the average
of all such Quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation. "Reference Treasury Dealer" means a nationally recognized U.S.
Government securities dealer in New York City selected by the Corporation.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and the prepayment date, the average, as determined by the
Debenture Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
"Remaining Life" means the term of the Junior Subordinated Debentures from
the prepayment date to the stated Maturity Date.
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the prepayment 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 the prepayment date interest
shall cease 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 such 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 ("Additional Sums").
CERTAIN COVENANTS OF THE CORPORATION
The Corporation will also covenant that it will not: (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock;
(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 common stock of the
Corporation 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: (A) there shall
have occurred any event of which the Corporation has actual knowledge that (1)
is, or with the giving of notice or the lapse of time, or both, would be, a
Debenture Event of Default and (2) in respect of which the Corporation shall not
have taken reasonable steps to cure; (B) the Corporation shall be in default
with respect to its payment of any obligations under the Guarantee; or (C) the
Corporation shall have given notice of its election to exercise its right to
commence an Extension Period as provided in
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the Indenture and such Extension Period, or any extension thereof, shall have
commenced and be continuing.
So long as the Trust Securities remain outstanding, the Corporation also
will covenant: (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities, PROVIDED, HOWEVER, that any permitted
successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of such Common Securities; (ii) to use commercially
reasonable efforts to cause the Trust (a) to remain a business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities, or certain mergers, consolidations or amalgamations,
each as permitted by the Trust Agreement, and (b) to otherwise continue to be
classified as a grantor trust and not an association taxable as a corporation
for United States federal income tax purposes; (iii) to use commercially
reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Junior Subordinated Debentures;
and (iv) to not cause, as sponsor of the Trust, or permit, as holder of the
Common Securities, the dissolution, winding up or termination of the Trust,
except as provided in the Trust Agreement.
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 the Indenture
for specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies or enabling the Corporation and the Trust to conduct
an Exchange Offer as contemplated by the Registration Rights Agreement, provided
that any such action does not materially adversely affect the interest of the
holders of Junior Subordinated Debentures, and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Corporation and the Debenture Trustee, with
the consent of the holders of a majority in aggregate principal amount of Junior
Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of Junior Subordinated Debentures; provided that no such
modification may, without the consent of the holders of each outstanding Junior
Subordinated Debenture so affected, (i) change the Stated Maturity Date, or
reduce the principal amount of the Junior Subordinated Debentures or reduce the
amount payable on redemption thereof or reduce the rate or extend the time of
payment of interest thereon except pursuant to the Corporation's right under the
Indenture to defer the payment of interest as provided therein (see "--Option to
Extend Interest Payment Date") 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 (including Compounded
Interest and Additional Sums, if any), on the Junior Subordinated Debentures
or any Other Debentures when due (subject to the deferral of any due date in
the case of an Extension Period with respect to the Junior Subordinated
Debentures or Other Debentures as the case may be); or
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(ii) failure to pay any principal or premium, if any, on the Junior
Subordinated Debentures or any Other Debentures when due whether at
maturity, upon redemption, by declaration of acceleration of maturity or
otherwise; or
(iii) failure to observe or perform any other covenant contained in the
Indenture for 90 days after written notice to the Corporation from the
Debenture Trustee or to the Corporation and the Debenture Trustee from the
holders of at least 25% in aggregate outstanding principal amount of Junior
Subordinated Debentures; or
(iv) certain events related to bankruptcy, insolvency or reorganization
of the Corporation.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have, subject to certain exceptions, the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee. The Debenture Trustee or the holders of not
less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default (other than the
non-payment of the principal of the Junior Subordinated Debentures which has
become due solely by such acceleration) has been cured and a sum sufficient to
pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default, except a default
in the payment of principal (or premium, if any) or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest (and premium, if any) and principal due otherwise than by acceleration
has been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Junior Subordinated
Debenture.
The Indenture requires the annual filing by the Corporation with the
Debenture Trustee of a certificate as to the absence of certain defaults under
the Indenture.
The Indenture provides that the Debenture Trustee may withhold notice of a
Debenture Event of Default from the holders of the Junior Subordinated
Debentures if the Debenture Trustee considers it in the interest of such holders
to do so.
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 the principal of
(or premium, if any), or interest (including Compounded Interest and Additional
Sums, if any), on 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. 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
(including Compounded Interest and Additional Sums, if any), 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."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties as an
entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties as an entirety or substantially as an entirety to the Corporation,
unless: (i) in case the Corporation consolidates with or merges into another
Person or conveys or transfers its properties as an entirety or 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 under the Indenture with
respect to the Junior Subordinated Debentures; (ii) immediately after giving
effect thereto, no Debenture Event of Default, and no event which, after notice
or lapse of time or both, would become a Debenture Event of Default, shall have
occurred and be continuing; and (iii) certain other conditions as prescribed in
the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity or called for redemption within one year, and 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 (including Compounded Interest and Additional Sums, if any), to the
date of the redemption or to the Stated Maturity Date, as the case may be, then
the Indenture will cease to be of further effect (except as to the Corporation's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and discharged the Indenture.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, all Senior Indebtedness must be paid
in full before the holders of Junior Subordinated Debentures will be entitled to
receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
Senior Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
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"Indebtedness" shall mean: (i) every obligation of the Corporation for money
borrowed; (ii) every obligation of the Corporation evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of the Corporation with respect to letters of
credit, banker's acceptances or similar facilities issued for the account of the
Corporation; (iv) every obligation of the Corporation issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business); (v)
every capital lease obligation of the Corporation; (vi) all indebtedness of the
Corporation whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts, options
and swaps and similar arrangements; and (vii) every obligation of the type
referred to in clauses (i) through (vi) of another Person and all dividends of
another Person the payment of which, in either case, the Corporation has
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Indebtedness Ranking on a Parity with the Junior Subordinated Debentures"
shall mean (i) Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, to the extent such
Indebtedness by its terms ranks equally with and not prior to the Junior
Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation
and (ii) all other debt securities, and guarantees in respect of those debt
securities, issued to any trust other than the 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
guaranteed by the Corporation pursuant to an instrument that ranks PARI PASSU
with or junior in right of payment to the Guarantee. The securing of any
Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures, shall not be deemed to prevent such Indebtedness
from constituting Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures" shall
mean any Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, to the extent such
Indebtedness by its terms ranks junior to and not equally with or prior to the
Junior Subordinated Debentures (and any other Indebtedness Ranking on a Parity
with the Junior Subordinated Debentures) in right of payment upon the happening
of the dissolution or winding-up or liquidation or reorganization of the
Corporation. The securing of any Indebtedness, otherwise constituting
Indebtedness Ranking Junior to the Junior Subordinated Debentures, shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding on
the date of execution of the Indenture or thereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated Debentures,
and any deferrals, renewals or extensions of such Senior Indebtedness.
The Corporation is a holding company and almost all of the operating assets
of the Corporation are owned by the Corporation's subsidiaries. The Corporation
relies primarily on dividends from the Bank to meet its obligations for payment
of principal and interest on its outstanding debt obligations and corporate
expenses. The Corporation is a legal entity separate and distinct from its
subsidiaries. Holders of Junior Subordinated Debentures should look only to the
Corporation for payments on the Junior Subordinated Debentures. There are
regulatory limitations on the payment of dividends directly or indirectly to the
Corporation from the Bank. See "--General." In addition, the Bank is subject to
certain restrictions imposed by federal law on any extensions of credit to, and
certain other transactions with, the Corporation and certain other affiliates,
and on investments in stock or other securities thereof. Such restrictions
prevent the Corporation and such other affiliates from borrowing from the Bank
unless the loans are secured by various types of collateral. Further, such
secured loans, other transactions and investments by
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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. Accordingly, the Junior Subordinated Debentures will
be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries.
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 (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary (including
depositors, in the case of the Bank), except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries. At June 30, 1998, the
subsidiaries of the Corporation had total liabilities, excluding liabilities
owed to the Corporation, of $2.2 billion, including the subsidiaries' deposit
liabilities, and all liabilities of any future subsidiaries of the Corporation.
The Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of the Corporation or any subsidiary, including Senior
Indebtedness.
RESTRICTIONS ON TRANSFER
The Original Junior Subordinated Debentures were issued and the Exchange
Junior Subordinated Debentures will be issued and may be transferred only in
blocks having an aggregate principal amount of not less than $100,000 (100
Junior Subordinated Debentures) and multiples of $1,000 in excess thereof. Any
attempted transfer of Junior Subordinated Debentures in a block having an
aggregate principal amount of less than $100,000 shall be deemed to be void and
of no legal effect whatsoever. Any such purported transferee shall be deemed not
to be the holder of such Junior Subordinated Debentures for any purpose,
including but not limited to the receipt of payments on such Junior Subordinated
Debentures, and such purported transferee shall be deemed to have no interest
whatsoever in such Junior Subordinated Debentures.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
Following the Exchange Offer and the qualification of the Indenture under
the Trust Indenture Act, the Debenture Trustee shall have and be subject to all
the duties and responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act. Subject to such provisions, the Debenture Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of 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 under the Indenture.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
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DESCRIPTION OF GUARANTEE
The Original Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Original Capital Securities
for the benefit of the holders from time to time of the Original Capital
Securities. The Exchange Guarantee will be executed and delivered by the
Corporation concurrently with the issuance of the Exchange Capital Securities by
the Trust for the benefit of the holders from time to time of the Exchange
Capital Securities. The terms of the Exchange Guarantee are identical in all
material respects to the Original Guarantee. As soon as practicable after the
date hereof, the Exchange Guarantee will be exchanged by the Corporation for the
Original Guarantee for the benefit of the holders from time to time of the
Exchange Capital Securities. The Bank of New York will act as Guarantee Trustee
under the Guarantee. The Guarantee will be qualified under the Trust Indenture
Act. This summary of certain provisions of the Exchange Guarantee and the
Original 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 will hold the Guarantee for the benefit of
the holders of the Capital Securities.
GENERAL
The Corporation has irrevocably agreed, with respect to the Original
Guarantee, and will irrevocably agree, with respect to the Exchange Guarantee,
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 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 the 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 dissolution, winding-up or liquidation of the
Trust (other than in connection with the distribution of the Junior Subordinated
Debentures to holders of the Capital Securities or the redemption of all Capital
Securities), the lesser of (a) the Liquidation Distribution, to the extent the
Trust has funds legally available therefor at the time, and (b) the amount of
assets of the Trust remaining available for distribution to holders of Capital
Securities after satisfaction of liabilities to creditors of the Trust as
required by applicable law. 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 Original Guarantee is an irrevocable guarantee, with respect to the
Original Capital Securities, and the Exchange Guarantee will be an irrevocable
guarantee, with respect to the Exchange Capital Securities, on a subordinated
basis of the Trust's obligations under the Capital Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments. If
the Corporation does not make interest payments on the Junior Subordinated
Debentures held by the Trust, the Trust will not be able to pay the
Distributions on the Capital Securities and will not have funds legally
available therefor. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee."
The Original Guarantee does and the Exchange Guarantee will rank subordinate
and junior in right of payment to all Senior Indebtedness to the extent provided
therein. See "--Status of the Original Guarantee" and "-- Status of Exchange
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 effectively will
be subordinated to all existing and
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future liabilities of the Corporation's subsidiaries, including the
Corporation's subsidiaries' deposit liabilities, and all liabilities of any
future subsidiaries of the Corporation. Claimants should look only to the assets
of the Corporation for payments under the Guarantee. See "Description of the
Junior Subordinated Debentures--General." The Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Indebtedness, whether under the Indenture, any other indenture
that the Corporation may enter into in the future or otherwise.
The Corporation will, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the Capital
Securities. No single document standing alone, or operating in conjunction with
fewer than all of the other documents, constitutes 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. See "Relationship Among the Capital Securities, the
Junior Subordinated Debentures and the Guarantee."
STATUS OF THE EXCHANGE GUARANTEE
The Exchange Guarantee will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in right of payment to all
Senior Indebtedness in the same manner as the Junior Subordinated Debentures.
See "Description of Junior Subordinated Debentures--Subordination." In addition,
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 such subsidiary (including depositors of the Bank),
except to the extent the Corporation may itself be recognized as a creditor of
such subsidiary. Accordingly, the Corporation's obligations under the Exchange
Guarantee effectively will be subordinated to all existing and future
liabilities of the Corporation's present and future subsidiaries (including the
depositors of the Bank). As a result, claimants should look only to the assets
of the Corporation for payments under the Exchange Guarantee. See "Description
of Junior Subordinated Debentures--General." The Exchange Guarantee will rank
PARI PASSU with all other Guarantees issued by the Corporation with respect to
preferred beneficial interests (if any) issued by Other Trusts.
The Exchange Guarantee does not limit the amount of secured or unsecured
debt, including Senior Indebtedness, that may be incurred by the Corporation or
any of its subsidiaries. The Corporation expects from time to time that it will
incur additional indebtedness and that its subsidiaries will also incur
additional liabilities.
The Exchange Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Corporation to enforce its rights under the Exchange Guarantee
without first instituting a legal proceeding against any other person or
entity). The Exchange Guarantee will be held for the benefit of the holders of
the Exchange Capital Securities. The Exchange 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 Exchange Capital Securities
of the Exchange Junior Subordinated Debentures.
STATUS OF ORIGINAL GUARANTEE
If not all the Exchange Capital Securities are exchanged for Original
Capital Securities in the Exchange Offer, the Original Guarantee will not
terminate, but will continue to guarantee the obligations of the Corporation for
the benefit of the holders of the Original Capital Securities. The Original
Guarantee will terminate upon full payment of the applicable Redemption Price of
the Original Capital Securities, upon full payment of the Liquidation Amount
payable upon liquidation of the Trust or upon distribution of Original Junior
Subordinated Debentures to the holders of the Original Capital Securities. The
Original Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time
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any holder of the Original Capital Securities must restore payment of any sums
paid under the Original Capital Securities or the Original Guarantee.
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,
PROVIDED, HOWEVER, that except with respect to a default in payment of any
Guarantee Payment, the Corporation shall have received notice of default and
shall not have cured such default within 60 days after receipt of such notice.
The holders of not less than 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 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 Rights; Amendment of the Trust
Agreement." All guarantees and agreements contained in the Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Corporation and shall inure to the benefit of the holders of the 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 all outstanding 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, will undertake to
perform only such duties as are specifically set forth in the Guarantee and, in
case a default with respect to the Guarantee has occurred, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee will be under no obligation to exercise any of the powers vested in it
by the Guarantee at the request of any holder of the Capital Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
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GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
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) will be 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 will 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 will be subordinate and
junior in right of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
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 will
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 will provide that the Trust is not authorized to engage in any
activity that is not consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF 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 will 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.
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LIMITED PURPOSE OF THE TRUST
The Capital Securities will represent beneficial interests in the Trust, and
the Trust exists for the sole purpose of issuing and selling the Trust
Securities, using the proceeds from the sale of the Trust Securities to acquire
the Junior Subordinated Debentures and engaging in only those other activities
necessary, advisable or incidental thereto. A principal difference between the
rights of a holder of a Capital Security and a holder of a Junior Subordinated
Debenture is that a holder of a Junior Subordinated Debenture will be entitled
to receive from the Corporation the principal amount of (and premium, if any)
and interest on Junior Subordinated Debentures held, while a holder of Capital
Securities is entitled to receive Distributions from the Trust (or, in certain
circumstances, from the Corporation under the Guarantee) if and to the extent
the Trust has funds on hand legally available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary dissolution, winding-up or
liquidation of the Trust, after satisfaction of the liabilities of creditors of
the Trust as required by applicable law, the holders of the Trust 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 principal (and premium, if any) and interest, before any stockholders of
the Corporation receive payments or distributions. Since the Corporation will be
the guarantor under the Guarantee and will agree to pay for all costs, expenses
and liabilities of the Trust (other than the Trust's obligations to the holders
of its Trust Securities), the positions of a holder of Capital Securities and a
holder of Junior Subordinated Debentures relative to other creditors and 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
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of Capital
Securities held as capital assets by a holder who purchases such Capital
Securities upon initial issuance. The statements of law and legal conclusions
set forth in the summary regarding the tax consequences to the beneficial owners
of Capital Securities represent the opinion of Muldoon, Murphy & Faucette,
special federal income tax counsel to the Corporation and this Trust ("Special
Tax Counsel"). This summary and the tax opinion of Special Tax Counsel only
address the tax consequences to a person that acquires Capital Securities on
their original issue at their original offering price. The summary does not
address all tax consequences that may be applicable to beneficial owners of the
Capital Securities, nor does it address the tax consequences to special classes
of holders such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, United States Alien Holders (as defined below) engaged in
a U.S. trade or business or persons that will hold the 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 Code, Treasury regulations thereunder and the
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a
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retroactive basis. An opinion of Special Tax Counsel is not binding on the
Internal Revenue Service ("IRS") or the courts. No rulings have been or are
expected to be sought from the IRS with respect to any of the transactions
described herein and no assurance can be given that the IRS will not take
contrary positions. Moreover, no assurance can be given that the opinions
expressed herein will not be challenged by the IRS or, if challenged, that such
a challenge would not be successful.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Exchange Capital Securities for Original Capital Securities
should not be a taxable event to holders for United States federal income tax
purposes. The exchange of Exchange Capital Securities for Original Capital
Securities pursuant to the Exchange Offer should not be treated as an "exchange"
for United States federal income tax purposes because the Original Capital
Securities should not be considered to differ materially in kind or extent from
the Exchange Capital Securities and because the exchange will occur by operation
of the terms of the Original Capital Securities. If, however, the exchange of
the Exchange Capital Securities for the Original Capital Securities were treated
as an exchange for United States federal income tax purposes, such exchange
should constitute a recapitalization for federal income tax purposes.
Accordingly, the Exchange Capital Securities should have the same issue price as
the Original Capital Securities, and a holder should have the same adjusted tax
basis and holding period in the Exchange Capital Securities as the holder had in
the Original Capital Securities immediately before the exchange.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Corporation intends to take the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Corporation. The Corporation, the Trust and the holders of
the Capital Securities (by acceptance of a beneficial interest in a Capital
Security) will agree to treat the Junior Subordinated Debentures as indebtedness
of the Corporation for all United States federal income tax purposes. No
assurance can be given, however, that such position will not be challenged by
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.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Capital Securities, Special Tax
Counsel will render its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Trust Agreement and the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Capital Securities generally will be considered the
owner of an undivided interest in the Junior Subordinated Debentures, and each
holder will be required to include in its gross income any interest (or OID
accrued) with respect to its allocable share of those Junior Subordinated
Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations") applicable to
debt instruments issued on or after August 13, 1996, a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with OID. The Corporation believes that the likelihood
of its exercising its option to defer payments of interest is "remote" since
exercising that option would, among other things, prevent the Corporation from
declaring dividends on any class of its equity securities. Accordingly, the
Corporation intends to take the position based on the advice of Special Tax
Counsel that the Junior Subordinated Debentures will not be considered to be
issued with OID and,
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accordingly, stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder as ordinary income at the time it is paid or accrued
in accordance with such holder's method of tax accounting.
Under the Regulations, if 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" within the meaning of the Regulations, 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. In
each case the amount of OID that will accrue in any month will approximately
equal the amount of interest accruing at the stated interest rate.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation described herein and assert that the
Junior Subordinated Debentures were originally issued with OID.
Because income on the Capital Securities will constitute interest or OID,
corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
The Corporation will have the right at any time to liquidate the Trust and
cause the Junior Subordinated Debentures to be distributed to the holders of the
Trust Securities. Under current law, such a distribution, for United States
federal income tax purposes, would be treated as a nontaxable event to each
holder, and each holder would receive an aggregate tax basis in the Junior
Subordinated Debentures equal to such holder's aggregate tax basis in its
Capital Securities. A holder's holding period in the Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder. A holder will
account for interest in respect of the Junior Subordinated Debentures received
from the Trust in the manner described above under "--Interest Income and
Original Issue Discount," including any accrual of OID (if any) attributed to
the Junior Subordinated Debentures upon any such distribution.
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 a redemption of the
Capital Securities by the Corporation for cash) 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
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ordinary income). A holder's adjusted tax basis in the Capital Securities
generally will be its initial purchase price increased by OID (if any)
previously includable in such holder's gross income to the date of disposition
and decreased by payments (if any) received on the Capital Securities in respect
of OID. Such gain or loss generally will be a capital gain or loss. Pursuant to
the Taxpayer Relief Act of 1997, net gain on the sale of Capital Securities
constituting a capital asset which are realized by an individual after July 28,
1997, and held for more than 18 months are taxed for federal income tax purposes
at a capital gains tax rate of 20% (or rate of 10% if the individual taxpayer is
in the 15% tax bracket). Effective in 2001, the 20% rate drops to 18% (and the
10% drops to 8%) for capital assets acquired after the year 2000 and held more
than five years; however, the requirement that the capital asset be acquired
after the year 2000 does not apply to the 8% rate. Net gains on the sale of
Capital Securities held by an individual for more than one year, but not more
than 18 months, are taxed for federal income tax purposes at a federal capital
gains tax rate of 28%.
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 Debenture 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,
if applicable, 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 any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Capital Securities who or which is a citizen
or individual resident (or is treated as a citizen or individual resident) of
the United States for federal income tax purposes, a corporation or partnership
(except in the case of a partnership to the extent provided in Regulations)
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate the income of which is includable in its gross
income for federal income tax purposes without regard to its source; or a trust
if, and only if, (i) a court within the United States is able to exercise
primary supervision over the administration of the trust and (ii) one or more
United States trustees have the authority to control all substantial decisions
of the trust.
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that (a) the beneficial owner of the Capital
Security does not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of the Corporation entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Corporation through stock ownership,
and (c) either (A) the beneficial owner of the Capital Security certifies to the
Trust or its agent, under penalties of perjury, on the form designated by the
IRS, supplying all the information requested on the form designated by the IRS,
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 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
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not be subject to United States federal withholding tax on any gain realized
upon the sale or other disposition of a Capital Security. Final Treasury
Regulations (the "Withholding Regulations") provide alternative methods for
satisfying the certification requirements described in clause (i)(c) above. The
Withholding Regulations are to be effective for certain payments made to United
States Alien Holders after December 31, 1999.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
Each of the Corporation (the obligor with respect to the Junior Subordinated
Debentures held by the Trust), and its affiliates and the Property Trustee may
be considered a "party in interest" (within the meaning of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many Plans that are subject to ERISA and certain employee
benefit-related provisions of the Code. The purchase and/or holding of Capital
Securities by a Plan that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975 of the Code
(including individual retirement arrangements and other plans described in
Section 4975(e)(1) of the Code) and with respect to which the Corporation, the
Property Trustee or any affiliate is a service provider (or otherwise is a party
in interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Capital
Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving banks' collective investment funds), PTCE 90-1 (an exemption for
certain transactions involving insurance company pooled separate accounts), PTCE
95-60 (an exemption for transactions involving certain insurance company general
accounts) or PTCE 96-23 (an exemption for certain transactions determined by an
in-house asset manager). In addition, a Plan fiduciary considering the purchase
of Capital Securities should be aware that the assets of the Trust may be
considered "plan assets" for ERISA purposes. In such event, any persons
exercising discretion with respect to the Junior Subordinated Debentures may
become fiduciary parties in interest or disqualified persons with respect to
investing Plans. Accordingly, each investing Plan, by purchasing the Capital
Securities, will be deemed to have directed the Trust to invest in the Junior
Subordinated Debentures and to have consented to the appointment of the Property
Trustee. In this regard, it should be noted that, in an Event of Default, the
Corporation may not remove the Property Trustee without the approval of a
majority of the holders of the Capital Securities.
A Plan fiduciary should consider whether the purchase of Capital Securities
could result in a delegation of fiduciary authority to the Property Trustee,
and, if so, whether such a delegation of authority is consistent with the terms
of the Plan's governing instrument or any investment management agreement with
the Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of Section 3(38) of ERISA). Further, prior to an Event of Default
with respect to the Junior Subordinated Debentures, the Property Trustee will
have only limited custodial and ministerial authority with respect to Trust
assets.
THE SALE OF INVESTMENTS TO PLANS IS IN NO RESPECT A REPRESENTATION BY THE
TRUST, THE CORPORATION, THE PROPERTY TRUSTEE, THE INITIAL PURCHASERS OR ANY
OTHER PERSON ASSOCIATED WITH THE SALE OF THE CAPITAL SECURITIES THAT SUCH
SECURITIES MEET ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY
PLANS GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH SECURITIES ARE OTHERWISE
APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN. ANY PURCHASER PROPOSING
TO ACQUIRE CAPITAL SECURITIES WITH ASSETS OF ANY PLAN SHOULD CONSULT WITH ITS
COUNSEL.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange 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 Exchange Capital Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by Participating Broker-Dealers during the period referred to below in
connection with resales of Exchange Capital Securities received in exchange for
Original Capital Securities if such Original Capital Securities were acquired by
such Participating Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities. The Corporation and the
Trust have agreed that this
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Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such Exchange
Capital Securities for a period ending 90 days after the Expiration Date
(subject to extension under certain limited circumstances described herein) or,
if earlier, when all such Exchange Capital Securities have been disposed of by
such Participating Broker-Dealer. However, a Participating Broker-Dealer who
intends to use this Prospectus in connection with the resale of Exchange Capital
Securities received in exchange for Original Capital Securities pursuant to the
Exchange Offer must notify the Corporation or the Trust, or cause the
Corporation or the Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be given in the space
provided for that purpose in the Letter of Transmittal or may be delivered to
the Exchange Agent at one of the addresses set forth herein under "The Exchange
Offer--Exchange Agent." See "The Exchange Offer--Resales of Exchange Capital
Securities."
The Corporation or the Trust will not receive any cash proceeds from the
issuance of the Exchange Capital Securities offered hereby. Exchange Capital
Securities received by broker-dealers for their own accounts in connection with
the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Capital Securities.
Any broker-dealer that resells Exchange 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 Exchange Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of Exchange 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 90 days after the Expiration Date, the Trust and the
Corporation 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 Trust and the Corporation have
agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Capital Securities) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Capital Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters and certain matters relating to United States federal
income tax considerations will be passed upon for the Corporation by Muldoon,
Murphy & Faucette. Certain matters of Delaware law relating to the validity of
the Capital Securities will be passed upon on behalf of the Trust by Richards,
Layton & Finger, P.A., special Delaware counsel to the Trust and the
Corporation.
EXPERTS
The consolidated financial statements of Reliance Bancorp, Inc. and
subsidiary as of June 30, 1998 and 1997, and for each of the years in the
three-year period ended June 30, 1998 incorporated by reference in the
Corporation's Annual Report on Form 10-K for the year ended June 30, 1998, have
been incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said form as experts in accounting and
auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE TRUST
OR BY THE INITIAL PURCHASERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 8
Incorporation of Certain Documents by Reference........................... 8
Summary................................................................... 10
Risk Factors.............................................................. 16
Reliance Capital Trust I.................................................. 22
Reliance Bancorp, Inc..................................................... 22
Use of Proceeds........................................................... 24
Ratios of Earnings to Combined Fixed Charges.............................. 24
Accounting Treatment...................................................... 24
Capitalization............................................................ 25
Selected Consolidated Financial and Other Data of the Corporation......... 26
The Exchange Offer........................................................ 28
Description of Exchange Securities; Comparison to Original Securities..... 37
Description of Capital Securities......................................... 37
Description of Junior Subordinated Debentures............................. 48
Description of Guarantee.................................................. 59
Relationship Among the Capital Securities, the Junior Subordinated
Debentures and the Guarantee............................................ 62
Certain Federal Income Tax Consequences................................... 63
ERISA Considerations...................................................... 67
Plan of Distribution...................................................... 68
Legal Matters............................................................. 68
Experts................................................................... 68
</TABLE>
RELIANCE CAPITAL TRUST I
OFFER TO EXCHANGE ITS 8.17% CAPITAL SECURITIES, SERIES B (LIQUIDATION AMOUNT
$1,000 PER CAPITAL SECURITY) WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING 8.17% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED
HEREIN, BY
RELIANCE BANCORP, INC.
---------------------
PROSPECTUS
---------------------
OCTOBER 13, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with the General Corporation Law of the State of Delaware
(being Chapter 1 of Title 8 of the Delaware Code), Articles 10 and 11 of the
registrant's Certificate of Incorporation provide as follows:
TENTH:
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent, or in any other capacity while serving as a Director,
Officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith; provided, however, that, except as
provided in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article TENTH
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a Director or Officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, services to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article TENTH shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in full
by the Corporation within sixty days after a written claim has been received by
the Corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be twenty days, the indemnitee may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall be entitled to be paid also
the expenses of prosecuting or defending such suit. In (i) any suit brought by
the indemnitee to
II-1
<PAGE>
enforce a right to indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article TENTH or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
Disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect itself
and any Director, Officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ELEVENTH:
A Director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability: (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the Delaware General Corporation
Law; or (iv) for any transaction from which the Director derived an improper
personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of Directors, then the liability of a Director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders of
the Corporation shall not adversely affect any right or protection of a Director
of the Corporation existing at the time of such repeal or modification.
II-2
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
4.1 Indenture of the Corporation relating to the Junior Subordinated Debentures
4.2 Form of Certificate of Exchange Junior Subordinated Debenture
4.3 Certificate of Trust of Reliance Capital Trust I
4.4 Declaration of Trust of Reliance Capital Trust I
4.5 Amended and Restated Declaration of Trust of Reliance Capital Trust I
4.6 Form of Exchange Capital Security Certificate for Reliance Capital Trust I
4.7 Form of Exchange Guarantee of the Corporation relating to the Exchange Capital Securities
4.8 Registration Rights Agreement
4.9 Liquidated Damages Agreement
5.1 Opinion and consent of Muldoon, Murphy & Faucette as to validity of the Exchange Junior Subordinated
Debentures and the Exchange Guarantee to be issued by the Corporation
5.2 Opinion and consent of Richards, Layton & Finger, P.A. as to the validity of the Exchange Capital
Securities to be issued by Reliance Capital Trust I
8.0 Opinion of Muldoon, Murphy & Faucette as to certain federal income tax matters
12.1 Computation of ratio of earnings to fixed charges (excluding interest on deposits)
12.2 Computation of ratio of earnings to fixed charges (including interest on deposits)
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Muldoon, Murphy & Faucette (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2)
24.0 Power of Attorney of certain officers and directors of the Corporation (located on the signature page
hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as Property Trustee under the
Declaration of Trust of Reliance Capital Trust I
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as Guarantee Trustee under the
Exchange Guarantee
25.3 Form T-1 Statement of Eligibility of The Bank of New York to act as Debenture Trustee under the
Indenture
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ------------------------
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Each of the undersigned Registrants hereby also undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereto) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by a Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) to deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Act of 1934, where interim financial information
to be presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
undersigned Registrant pursuant to the provisions, or otherwise, each Registrant
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 each
II-4
<PAGE>
undersigned Registrant of expenses incurred or paid by a director, officer of
controlling person of each 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 Registrant will, unless
in the opinion of its counsel the matter has been settled by the 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.
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 information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
Each of the undersigned Registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Reliance
Bancorp, Inc. certifies that it has reasonable grounds that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Garden City, State of New York on the 13th day of
October, 1998.
RELIANCE BANCORP, INC.
BY: /S/ RAYMOND A. NIELSEN
------------------------------------------
Raymond A. Nielsen
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------
<C> <S> <C>
/s/ RAYMOND A. NIELSEN President, Chief Executive Officer
------------------------------------------- and Director (principal executive October 13, 1998
Raymond A. Nielsen officer)
/s/ PAUL D. HAGAN Senior Vice President and Chief
------------------------------------------- Financial Officer (principal October 13, 1998
Paul D. Hagan financial and accounting officer)
*
------------------------------------------- Chairman of the Board October 13, 1998
Raymond L. Nielsen
*
------------------------------------------- Director October 13, 1998
Donald LaPasta
*
------------------------------------------- Director October 13, 1998
J. William Newby
*
------------------------------------------- Director October 13, 1998
Peter F. Neumann
*
------------------------------------------- Director October 13, 1998
Douglas G. LaPasta
*
------------------------------------------- Director October 13, 1998
Thomas G. Davis, Jr.
*
------------------------------------------- Director October 13, 1998
Conrad J. Gunther, Jr.
</TABLE>
* Pursuant to the Power of Attorney filed on September 25, 1998.
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Reliance Capital
Trust I certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Garden City, State of New York, on the 13 day of
October, 1998.
RELIANCE CAPITAL TRUST I
BY: /S/ RAYMOND A. NIELSEN
------------------------------------------
Raymond A. Nielsen
ADMINISTRATIVE TRUSTEE
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------------------ --------------------------------- ----------------------
<C> <S> <C>
/s/ RAYMOND A. NIELSEN
------------------------------------------- Administrative Trustee October 13, 1998
Raymond A. Nielsen
/s/ GERALD M. SAUVIGNE
------------------------------------------- Administrative Trustee October 13, 1998
Gerald M. Sauvigne
/s/ PAUL D. HAGAN
------------------------------------------- Administrative Trustee October 13, 1998
Paul D. Hagan
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
4.1 Indenture of the Corporation relating to the Junior Subordinated Debentures*
4.2 Form of Certificate of Exchange Junior Subordinated Debenture*
4.3 Certificate of Trust of Reliance Capital Trust I*
4.4 Declaration of Trust of Reliance Capital Trust I*
4.5 Amended and Restated Declaration of Trust of Reliance Capital Trust I*
4.6 Form of Exchange Capital Security Certificate for Reliance Capital Trust I*
4.7 Form of Exchange Guarantee of the Corporation relating to the Exchange Capital Securities*
4.8 Registration Rights Agreement*
4.9 Liquidated Damages Agreement*
5.1 Opinion and consent of Muldoon, Murphy & Faucette as to validity of the Exchange Junior Subordinated
Debentures and the Exchange Guarantee to be issued by the Corporation*
5.2 Opinion and consent of Richards, Layton & Finger, P.A. as to the validity of the Exchange Capital
Securities to be issued by Reliance Capital Trust I*
8.0 Opinion of Muldoon, Murphy & Faucette as to certain federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges (excluding interest on deposits)*
12.2 Computation of ratio of earnings to fixed charges (including interest on deposits)*
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Muldoon, Murphy & Faucette (included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2)*
24.0 Power of Attorney of certain officers and directors of the Corporation (located on the signature page
hereto)*
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as Property Trustee under the
Declaration of Trust of Reliance Capital Trust I*
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as Guarantee Trustee under the
Exchange Guarantee*
25.3 Form T-1 Statement of Eligibility of The Bank of New York to act as Debenture Trustee under the
Indenture*
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
</TABLE>
- ------------------------
* Previously filed
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Pre-Effective Amend
to the Registration Statement of Reliance Bancorp, Inc. on Form S-4 of our
report dated July 23, 1998, incorporated by reference in the Annual Report on
Form 10-K of Reliance Bancorp, Inc. for the year ended June 30, 1998 and to the
reference to our firm the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ KPMG PEAT MARWICK LLP
- ---------------------------
Melville, New York
October 13, 1998
A-1
