<PAGE>
Filed Pursuant to Rule 424(b)(4)
Registration Nos. 333-24629
and 333-24629-01
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED APRIL 29, 1997
[Logo of Dime Bancorp, Inc.]
$200,000,000
DIME CAPITAL TRUST I
9.33% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
DIME BANCORP, INC.
----------------
The 9.33% Capital Securities, Series A (the "Series A Capital Securities"),
offered hereby represent preferred beneficial interests in Dime Capital Trust
I, a statutory business trust created under the laws of the State of Delaware
(the "Series A Issuer"). Dime Bancorp, Inc., a Delaware corporation (the
"Corporation") and the holding company of The Dime Savings Bank of New York,
FSB (the "Bank" and, together with the Corporation and their consolidated
subsidiaries, the "Company"), will be the owner of all of the beneficial
interests represented by common securities of the Series A Issuer ("Series A
Common Securities" and, collectively with the Series A Capital Securities, the
"Series A Securities"). The Chase Manhattan Bank is
(Continued on next page)
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES A CAPITAL SECURITIES.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED OR GUARANTEED 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 SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) COMMISSION(2) SERIES A ISSUER(1)(3)(4)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Series A Capital Secu-
rity.................... $1,000.00 (3) $1,000.00
- -------------------------------------------------------------------------------
Total.................... $200,000,000 (3) $200,000,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued Distributions, if any, from May 6, 1997.
(2) The Series A Issuer and the Corporation have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series A Capital
Securities will be invested in the Series A Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds $16.25 per Series A Capital Security (or $3,250,000 in
the aggregate). See "Underwriting."
(4) Expenses of the offering which are payable by the Corporation are
estimated to be $383,107, net of certain expenses to be reimbursed by the
Underwriters. See "Underwriting."
----------------
The Series A Capital Securities are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the Series A Capital Securities will be made in
book-entry form through the facilities of The Depository Trust Company ("DTC")
in New York, New York on or about May 6, 1997, against payment therefor in
immediately available funds.
----------------
MERRILL LYNCH & CO.
BT SECURITIES CORPORATION
LEHMAN BROTHERS
----------------
The date of this Prospectus Supplement is April 29, 1997.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
CAPITAL SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
(cover page continued)
the Property Trustee of the Series A Issuer. The Series A Issuer exists for
the sole purpose of issuing the Series A Securities and investing the proceeds
thereof in $206,186,000 initial principal amount of 9.33% Junior Subordinated
Deferrable Interest Debentures, Series A (the "Series A Subordinated
Debentures"), to be issued by the Corporation. The Series A Subordinated
Debentures will mature on May 6, 2027 (the "Stated Maturity") (which date may
be shortened in certain circumstances as described under "Certain Terms of
Series A Subordinated Debentures--Conditional Right to Shorten Maturity or
Redeem upon a Tax Event or Capital Treatment Event"). Under certain
circumstances, the Series A Capital Securities will have a preference over the
Series A Common Securities with respect to cash distributions and amounts
payable on liquidation, redemption or otherwise. See "Description of Preferred
Securities--Subordination of Common Securities" in the accompanying
Prospectus.
Holders of the Series A Capital Securities will be entitled to receive
preferential cumulative cash distributions accruing from May 6, 1997 and
payable semi-annually in arrears on May 6 and November 6 of each year,
commencing November 6, 1997, at an annual rate equal to 9.33% of the
Liquidation Amount of $1,000 per Series A Capital Security ("Distributions").
Subject to certain exceptions, as described herein, the Corporation has the
right to defer payment of interest on the Series A Subordinated Debentures at
any time or from time to time for a period not exceeding ten consecutive semi-
annual periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity of the Series A Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at a rate equal to 9.33% per annum, compounded
semi-annually, to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period subject to the requirements set forth
herein. If interest payments on the Series A Subordinated Debentures are so
deferred, Distributions on the Series A Capital Securities will also be
deferred and the Corporation will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash distributions with
respect to the Corporation's capital stock or debt securities that rank pari
passu with or junior to the Series A Subordinated Debentures. During an
Extension Period, interest on the Series A Subordinated Debentures will
continue to accrue (and the amount of Distributions to which holders of the
Series A Capital Securities are entitled will accumulate) at a rate equal to
9.33% per annum, compounded semi-annually from the relevant payment date for
such interest, and holders of Series A Capital Securities will be required to
accrue interest income for United States federal income tax purposes. See
"Certain Terms of Series A Subordinated Debentures--Option to Defer Interest
Payments" and "Certain Federal Income Tax Consequences--Original Issue
Discount."
The Series A Subordinated Debentures are unsecured and subordinated to all
Senior Debt (as defined in the accompanying Prospectus). Substantially all of
the Corporation's existing indebtedness constitutes Senior Debt. Because the
Corporation is a holding company, the right of the Corporation to participate
in any distribution of assets of its subsidiaries, including the Bank, upon
any such subsidiary's liquidation or reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Series A Subordinated Debentures (and, therefore, the Series
A Capital Securities) will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders thereof
should look only to the assets of the Corporation for payments on the Series A
Subordinated Debentures. See "Description of Subordinated Debentures--
Subordination" in the accompanying Prospectus.
S-2
<PAGE>
(cover page continued)
The Corporation has, through the Series A Guarantee, the Trust Agreement,
the Series A Subordinated Debentures, the Indenture and the Expense Agreement
(each as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of the Series A Issuer's obligations under the
Series A Capital Securities. See "Relationship Among the Capital Securities,
the Corresponding Junior Subordinated Debentures, the Expense Agreement and
the Guarantees--Full and Unconditional Guarantee" in the accompanying
Prospectus. The Series A Guarantee of the Corporation guarantees the payment
of Distributions and payments on liquidation or redemption of the Series A
Capital Securities, but only in each case to the extent of funds held by the
Series A Issuer, as described herein (the "Series A Guarantee"). See
"Description of Guarantees" in the accompanying Prospectus. If the Corporation
does not make interest payments on the Series A Subordinated Debentures held
by the Series A Issuer, the Series A Issuer will have insufficient funds to
pay Distributions on the Series A Capital Securities. The Series A Guarantee
does not cover payment of Distributions when the Series A Issuer has
insufficient funds to pay such Distributions. In such event, a holder of
Series A Capital Securities may institute a legal proceeding directly against
the Corporation pursuant to the terms of the Indenture to enforce payment of
amounts equal to such Distributions to such holder. See "Description of Junior
Subordinated Debentures--Enforcement of Certain Rights by Holders of Capital
Securities" in the accompanying Prospectus. The obligations of the Corporation
under the Series A Guarantee and the Series A Subordinated Debentures are
subordinate and junior in right of payment to all Senior Debt of the
Corporation.
The Series A Capital Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series A Subordinated Debentures at
maturity or their earlier redemption. The Series A Subordinated Debentures are
redeemable prior to maturity at the option of the Corporation (i) on or after
May 6, 2007, in whole at any time or in part from time to time, (ii) at any
time in whole (but not in part) in certain circumstances upon the occurrence
of a Tax Event or Capital Treatment Event, as described under "Certain Terms
of Series A Subordinated Debentures--Conditional Right to Shorten Maturity or
Redeem upon a Tax Event or Capital Treatment Event," or (iii) on or after May
6, 2002 in whole (but not in part) in certain circumstances if the Corporation
is not then subject to the Holding Company Capital Rules, as described under
"Risk Factors--Imposition of Holding Company Capital Rules." For a description
of the redemption prices for the Series A Capital Securities pursuant to
clause (i), (ii) or (iii) above, see "Certain Terms of Series A Capital
Securities--Redemption" and "Certain Terms of Series A Subordinated
Debentures--Redemption."
The Corporation will have the right at any time to terminate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Capital Securities in liquidation of the Series A
Issuer. See "Certain Terms of Series A Capital Securities--Liquidation of
Series A Issuer and Distribution of Series A Subordinated Debentures to
Holders."
In the event of the termination of the Series A Issuer, after satisfaction
of liabilities to creditors of the Series A Issuer as required by applicable
law, the holders of the Series A Capital Securities will be entitled to
receive a Liquidation Amount of $1,000 per Series A Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of such amount in Series A Subordinated
Debentures, subject to certain exceptions. See "Description of Preferred
Securities--Liquidation Distribution Upon Termination" in the accompanying
Prospectus.
If the Series A Subordinated Debentures are distributed to the holders of
Series A Capital Securities upon the liquidation of the Series A Issuer, the
Corporation will use its best efforts to include the Series A Subordinated
Debentures on such stock exchanges or other automated quotation systems, if
any, on which the Series A Capital Securities are then listed or traded.
The Series A Capital Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Series A Capital Securities will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described in the accompanying Prospectus,
Series A Capital Securities in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance" in the
accompanying Prospectus.
S-3
<PAGE>
The information in this Prospectus Supplement supplements and should be read
in conjunction with the information contained in the accompanying Prospectus.
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture,
as amended and supplemented from time to time, between the Corporation and The
Chase Manhattan Bank, as trustee (the "Debenture Trustee"), (ii) the "Trust
Agreement" means the Amended and Restated Trust Agreement relating to the
Series A Issuer among the Corporation, as Depositor, The Chase Manhattan Bank,
as Property Trustee (the "Property Trustee"), Chase Manhattan Bank Delaware,
as Delaware Trustee (the "Delaware Trustee"), and the Administrative Trustees
named therein (collectively, with the Property Trustee and Delaware Trustee,
the "Issuer Trustees"), (iii) the "Guarantee Agreement" means the Guarantee
Agreement by and between the Corporation, as Guarantor, and The Chase
Manhattan Bank, as Guarantee Trustee, and (iv) the "Expense Agreement" means
the Agreement as to Expenses and Liabilities between the Corporation and the
Series A Issuer. Each of the other capitalized terms used in this Prospectus
Supplement and not otherwise defined in this Prospectus Supplement has the
meaning set forth in the accompanying Prospectus.
Except for the historical information included or incorporated by reference
in this Prospectus, the discussion in this Prospectus contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions.
The cautionary statements made in this Prospectus should be read as being
applicable to all related forward-looking statements wherever they appear in
this Prospectus or in the documents incorporated by reference herein. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include those
discussed below, as well as those discussed elsewhere herein or in the
documents incorporated by reference herein.
RISK FACTORS
Prospective purchasers of the Series A Capital Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and
in the accompanying Prospectus and should particularly consider the following
matters. In addition, because holders of Series A Capital Securities may
receive Series A Subordinated Debentures in exchange therefor upon liquidation
of the Series A Issuer, prospective purchasers of Series A Capital Securities
are also making an investment decision with regard to the Series A
Subordinated Debentures and should carefully review all the information
regarding the Series A Subordinated Debentures contained herein.
GENERAL BUSINESS RISKS
The Company's business is subject to various material business risks. For
example, changes in prevailing interest rates can have significant effects on
the Company's business. Some of the risks to which the Company's business is
subject may become more acute in periods of economic slowdown or recession.
During such periods, foreclosures generally increase and could result in an
increased incidence of claims and legal actions against the Company. In
addition, such conditions could lead to a potential decline in demand for the
Company's loan origination services.
INTEREST RATE RISK
The Company realizes its income primarily from the differential or "spread"
between the interest earned on loans and investments and the interest paid on
deposits and borrowings. Net interest spreads are affected by the difference
between the maturities and the repricing characteristics of interest-earning
assets and interest-bearing liabilities. As is typical of most thrift
institutions, the Company's interest-bearing liabilities reprice or mature, on
average, sooner than its interest-earning assets. Additionally, the
characteristics of many of the Company's interest-earning assets (such as pre-
payment options, interest rate caps and similar features) are sensitive to
changes in the level of interest rates. Although the Company utilizes a
variety of techniques in an effort to manage its interest rate risk, the
Company remains subject to a significant level of interest rate risk. In
addition, changes in the relationship between long-term and short-term
interest rates (the "yield curve") can have a significant impact on the
Company's net interest income.
S-4
<PAGE>
COMPETITION
The Company experiences substantial competition both in attracting and
retaining deposits and in making loans. Its most direct competition for
deposits historically has come from other thrift institutions and commercial
banks doing business in the greater New York metropolitan area. However, as
with all banking organizations, the Company has experienced increasing
competition from nonbanking sources. For example, the Company also competes
for funds with mutual funds, corporate and governmental debt securities and
other investment alternatives. The Company's competition for loans comes
principally from other thrift institutions, commercial banks, mortgage banking
companies, consumer finance companies, insurance companies and other
institutional lenders. A number of institutions with which the Company
competes for deposits and loans have significantly greater assets and capital
than the Company.
REGULATION
Each of the Corporation, as a savings and loan holding company, and the
Bank, as a federal savings bank, is subject to significant regulation, which
has materially affected their businesses as well as the businesses of other
banking organizations in the past and is likely to do so in the future.
Statutes and regulations now affecting the Corporation and the Bank may be
changed at any time, and the interpretation of these statutes and regulations
by examining authorities is also subject to change. There can be no assurance
that future changes in the regulations or in their interpretation will not
adversely affect the business of the Company. As a savings and loan holding
company, the Corporation is subject to regulation and examination by the
Office of Thrift Supervision (the "OTS"). As a federal savings association,
the Bank is subject to examination by the OTS, its primary regulator, and the
Federal Deposit Insurance Corporation ("FDIC"), as administrator of the Bank
Insurance Fund (the "BIF") and the Savings Association Insurance Fund (the
"SAIF"). There can be no assurance that the OTS or the FDIC may not, as a
result of such examinations or otherwise, impose various requirements or
regulatory sanctions upon the Bank or the Corporation.
IMPOSITION OF HOLDING COMPANY CAPITAL RULES
From time to time, legislation has been proposed in Congress that, if
adopted, would require federal savings associations, such as the Bank, to
convert to a national or state bank charter. These proposals have expressed
the expectation that, at some time in the future, savings and loan holding
companies, such as the Corporation, may be subjected to a regulatory framework
similar to that for bank holding companies. As a result of the adoption of
such legislation, actions of federal bank regulatory agencies or a merger or
consolidation of the Corporation with a bank holding company, it is possible
that the Corporation could become subject to the holding company-level capital
adequacy guidelines of the Board of Governors of the Federal Reserve System
(the "Federal Reserve") or similar guidelines (collectively, "Holding Company
Capital Rules"). If the Corporation does not become subject to the Holding
Company Capital Rules by May 6, 2002, then the Corporation will have the
right, if certain conditions are met, to redeem the Series A Subordinated
Debentures in whole (but not in part) and thereby cause the mandatory
redemption of the Series A Capital Securities. The Redemption Price in the
case of such a redemption shall equal, for each Series A Capital Security, the
Regulatory Make-Whole Amount (as defined in "Certain Terms of Series A Capital
Securities--Redemption") for a corresponding $1,000 principal amount of Series
A Subordinated Debentures together with accrued distributions to but excluding
the Redemption Date. See "--Tax Event or Capital Treatment Event--Exchange of
Series A Capital Securities for Series A Subordinated Debentures, Shortening
of Maturity of Series A Subordinated Debentures or Redemption" and "Certain
Terms of Series A Capital Securities--Redemption."
S-5
<PAGE>
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE
SERIES A SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series A Guarantee issued by
the Corporation for the benefit of the holders of Series A Capital Securities
and under the Series A Subordinated Debentures are unsecured and rank
subordinate and junior in right of payment to all Senior Debt of the
Corporation. Substantially all of the Corporation's existing indebtedness
constitutes Senior Debt. Because the Corporation is a holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary, including the Bank, upon any such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Series A
Capital Securities to benefit indirectly from such distribution), is subject
to the prior claims of creditors of that subsidiary, except to the extent that
the Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Series A Guarantee and the Series A Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Series A Subordinated Debentures
should look only to the assets of the Corporation for payments on the Series A
Subordinated Debentures. See "The Corporation." None of the Indenture, the
Series A Guarantee, the Trust Agreement or the Expense Agreement places any
limitation on the amount of secured or unsecured debt, including Senior Debt,
that may be incurred by the Corporation. See "Description of Guarantees--
Status of the Guarantees" and "Description of Junior Subordinated Debentures--
Subordination" in the accompanying Prospectus.
The ability of the Series A Issuer to pay amounts due on the Series A
Capital Securities is solely dependent upon the Corporation making payments on
the Series A Subordinated Debentures as and when required.
OPTION TO DEFER INTEREST PAYMENTS; TAX CONSEQUENCES
So long as no event of default under the Indenture has occurred or is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time
to time for a period not exceeding ten consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series A Subordinated Debentures. As a
consequence of any such deferral, semi-annual Distributions on the Series A
Capital Securities by the Series A Issuer will also be deferred (and the
amount of Distributions to which holders of the Series A Capital Securities
are entitled will accumulate additional Distributions thereon at a rate equal
to 9.33% per annum, compounded semi-annually from the relevant payment date
for such Distributions) during any such Extension Period. 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 or (ii) make any
payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation that rank pari
passu in all respects with or junior in interest to the Series A Subordinated
Debentures, subject to certain exceptions described herein. See "Certain Terms
of Series A Subordinated Debentures--Option to Defer Interest Payments." Prior
to the termination of any such Extension Period, the Corporation may further
defer the payment of interest, provided that no Extension Period may exceed
ten consecutive semi-annual periods or extend beyond the Stated Maturity of
the Series A Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at an annual rate equal to 9.33%, compounded semi-annually
from the interest payment date for such interest, 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
"Certain Terms of Series A Capital Securities--Distributions."
Should an Extension Period occur, a holder of Series A Capital Securities
will be required to recognize income (in the form of original issue discount)
in respect of its pro rata share of the Series A Subordinated Debentures held
by the Series A Issuer for United States federal income tax purposes. As a
result, a holder of Series A Capital Securities will be required to include
such income in gross income for United States federal
S-6
<PAGE>
income tax purposes in advance of the receipt of cash attributable to such
income and will not receive the cash related to such income from the Series A
Issuer if the holder disposes of the Series A Capital Securities prior to the
record date for the payment of Distributions. See "Certain Federal Income Tax
Consequences--Original Issue Discount" and "--Sale or Redemption of Series A
Capital Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Series A Subordinated Debentures. However, should
the Corporation elect to exercise such right in the future, the market price
of the Series A Capital Securities is likely to be affected. A holder that
disposes of its Series A Capital Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder
that continues to hold its Series A Capital Securities.
TAX EVENT OR CAPITAL TREATMENT EVENT--EXCHANGE OF SERIES A CAPITAL SECURITIES
FOR SERIES A SUBORDINATED DEBENTURES, SHORTENING OF MATURITY OF SERIES A
SUBORDINATED DEBENTURES OR REDEMPTION
Upon the occurrence and continuation of a Tax Event or a Capital Treatment
Event (whether occurring before or after May 6, 2007), the Corporation has the
right, if certain conditions are met, (i) to terminate the Series A Issuer and
cause the Series A Subordinated Debentures to be distributed to the holders of
the Series A Capital Securities in exchange therefor upon liquidation of the
Series A Issuer, (ii) to shorten the maturity of the Series A Subordinated
Debentures to a date not earlier than May 6, 2012, or (iii) to redeem the
Series A Subordinated Debentures in whole (but not in part) within 90 days
following the occurrence of such Tax Event or Capital Treatment Event and
thereby cause a mandatory redemption of the Series A Capital Securities. Any
such redemption shall be at a price equal to the Tax/Capital Make-Whole Amount
(as defined in "Certain Terms of Series A Capital Securities--Redemption")
together with accrued interest to but excluding the date fixed for redemption.
See "Certain Terms of Series A Subordinated Debentures--Conditional Right to
Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event."
A "Tax Event" means, with respect to Series A Subordinated Debentures held
by the Series A Issuer or another Issuer (as defined in the Prospectus), the
receipt by the Series A Issuer 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 proposed 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 proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Series A Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Series A Issuer is, or within 90 days of the
date of such opinion will be, subject to United States federal income tax with
respect to income received or accrued on the Series A Subordinated Debentures,
(ii) interest payable by the Corporation on the Series A Subordinated
Debentures is not, or within 90 days of the date of such opinion, will not be,
deductible by the Corporation, in whole or in part, for United States federal
income tax purposes or (iii) the Series A Issuer is, or within 90 days of the
date of the opinion will be, subject to more than a de minimis amount of other
taxes, duties or other governmental charges. With respect to Series A
Subordinated Debentures that are no longer held by the Series A Issuer or
another Issuer, "Tax Event" means the receipt by the Corporation 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 proposed 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
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Series A Subordinated Debentures under the Indenture,
there is more than an insubstantial risk that interest payable by the
Corporation on the Series A 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 (each of the
circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
S-7
<PAGE>
A "Capital Treatment Event" means any time when the Corporation, for any
reason, is subject to the Holding Company Capital Rules and the Corporation is
not entitled to treat an amount equal to the aggregate Liquidation Amount of
the Series A Capital Securities as "Tier 1 Capital" (or the then equivalent
thereof) for purposes of the Holding Company Capital Rules, as then in effect
and applicable to the Corporation. If the Corporation becomes subject to the
Holding Company Capital Rules and the Series A Capital Securities are treated
as "Tier 1 Capital" as described above, then for as long as the Series A
Capital Securities continue to be so treated, the Corporation will not
exercise its right to redeem (or shorten the maturity of, as described below)
the Series A Subordinated Debentures prior to their stated maturity without
having received the prior approval of the Federal Reserve to do so, provided
such approval is then required under applicable Holding Company Capital Rules.
Under current Holding Company Capital Rules, securities similar to the Series
A Capital Securities issued by bank holding companies have been treated as
"Tier 1 Capital."
See "--Possible Tax Law Changes Affecting the Series A Capital Securities"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Corporation to cause a redemption of
the Series A Capital Securities prior to May 6, 2007.
As described above under "--Imposition of Holding Company Capital Rules,"
the Series A Subordinated Debentures may also be redeemed in whole (but not in
part) on or after May 6, 2002 if the Corporation is not then subject to the
Holding Company Capital Rules. See "Certain Terms of Series A Capital
Securities--Redemption."
EXCHANGE OF SERIES A CAPITAL SECURITIES FOR SERIES A SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series A
Issuer and, after satisfaction of liabilities to creditors of the Series A
Issuer as required by applicable law, cause the Series A Subordinated
Debentures to be distributed to the holders of the Series A Capital Securities
in exchange therefor upon liquidation of the Series A Issuer. See "Certain
Terms of Series A Capital Securities--Liquidation of Series A Issuer and
Distribution of Series A Subordinated Debentures to Holders."
Under current United States federal income tax law and interpretations, a
distribution of the Series A Subordinated Debentures upon liquidation of the
Series A Issuer should not be a taxable event to holders of the Series A
Capital Securities. However, if a Tax Event were to occur that would cause the
Series A Issuer to be subject to United States federal income tax with respect
to income received or accrued on the Series A Subordinated Debentures, a
distribution of the Series A Subordinated Debentures by the Series A Issuer
could be a taxable event to the Series A Issuer and the holders of the Series
A Capital Securities. See "Certain Federal Income Tax Consequences--
Distribution of the Series A Subordinated Debentures to Holders of the Series
A Capital Securities."
SHORTENING OF STATED MATURITY OF SERIES A SUBORDINATED DEBENTURES
Upon the occurrence of a Tax Event or a Capital Treatment Event, the
Corporation in certain circumstances will have the right to shorten the
maturity of the Series A Subordinated Debentures to a date not earlier than
May 6, 2012 and thereby cause the Series A Capital Securities to be redeemed
on such earlier date. See "Certain Terms of Series A Subordinated Debentures--
Conditional Right to Shorten Maturity or Redeem upon a Tax Event or Capital
Treatment Event."
MARKET PRICES
There can be no assurance as to the market prices for Series A Capital
Securities or Series A Subordinated Debentures that may be distributed in
exchange for Series A Capital Securities upon liquidation of the Series A
Issuer. Accordingly, the Series A Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Series A Subordinated Debentures that a holder of Series A
Capital Securities may receive on liquidation of the Series A Issuer, may
trade at a discount to the price that the investor paid to purchase the Series
A Capital Securities offered hereby. As a result of the existence of the
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<PAGE>
Corporation's right to defer interest payments, the market price of the Series
A Capital Securities (which represent preferred beneficial interests in the
Series A Issuer) may be more volatile than the market prices of other
securities on which original issue discount accrues that are not subject to
such deferrals. See "Certain Terms of the Series A Subordinated Debentures"
and "Description of Junior Subordinated Debentures--Corresponding Junior
Subordinated Debentures" in the accompanying Prospectus.
RIGHTS UNDER THE SERIES A GUARANTEE; DIRECT ACTION
The Series A Guarantee guarantees to the holders of the Series A Capital
Securities the following payments, to the extent not paid by the Series A
Issuer: (i) any accumulated and unpaid Distributions required to be paid on
the Series A Capital Securities, to the extent that the Series A Issuer has
funds on hand available therefor at such time; (ii) the redemption price with
respect to any Series A Securities called for redemption, to the extent that
the Series A Issuer has funds on hand available therefor at such time; and
(iii) upon a voluntary or involuntary dissolution, winding-up or liquidation
of the Series A Issuer (unless the Series A Subordinated Debentures are
distributed to holders of the Series A 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 Series A Issuer
has funds on hand available therefor at such time and (b) the amount of assets
of the Series A Issuer remaining available for distribution to holders of the
Series A Capital Securities. The Series A Guarantee will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The Chase Manhattan Bank will act as the indenture trustee
under the Series A Guarantee (the "Guarantee Trustee") for the purpose of
compliance with the Trust Indenture Act and will hold the Series A Guarantee
for the benefit of the holders of the Series A Capital Securities. The Chase
Manhattan Bank will also act as Debenture Trustee for the Series A
Subordinated Debentures and as Property Trustee under the Trust Agreement.
Chase Manhattan Bank Delaware will act as Delaware Trustee under the Trust
Agreement.
The holders of not less than a majority in aggregate liquidation amount of
the Series A Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Series A Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Series A
Guarantee without first instituting a legal proceeding against the Series A
Issuer, the Guarantee Trustee or any other person or entity. If the
Corporation were to default on its obligation to pay amounts payable under the
Series A Subordinated Debentures, the Series A Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Series A
Capital Securities or otherwise, and, in such event, holders of the Series A
Capital Securities would not be able to rely upon the Series A 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 interest on or principal of the Series A
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Series A Capital Securities may institute a legal
proceeding directly against the Corporation for enforcement of payment to such
holder of the principal of or interest on such Series A Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Series A Capital Securities of such holder (a "Direct Action"). In
connection with such Direct Action, the Corporation will have a right of set-
off under the Indenture to the extent of any payment made by the Corporation
to such holder of Series A Securities in the Direct Action. Except as
described herein, holders of Series A Securities will not be able to exercise
directly any other remedy available to the holders of the Series A
Subordinated Debentures or assert directly any other rights in respect of the
Series A Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Capital Securities"
and "--Debenture Events of Default" and "Description of Guarantees" in the
accompanying Prospectus. The Trust Agreement provides that each holder of
Series A Capital Securities by acceptance thereof agrees to the provisions of
the Series A Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series A Capital Securities generally will have limited voting
rights relating only to the modification of the Series A Capital Securities
and the exercise of the Series A Issuer's rights as holder of Series
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<PAGE>
A Subordinated Debentures and the Series A Guarantee. Holders of Series A
Capital Securities will not be entitled to vote to appoint, remove or replace
the Property Trustee, the Delaware Trustee or any Administrative Trustee, and
such voting rights are vested exclusively in the holder of the Series A Common
Securities except, with respect to the Property Trustee and the Delaware
Trustee, upon the occurrence of certain events described in the accompanying
Prospectus. The Property Trustee, the Administrative Trustees and the
Corporation may amend the Trust Agreement without the consent of holders of
Series A Capital Securities to ensure that the Series A Issuer will be
classified for United States federal income tax purposes as a grantor trust or
as other than an association taxable as a corporation unless such action
materially adversely affects the interests of such holders. See "Description
of Capital Securities--Voting Rights; Amendment of Each Trust Agreement" and
"--Removal of Issuer Trustees" in the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES A CAPITAL SECURITIES
The Series A Capital Securities have not been listed on a national
securities exchange or the NASDAQ Stock Market. The absence of such a listing
for the Series A Capital Securities could adversely affect the liquidity of
the Series A Capital Securities.
The Series A Capital Securities may trade at prices that do not fully
reflect the value of accrued but unpaid interest with respect to the
underlying Series A Subordinated Debentures. A holder of Series A Capital
Securities that disposes of its Series A Capital Securities between record
dates for payments of Distributions (and consequently does not receive a
Distribution from the Series A Issuer for the period prior to such
disposition) will nevertheless be required to include accrued but unpaid
interest on the Series A Subordinated Debentures through the date of
disposition in income as ordinary income and to add such amount to its
adjusted tax basis in the Series A Capital Securities disposed of. Such a
holder will recognize a capital loss to the extent the amount realized on the
sale (less any amount that is treated as a payment of accrued interest
required to be included in income) is less than its adjusted tax basis.
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 Consequences--Sale or Redemption of Series A
Capital Securities."
POSSIBLE TAX LAW CHANGES AFFECTING THE SERIES A CAPITAL SECURITIES
On February 6, 1997, the revenue portion of President Clinton's 1997 budget
proposal (the "Budget Proposal") was released. If enacted, the Budget Proposal
would generally deny interest deductions for interest on an instrument issued
by a corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. The above
described provision of the Budget Proposal is proposed to be effective
generally for instruments issued on or after the date of first Congressional
committee action. If a similar provision were to apply to the Series A
Subordinated Debentures, the Corporation would be unable to deduct interest on
the Series A Subordinated Debentures. Under current law, the Corporation will
be able to deduct interest on the Series A Subordinated Debentures. There can
be no assurances, however, that current or future legislative proposals or
final legislation will not affect the ability of the Corporation to deduct
interest on the Series A Subordinated Debentures. Such a change could give
rise to a Tax Event, which in certain circumstances would permit the
Corporation to terminate the Series A Issuer and cause the Series A
Subordinated Debentures to be distributed to the holders of the Series A
Capital Securities in exchange therefor upon liquidation of the Series A
Issuer, to shorten the maturity of the Series A Subordinated Debentures to a
date not earlier than May 6, 2012 or to cause a redemption of the Series A
Capital Securities. See "Certain Terms of Series A Subordinated Debentures--
Conditional Right to Shorten Maturity or Redeem Upon a Tax Event or Capital
Treatment Event" and "--Redemption" in this Prospectus Supplement and
"Description of Preferred Securities--Redemption or Exchange" in the
accompanying Prospectus. See also "Certain Federal Income Tax Consequences--
Possible Tax Law Changes."
S-10
<PAGE>
THE SERIES A ISSUER
The Series A Issuer is a statutory business trust created under the laws of
the State of Delaware by the (i) execution of a trust agreement between the
Corporation, as Depositor, and Chase Manhattan Bank Delaware, as Delaware
Trustee, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on April 4, 1997. The Series A Issuer's business and
affairs are conducted by the Issuer Trustees: The Chase Manhattan Bank, as
Property Trustee, Chase Manhattan Bank Delaware, as Delaware Trustee, and two
individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Series A Issuer exists for the exclusive
purposes of (i) issuing and selling the Series A Securities, (ii) using the
proceeds from the sale of Series A Securities to acquire Series A Subordinated
Debentures issued by the Corporation, and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer
of the Series A Capital Securities). Accordingly, the Series A Subordinated
Debentures will be the sole assets of the Series A Issuer, and payments under
the Series A Subordinated Debentures will be the sole revenue of the Series A
Issuer. All of the Series A Common Securities will be owned by the
Corporation. The Series A Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Series A Capital Securities, except
that upon the occurrence and continuance of an event of default under the
Trust Agreement resulting from an Event of Default under the Indenture, the
rights of the Corporation, as holder of the Series A Common Securities, to
payment in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Series A
Capital Securities. See "Description of Preferred Securities--Subordination of
Common Securities" in the accompanying Prospectus. The Corporation will
acquire Series A Common Securities in an aggregate liquidation amount equal to
3% of the total capital of the Series A Issuer. The Series A Issuer has a term
of 55 years, but may terminate earlier as provided in the Trust Agreement. The
principal executive office of the Series A Issuer is 589 Fifth Avenue, New
York, New York 10017, Attention: Gene C. Brooks, and its telephone number is
(212) 326-6170. See "The Issuers" in the accompanying Prospectus.
It is anticipated that the Series A Issuer will not be subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
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<PAGE>
RECENT DEVELOPMENTS
PENDING TRANSACTIONS
In April 1997, the Company entered into three agreements to sell an
aggregate of approximately $126 million of its non-performing residential
loans and owned real estate. These sales are expected to result in a one-time
pre-tax charge in the second quarter of 1997 of approximately $15 million. The
loss is expected to be substantially offset by reinvestment earnings and lower
credit-related costs during the balance of 1997. Adjusted for the sales, on a
pro forma basis as of March 31, 1997, the Company's portfolio of non-
performing assets would be approximately $104 million, or 0.57% of total
assets. The sales, which are subject to standard closing conditions, are
expected to close in the second quarter of 1997.
The proposed acquisition by the Company of BFS Bankorp, Inc., the parent
company of Bankers Federal Savings FSB (the "BFS Acquisition"), has received
all required approvals and is expected to close on April 30, 1997. Completion
of the BFS Acquisition will add approximately $600 million of loans and $450
million of deposits to the Company's balance sheet.
CONSOLIDATED FIRST QUARTER 1997 RESULTS FOR THE COMPANY
The Company recorded net income of $32.9 million for the first quarter of
1997, compared with $27.1 million for the comparable prior year quarter. The
Company's annualized return on average stockholders' equity and return on
average assets were 12.66% and 0.69%, respectively, in the first quarter of
1997, compared with 10.93% and 0.54% in the first quarter of 1996. Net
interest income in the first quarter of 1997 was $117.3 million, as compared
with $114.3 million in the first quarter of 1996. The growth in net interest
income occurred despite the reduction in the Company's "wholesale" position--
mortgage-backed securities funded by borrowings--which resulted in a $1.0
billion reduction in average interest-earning assets. The increase reflects a
rise in the Company's net interest margin from 2.35% in the first quarter of
1996 to 2.51% in the first quarter of 1997, attributable in part to sales of
relatively lower-yielding mortgage-backed securities during 1996 and lower
overall funding costs.
Non-interest income increased to $27.6 million for the first quarter of 1997
from $23.6 million in the comparable prior year quarter. This improvement was
attributable largely to a $1.4 million increase in securities and insurance
brokerage fees, together with $2.0 million of net gains from securities
transactions during the first quarter of 1997, as compared with net losses
from securities transactions of $0.7 million in the first quarter of 1996.
These factors were offset partially by a $1.1 million decline in net gains
from sales of loans in the first quarter of 1997 as compared with the first
quarter of 1996.
Non-interest expense was $80.6 million in the three months ended March 31,
1997, compared with $81.6 million in the year-earlier period. The 1996 period
included restructuring and merger-related expense of $3.5 million. General and
administrative expense totaled $72.4 million in the first quarter of 1997, up
$2.2 million from the comparable prior year quarter, but down $3.2 million
from the fourth quarter of 1996. The fourth quarter of 1996 included a $4.3
million charge in connection with the relocation of the mortgage banking
operation headquarters to Tampa, Florida. The first quarter of 1997 included
expenses associated with the continuing expansion of the Company's mortgage
banking and consumer lending activities, the ongoing development of product
sales technology, and a higher level of commissions associated with increased
fees from investment services.
Non-performing assets, which consist of non-accrual loans and other real
estate owned, net, were $230.4 million, or 1.25% of total assets, at March 31,
1997, as compared with $244.8 million, or 1.30% of total assets, at year-end
1996. At March 31, 1997, non-accrual loans totaled $182.6 million, or 1.68% of
total loans receivable, compared with $191.6 million, or 1.78% of total loans
receivable, at year-end 1996. The allowance for loan losses represented 56.5%
of non-accrual loans at March 31, 1997.
At March 31, 1997, the Bank had tangible and leverage capital ratios of
6.32% and a risk-based capital ratio of 13.30%.
DECLARATION OF DIVIDEND
On April 25, 1997, the Corporation announced that its Board of Directors had
declared a cash dividend of $0.04 per common share. The dividend will be paid
on June 16, 1997 to stockholders of record as of the close of business on May
16, 1997.
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<PAGE>
THE CORPORATION
This information is qualified in its entirety by the detailed information,
definitions and financial statements appearing elsewhere herein or
incorporated herein by reference.
GENERAL
The Corporation is the holding company for the Bank, a federally-chartered
savings bank. At December 31, 1996, the Company had total assets of $18.9
billion, total stockholders' equity of $1.0 billion, and total deposits of
$12.9 billion. The Company's core business activities include consumer
financial services, mortgage banking, commercial and multifamily real estate
lending, consumer lending, and business banking.
The Bank is a member of the BIF of the FDIC, with approximately 68% of its
deposits assessable by the BIF and approximately 32% of its deposits
assessable by the SAIF of the FDIC, in each case insured up to applicable
limits. The Bank is subject to regulation, examination and supervision by the
OTS, as its primary regulator, and the FDIC, as the administrator of the BIF
and the SAIF.
The Corporation has its principal executive offices at 589 Fifth Avenue, New
York, New York 10017, telephone number (212) 326-6170.
CONSUMER FINANCIAL SERVICES
The Company's consumer financial services include deposit products and
related services, securities brokerage services and insurance products. These
products and services are delivered through the Company's multi-channel
distribution network, which also serves as a vehicle for delivering products
and services related to the Company's other business activities, including
mortgage banking, consumer lending and business banking. During 1996, the
Company expanded its bank-by-phone capabilities, and as a result, most
services are now available 24 hours a day and seven days a week.
The Company's principal deposit-gathering market is the greater New York
metropolitan area, in which it operates 85 branches, consisting of 37 branches
in New York City, 23 branches in Long Island, 7 branches in Westchester and
Rockland counties in New York, and 18 branches in New Jersey. The Company also
operates one branch in Florida. In addition, the Company's deposit gathering
network includes over 100 automated teller machines owned by the Company. The
Company attracts deposits by offering a broad selection of deposit instruments
and programs, including consumer and commercial demand accounts, savings
accounts, money market accounts, time deposit accounts, individual retirement
and Keogh accounts, and automatic payroll and Social Security deposit
programs.
The Company provides insurance and securities brokerage services through
wholly-owned insurance and brokerage subsidiaries. The services provided by
the Company's securities brokerage subsidiary, Dime Securities of New York,
Inc. ("Dime Securities"), a registered broker-dealer, consist primarily of the
execution of securities transactions, on an agency basis, solely upon the
order and for the accounts of its customers. In addition, Dime Securities
provides standardized and individualized investment and financial planning
advice to individuals or entities. Products sold by Dime Securities, which are
not BIF- or SAIF-insured, include: mutual funds; government, corporate and
municipal bonds; equity securities and equity options; variable annuities; and
unit investment trusts.
Various subsidiaries of the Bank sell certain tax-deferred annuities and
life and disability insurance products issued by specified insurance
companies. In addition to sales by the Company's branch-based sales force,
life and disability insurance products are sold through direct mail marketing
and telemarketing programs.
The Company also offers Savings Bank Life Insurance ("SBLI") in New York
through its customer representatives and direct mail marketing programs. The
Company administers the SBLI program and is
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<PAGE>
reimbursed for expenses. However, the Company does not share in premiums or
surplus, which are maintained separately from its assets and liabilities, and
is not liable under any SBLI policy.
MORTGAGE BANKING
The Company's mortgage banking activities include production of one-to-four
family first mortgage loans and cooperative apartment loans ("residential
property loans"), sales of loans into the secondary market and loan servicing.
A key component of the Company's continuing business strategy is to expand its
mortgage banking activities by focusing on a multi-regional approach, which
consists of strengthening existing operations in its core lending area of New
York, New Jersey and Connecticut and controlled growth into markets outside of
that core lending area. In connection therewith, the Company, in the fourth
quarter of 1995, acquired the residential property loan origination businesses
of National Mortgage Investments Co., Inc., a Georgia-based mortgage banking
company, and James Madison Mortgage Company, a Virginia-based mortgage banking
company (the "National and Madison Acquisitions"). During 1996, these two
operations accounted for approximately $1 billion, or 39%, of the Company's
residential property loan originations. In addition to residential property
loan production offices in its core lending area, the Company currently
maintains offices in Arizona, Florida, Georgia, Illinois, Louisiana, Maryland,
Pennsylvania, South Carolina, and Virginia.
During the fourth quarter of 1996, the Company began a restructuring of its
mortgage banking operations, including new executive management, the
relocation of its mortgage banking headquarters from Uniondale, New York to
Tampa, Florida and various strategic initiatives designed to, among other
things, enhance the efficiencies of such operations and further strengthen the
Company's residential property loan production capabilities through the
establishment of additional regional loan origination offices and an expansion
of its correspondent-purchase activities.
During 1996, the Company originated $2.7 billion of residential property
loans. Of such originations, $1.9 billion were originated through approved
mortgage brokers and $0.8 billion resulted from direct originations through
the Company's branches, sales force and direct marketing. The Company, during
1996, also acquired $0.3 billion of residential property loans through
purchase activities. Of this amount, bulk purchases amounted to $0.2 billion
and correspondent purchases totaled $0.1 billion.
At December 31, 1996, the Company serviced residential property loans with
outstanding balances of $18.0 billion, including $7.0 billion of loans in its
own portfolio and $11.0 billion of loans owned by others.
COMMERCIAL AND MULTIFAMILY REAL ESTATE LENDING
First mortgage loans secured by commercial and multifamily real estate are
currently made by the Company principally in its core lending area. During
1996, the Company originated $154.2 million of commercial first mortgage loans
and $168.0 million of multifamily first mortgage loans. At December 31, 1996,
approximately half of the Company's $1.9 billion portfolio of commercial and
multifamily first mortgage loans was secured by multifamily properties.
As a result of the acquisition of BFS Bankorp, Inc. and its wholly-owned
subsidiary Bankers Federal Savings FSB (together, "BFS"), the Company's
portfolio of multifamily first mortgage loans will increase significantly. At
December 31, 1996, BFS had approximately $561 million of multifamily first
mortgage loans, as well as approximately $17 million of commercial first
mortgage loans. For a further discussion of the pending acquisition of BFS,
see "Merger and Acquisition Activities." In order to leverage existing
capabilities, increase production and provide geographic diversity, the
Company recently opened commercial and multifamily first mortgage loan
production offices in Philadelphia, Pennsylvania and Fairfax, Virginia.
CONSUMER LENDING
The Company's consumer loan portfolio, the principal balances of which
amounted to $723.7 million at year-end 1996, includes adjustable- and fixed-
rate home equity loans, automobile loans and lease financing,
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<PAGE>
manufactured home loans, boat loans, unsecured and secured personal loans,
property improvement loans, government-guaranteed student loans, loans secured
by deposits, and unsecured revolving and overdraft checking loans. Home equity
loans represented approximately 70% of the Company's total consumer loan
portfolio at December 31, 1996. During 1996, the Company's consumer loan
originations amounted to $373.4 million.
The Company's strategy with respect to consumer lending is to increase loan
production by marketing consumer loan products through its branch network and
expanding the use of telemarketing and direct response channels, as well as
cross-selling home equity loan products to its existing and new residential
first mortgage customers.
BUSINESS BANKING
The Company originates business loans principally to finance seasonal
working capital needs, expansion, renovation, and equipment purchases. During
1997, the Company intends to concentrate its business lending efforts on
companies with up to $25 million in annual sales and is seeking to build
relationships with such businesses by providing them with certain additional
banking services, including deposit and cash management products.
MERGER AND ACQUISITION ACTIVITIES
On January 13, 1995, Anchor Bancorp, Inc. and Anchor Savings Bank FSB
("Anchor Savings" and, together with Anchor Bancorp, Inc., "Anchor") were
merged with and into the Corporation and the Bank, respectively, with the
Corporation and the Bank being the surviving entities. Anchor Savings, on
August 12, 1994, had acquired all of the outstanding common stock and
preferred stock of The Lincoln Savings Bank, FSB ("Lincoln") and immediately
thereafter, Lincoln was merged with and into Anchor Savings. In addition,
during the fourth quarter of 1995, the Company consummated the National and
Madison Acquisitions.
In December 1996, the Corporation entered into a definitive agreement to
acquire BFS for approximately $92 million in cash. It is expected that the
transaction will be accounted for under the purchase method of accounting. At
December 31, 1996, BFS had total assets of $650.5 million, loans receivable,
net, of $586.8 million, substantially all of which were multifamily first
mortgage loans, and deposits of $453.5 million. The acquisition of BFS is
expected to be consummated during the second quarter of 1997.
BALANCE SHEET RESTRUCTURING PLAN
During 1996, a key component of the Company's operating strategy was to
continue implementation of a balance sheet restructuring plan (the "Balance
Sheet Restructuring Plan"), which was announced at the end of 1995. The
Balance Sheet Restructuring Plan was designed to, among other things, enable
the Company to improve its net interest margin, primarily by selling certain
relatively-lower yielding mortgage-backed securities ("MBS"), and provide the
Company with greater flexibility in adjusting to varying interest rate
environments. During 1996, the Company, in connection with the Balance Sheet
Restructuring Plan, sold $2.0 billion of securities and incurred a net loss of
$8.1 million. The proceeds of such sales were, in large part, used to repay
borrowed funds, the costs of which are generally more volatile than the
Company's deposits.
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<PAGE>
DIME BANCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth in summary form, certain financial data for
each of the years in the five-year period ended December 31, 1996. These
selected consolidated financial data are qualified in their entirety by the
detailed information and the consolidated financial statements of the
Corporation and notes thereto included in documents incorporated by reference
in this Prospectus Supplement and should be read in conjunction therewith. See
"Incorporation of Certain Documents By Reference" in the accompanying
Prospectus. The consolidated financial statements for each of the years in the
five-year period ended December 31, 1996 have been audited by KPMG Peat
Marwick LLP, independent certified public accountants; and the related
auditors' report for the three-year period ended December 31, 1996 refers to a
change in accounting method for goodwill. For purposes of this presentation,
the results provided for each of the years ended December 31, 1993 and 1992
include Anchor's results at or for its fiscal year ended June 30th of the
subsequent calendar year.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- --------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
DATA:
Interest income......... $ 1,350,698 $ 1,357,131 $ 1,136,862 $ 980,111 $1,243,664
Interest expense........ 889,403 947,505 707,785 589,939 753,288
----------- ----------- ----------- --------- ----------
Net interest income..... 461,295 409,626 429,077 390,172 490,376
Provision for loan
losses................. 41,000 39,650 55,799 95,489 103,684
----------- ----------- ----------- --------- ----------
Net interest income
after provision for
loan losses............ 420,295 369,976 373,278 294,683 386,692
----------- ----------- ----------- --------- ----------
Non-interest income:
Banking service fees... 27,373 22,325 19,953 19,269 18,677
Loan servicing fees,
net................... 30,356 30,452 28,213 30,001 32,270
Securities and
insurance brokerage
fees.................. 21,064 15,532 16,885 22,336 22,111
Net (losses) gains on
sales activities...... (12,716) (12,415) 2,925 36,606 28,544
Other.................. 12,391 10,273 11,291 14,313 17,112
----------- ----------- ----------- --------- ----------
Total non-interest
income................. 78,468 66,167 79,267 122,525 118,714
----------- ----------- ----------- --------- ----------
Non-interest expense:
General and
administrative
expense............... 292,795 285,901 294,474 294,755 323,122
SAIF recapitalization
assessment............ 26,280 -- -- -- --
Other real estate owned
expense, net.......... 10,072 12,892 11,013 77,393 50,204
Amortization of
mortgage servicing
rights................ 11,872 12,107 9,664 19,884 26,650
Restructuring and
merger-related
expense............... 3,504 15,331 58,258 4,000 3,000
----------- ----------- ----------- --------- ----------
Total non-interest
expense................ 344,523 326,231 373,409 396,032 402,976
----------- ----------- ----------- --------- ----------
Minority interest-
preferred stock
dividends of
subsidiary............. -- -- 11,433 1,312 --
----------- ----------- ----------- --------- ----------
Income before income tax
expense (benefit),
extraordinary item and
cumulative effect of a
change in accounting
principle.............. 154,240 109,912 67,703 19,864 102,430
Income tax expense
(benefit).............. 49,984 47,727 (53,138) (68,959) 41,642
----------- ----------- ----------- --------- ----------
Income before
extraordinary item and
cumulative effect of a
change in accounting
principle.............. 104,256 62,185 120,841 88,823 60,788
Extraordinary item-loss
on early extinguishment
of debt................ -- -- -- -- (2,760)
Cumulative effect of a
change in accounting
principle for goodwill,
securities available
for sale and mortgage
servicing rights,
respectively........... -- -- (92,887) (1,187) (7,066)
----------- ----------- ----------- --------- ----------
Net income.............. $ 104,256 $ 62,185 $ 27,954 $ 87,636 $ 50,962
=========== =========== =========== ========= ==========
Net income attributable
to common stock........ $ 104,256 $ 62,185 $ 27,954 $ 87,636 $ 39,403
=========== =========== =========== ========= ==========
</TABLE>
S-16
<PAGE>
DIME BANCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
AT OR FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
PRIMARY AND FULLY
DILUTED EARNINGS PER
COMMON SHARE:
Primary:
Income before
extraordinary item and
cumulative effect of a
change in accounting
principle............. $ 0.96 $ 0.57 $ 1.12 $ 0.91 $ 0.89
Extraordinary item..... -- -- -- -- (0.05)
Cumulative effect of a
change in accounting
principle............. -- -- (0.86) (0.01) (0.13)
----------- ----------- ----------- ----------- -----------
Net Income............. $ 0.96 $ 0.57 $ 0.26 $ 0.90 $ 0.71
=========== =========== =========== =========== ===========
Fully Diluted:
Income before
extraordinary item and
cumulative effect of a
change in accounting
principle............. $ 0.95 $ 0.57 $ 1.12 $ 0.91 $ 0.89
Extraordinary item..... -- -- -- -- (0.05)
Cumulative effect of a
charge in accounting
principle............. -- -- (0.86) (0.01) (0.13)
----------- ----------- ----------- ----------- -----------
Net Income............. $ 0.95 $ 0.57 $ 0.26 $ 0.90 $ 0.71
=========== =========== =========== =========== ===========
AVERAGE COMMON SHARES
OUTSTANDING (IN
THOUSANDS):
Primary................. 109,097 109,742 107,668 97,153 55,344
Fully diluted........... 109,249 109,682 107,700 97,367 55,386
FINANCIAL CONDITION DATA
AT DECEMBER 31:
Total assets............ $18,870,108 $20,326,620 $19,647,937 $18,098,984 $16,680,405
Securities available for
sale................... 2,589,572 4,070,865 530,714 658,204 898,279
Securities held to
maturity............... 4,363,971 5,085,736 8,609,897 8,159,747 6,678,036
Loans receivable........ 10,738,057 9,830,313 9,351,622 7,906,573 7,629,100
Allowance for loan
losses................. 106,495 128,295 170,383 157,515 248,429
Deposits................ 12,856,739 12,572,203 12,811,269 11,091,362 13,039,885
Borrowed funds.......... 4,815,191 6,614,552 5,758,734 5,850,575 2,888,269
Stockholders' equity.... 1,022,337 976,530 905,125 904,982 635,843
ASSET QUALITY AT
DECEMBER 31:
Non-performing assets... $ 244,845 $ 315,800 $ 415,866 $ 641,743 $ 1,010,877
Non-performing assets to
total assets........... 1.30% 1.55% 2.12% 3.55% 6.06%
Non-accrual loans to
loans receivable....... 1.78 2.60 3.66 3.68 10.19
Allowance for loan
losses to loans
receivable............. 0.99 1.31 1.82 1.99 3.26
Allowance for loan
losses to non-accrual
loans.................. 55.58 50.29 49.84 54.14 31.97
OTHER DATA:
Book value per common
share(1)............... $ 9.76 $ 9.03 $ 8.43 $ 8.48 $ 8.79
Tangible book value per
common share(1)........ 9.67 8.94 8.39 7.59 6.81
Net interest margin for
the year............... 2.40% 2.07% 2.36% 2.47% 2.91%
Return on average
assets................. 0.52 0.30 0.15 0.53 0.29
Return on average
stockholders' equity... 10.36 6.56 3.25 11.02 8.21
Average stockholders'
equity to average
assets................. 5.05 4.62 4.57 4.82 3.52
Stockholders' equity to
total assets........... 5.42 4.80 4.61 5.00 3.81
Loans serviced for
others................. $11,036,624 $ 9,514,560 $ 8,713,047 $ 8,265,354 $ 9,039,183
</TABLE>
- --------
Notes:
(1) For 1995, 1994 and 1993, the computation assumes the exercise of a warrant
issued to the FDIC in July 1993 to acquire 8.4 million shares of the
Corporation's common stock at $0.01 per share. This warrant actually was
exercised in May 1996.
S-17
<PAGE>
USE OF PROCEEDS
All the proceeds from the sale of Series A Capital Securities will be
invested by the Series A Issuer in Series A Subordinated Debentures. The
Corporation intends that the proceeds from the sale of such Series A
Subordinated Debentures will be added to its general corporate funds and will
be used for general corporate purposes. See "Use of Proceeds" in the
accompanying Prospectus.
ACCOUNTING TREATMENT
For financial reporting purposes, the Series A Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series A
Issuer will be included in the consolidated financial statements of the
Corporation. The Series A Capital Securities will be presented as a separate
line item in the consolidated balance sheets of the Corporation, entitled
"Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures" and appropriate disclosures about
the Series A Capital Securities, the Series A Guarantee and the Series A
Subordinated Debentures will be included in the notes to the consolidated
financial statements. For financial reporting purposes, the Corporation will
record Distributions payable on the Series A Capital Securities as an expense
in the consolidated statements of income.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of December 31, 1996 and as adjusted to
give effect to the consummation of the offering of the Series A Capital
Securities. The following data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation and its
subsidiaries incorporated herein by reference.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Total Long-term Debt................................ $ 906,514 $ 906,514
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures(a)............................. -- 200,000
Stockholders' Equity:
Common Stock...................................... 1,083 1,083
Additional Paid-In Capital........................ 914,386 914,386
Retained Earnings................................. 158,956 158,956
Treasury Stock, at Cost........................... (51,498) (51,498)
Net Unrealized Gain on Securities Available for
Sale, Net of Related Income Taxes................ 22 22
Unearned Compensation............................. (612) (612)
---------- ----------
Total Stockholders' Equity...................... 1,022,337 1,022,337
---------- ----------
Total Capitalization.......................... $1,928,851 $2,128,851
========== ==========
</TABLE>
- --------
(a) As described herein, the assets of the Series A Issuer will be
$206,186,000 of 9.33% Series A Subordinated Debentures, issued by the
Corporation to the Series A Issuer. The Series A Subordinated Debentures
will mature on May 6, 2027 (which date may be shortened to a date not
earlier than May 6, 2012 in certain circumstances as described under
"Certain Terms of Series A Subordinated Debentures--Conditional Right to
Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event"
upon the occurrence of a Tax Event or a Capital Treatment Event if certain
conditions are met). The Corporation owns all of the Series A Common
Securities of the Series A Issuer, which accrue distributions at the rate
of 9.33% per annum.
S-18
<PAGE>
CERTAIN TERMS OF SERIES A CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series A
Capital Securities supplements the description of the terms and provisions of
the Capital Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference
is hereby made. This summary of certain terms and provisions of the Series A
Capital Securities, which describes the material provisions thereof, does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Trust Agreement. The form of the Trust Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and accompanying Prospectus form a part.
DISTRIBUTIONS
The Series A Capital Securities represent beneficial interests in the Series
A Issuer, and Distributions on the Series A Capital Securities will be payable
at an annual rate equal to 9.33% of the stated Liquidation Amount of $1,000,
payable semi-annually in arrears on May 6 and November 6 of each year (each a
"Distribution Date"), to the holders of the Series A Capital Securities at the
close of business on the fifteenth day (whether or not a Business Day (as
defined in the accompanying Prospectus)) next preceding the relevant
Distribution Date. Distributions will accumulate from May 6, 1997. The first
Distribution Date for the Series A Capital Securities will be November 6,
1997. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any
Distribution Date is not a Business Day, then payment of the Distributions
payable on such date will be made on the next succeeding day that is a
Business Day (and without any additional Distributions or other payment in
respect of any such delay), except that, if such Business Day is 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 the date such payment was originally payable. The Paying Agent for the
Series A Capital Securities shall initially be The Chase Manhattan Bank. See
"Description of Preferred Securities--Distributions" in the accompanying
Prospectus.
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time
to time for a period not exceeding ten consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series A Subordinated Debentures. As a
consequence of any such deferral of interest payments by the Corporation,
semi-annual Distributions on the Series A Capital Securities will also be
deferred by the Series A Issuer during any such Extension Period.
Distributions to which holders of the Series A Capital Securities are entitled
will accumulate additional Distributions thereon at a rate per annum equal to
9.33% thereof, compounded semi-annually from the relevant Distribution Date.
The term "Distributions" as used herein shall include any such additional
Distributions. 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 or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation that rank pari passu in all respects with or
junior in interest to the Series A Subordinated Debentures, subject to certain
exceptions described herein. See "Certain Terms of Series A Subordinated
Debentures--Option to Defer Interest Payments." Prior to the termination of
any such Extension Period, the Corporation may further defer the payment of
interest on the Series A Subordinated Debentures, provided that no Extension
Period may exceed ten consecutive semi-annual periods or extend beyond the
Stated Maturity of the Series A Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all interest then accrued and
unpaid (together with interest thereon at a rate equal to 9.33% per annum,
compounded semi-annually, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period. See "Certain Federal Income Tax Consequences--Original Issue
Discount."
S-19
<PAGE>
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Subordinated Debentures.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series A
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined
in the accompanying Prospectus) of the Series A Securities, upon not less than
30 nor more than 60 days notice prior to the date fixed for repayment or
redemption, at a redemption price, with respect to the Series A Capital
Securities (the "Redemption Price"), equal to the aggregate Liquidation Amount
of such Series A Capital Securities plus accumulated and unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related
amount of the premium, if any, paid by the Corporation upon the concurrent
redemption of such Series A Subordinated Debentures. If less than all of the
Series A Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption, including any
premium paid by the Corporation, shall be allocated to the redemption pro rata
of the Series A Capital Securities and the Series A Common Securities.
The Corporation has the right to redeem the Series A Subordinated Debentures
(i) on or after May 6, 2007, in whole at any time or in part from time to
time, (ii) at any time, in certain circumstances as described under "Certain
Terms of Series A Subordinated Debentures--Conditional Right to Shorten
Maturity or Redeem upon a Tax Event or Capital Treatment Event," in whole (but
not in part), within 90 days following the occurrence of a Tax Event or a
Capital Treatment Event, or (iii) on or after May 6, 2002, in certain
circumstances as described under "Risk Factors--Imposition of Holding Company
Capital Rules," in whole (but not in part), if the Corporation is not then
subject to the Holding Company Capital Rules. A redemption of the Series A
Subordinated Debentures would cause a mandatory redemption of Series A Capital
Securities and Series A Common Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed as percentages of the Liquidation
Amount, together with accrued and unpaid Distributions to but excluding the
Redemption Date, if redeemed during the 12-month period beginning May 6:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007........................................................... 104.665%
2008........................................................... 104.199
2009........................................................... 103.732
2010........................................................... 103.266
2011........................................................... 102.799
2012........................................................... 102.333
2013........................................................... 101.866
2014........................................................... 101.400
2015........................................................... 100.933
2016........................................................... 100.467
</TABLE>
and at 100% on or after May 6, 2017.
The Redemption Price, in the case of a redemption under (ii) above, shall
equal, for each Series A Capital Security, the Tax/Capital Make-Whole Amount
for a corresponding $1,000 principal amount of Series A Subordinated
Debentures together with accrued Distributions to but excluding the Redemption
Date. The "Tax/Capital Make-Whole Amount" shall be equal to the greater of (i)
100% of the principal amount of such Series A Subordinated Debentures or (ii)
as determined by a Quotation Agent (as defined below) as of the Redemption
Date, the sum of the present values of the principal amount and premium
payable as part of the
S-20
<PAGE>
Redemption Price with respect to an optional redemption of such Series A
Subordinated Debentures on May 6, 2007, together with scheduled payments of
interest from the Redemption Date to May 6, 2007 (the "Remaining Life"), in
each case discounted to the Redemption Date on a semi-annual basis (assuming a
360-day year consisting of 30-day months) at the Adjusted Tax/Capital Treasury
Rate (as defined below).
The Redemption Price, in the case of a redemption under (iii) above, shall
equal, for each Series A Capital Security, the Regulatory Make-Whole Amount
for a corresponding $1,000 principal amount of Series A Subordinated
Debentures together with accrued Distributions to but excluding the Redemption
Date. The "Regulatory Make-Whole Amount" shall be equal to the greater of (i)
100% of the principal amount of such Series A Subordinated Debentures or (ii)
as determined by a Quotation Agent as of the Redemption Date, the sum of the
present values of the principal amount and premium payable as part of the
Redemption Price with respect to an optional redemption of such Series A
Subordinated Debentures on May 6, 2007, together with scheduled payments of
interest for the Remaining Life, in each case discounted to the Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of 30-day
months) at the Adjusted Regulatory Treasury Rate (as defined below).
"Adjusted Regulatory Treasury Rate" means, with respect to any Redemption
Date, the Treasury Rate (as defined below) plus 0.50%.
"Adjusted Tax/Capital Treasury Rate" means, with respect to any
Redemption Date, the Treasury Rate (as defined below) plus (i) 1.50% if
such Redemption Date occurs on or before May 6, 1998 or (ii) 0.50% if such
Redemption Date occurs after May 6, 1998.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the Remaining Life, yields
for the two published maturities most closely corresponding to the
Remaining Life shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.
"Comparable Treasury Issue" means, with respect to any Redemption Date,
the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the Remaining Life 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 May 6, 2007, the two most closely corresponding United States
Treasury securities shall be used as the Comparable Treasury Issue, and the
Treasury Rate shall be interpolated and extrapolated on a straight-line
basis, rounding to the nearest month using such securities.
"Quotation Agent" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated and its successors; provided, however, that if the foregoing
shall cease to be a primary United States Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Corporation shall
substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.
S-21
<PAGE>
"Comparable Treasury Price" means (i) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (ii) if
the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption 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 Redemption Date.
LIQUIDATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to liquidate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Capital Securities in exchange therefor upon
liquidation of the Series A Issuer.
Under current United States federal income tax law, a distribution of Series
A Subordinated Debentures in exchange for Series A Capital Securities should
not be a taxable event to holders of the Series A Capital Securities. Should
there be a change in law, a change in legal interpretation, a Tax Event or
other circumstances, however, the distribution of the Series A Subordinated
Debentures could be a taxable event to holders of the Series A Capital
Securities. See "Certain Federal Income Tax Consequences--Distribution of
Series A Subordinated Debentures to Holders of Series A Capital Securities."
If the Corporation elects to liquidate the Series A Issuer and thereby
causes the Series A Subordinated Debentures to be distributed to holders of
the Series A Capital Securities in exchange therefor upon liquidation of the
Series A Issuer, the Corporation shall continue to have the right to redeem
the Series A Subordinated Debentures in circumstances as described under
"Certain Terms of Series A Subordinated Debentures--Redemption."
LIQUIDATION VALUE
The amount payable on the Series A Capital Securities in the event of any
liquidation of the Series A Issuer is $1,000 per Series A Capital Security
plus accumulated and unpaid Distributions, which may be in the form of a
distribution of a Like Amount in Series A Subordinated Debentures, subject to
certain exceptions. See "Description of Preferred Securities--Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
REGISTRATION OF SERIES A CAPITAL SECURITIES
The Series A Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the
Series A Capital Securities will be shown on, and transfers thereof will be
effected only through, records maintained by Participants in DTC (as defined
in the accompanying Prospectus). Except as described below and in the
accompanying Prospectus, Series A Capital Securities in certificated form will
not be issued in exchange for the global certificates. See "Book-Entry
Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series A Capital Securities
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Series A Issuer that it is unwilling or unable to continue as
a depositary for such global security and no successor depositary shall have
been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act, at a time when DTC is required to be so
registered to act as such depositary, (ii) the Series A Issuer in its sole
discretion determines that such global security shall be so exchangeable, or
(iii) there shall have occurred and be continuing an event of default under
the Indenture with respect to the Series A Subordinated Debentures. Any global
security that is
S-22
<PAGE>
exchangeable pursuant to the preceding sentence shall be exchangeable for
definitive certificates registered in such names as DTC shall direct. It is
expected that such instructions will be based upon directions received by DTC
from its Participants with respect to ownership of beneficial interests in
such global security. In the event that Series A Capital Securities are issued
in definitive form, such Series A Capital Securities will be in denominations
of $1,000 and integral multiples thereof and may be transferred or exchanged
at the offices described below.
Payments on Series A Capital Securities represented by a global security
will be made to DTC, as the depositary for the Series A Capital Securities. In
the event Series A Capital Securities are issued in certificated form, the
Liquidation Amount and Distributions will be payable, the transfer of the
Series A Capital Securities will be registrable, and Series A Capital
Securities will be exchangeable for Series A Capital Securities of other
denominations of a like aggregate Liquidation Amount, at the corporate trust
office of the Property Trustee in New York, New York, or at the offices of any
paying agent or transfer agent appointed by the Administrative Trustees,
provided that payment of any Distribution may be made at the option of the
Administrative Trustees by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Series A Capital Securities
are issued in certificated form, the record dates for payment of Distributions
will be the 15th day of the month in which the relevant Distribution payment
is scheduled to be made. 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 "Book-Entry Issuance" in
the accompanying Prospectus.
CERTAIN TERMS OF SERIES A SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series A
Subordinated Debentures supplements the description of the terms and
provisions of the Junior Subordinated Debentures set forth in the accompanying
Prospectus under the heading "Description of Junior Subordinated Debentures,"
to which description reference is hereby made. The summary of certain terms
and provisions of the Series A Subordinated Debentures set forth below, which
describes the material provisions thereof, does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the
Indenture. The form of Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and accompanying
Prospectus form a part.
Concurrently with the issuance of the Series A Capital Securities, the
Series A Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series A Common Securities, in
the Series A Subordinated Debentures issued by the Corporation. The Series A
Subordinated Debentures will bear interest at an annual rate equal to 9.33% of
the principal amount thereof, payable semi-annually in arrears on May 6 and
November 6 of each year (each, an "Interest Payment Date"), commencing
November 6, 1997, to the person in whose name each Series A Subordinated
Debenture is registered, subject to certain exceptions, at the close of
business on the fifteenth day (whether or not a Business Day) next preceding
such Interest Payment Date. It is anticipated that, until the liquidation, if
any, of the Series A Issuer, the Series A Subordinated Debentures will be held
in the name of the Property Trustee in trust for the benefit of the holders of
the Series A Securities. The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any Interest Payment Date 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 Business Day is 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 the
date such payment was originally payable. Accrued interest that is not paid on
the applicable Interest Payment Date will bear additional interest on the
amount thereof (to the extent permitted by law) at a rate per annum equal to
9.33% thereof, compounded semi-annually from the relevant Interest Payment
Date. 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.
S-23
<PAGE>
The Series A Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture. The Series A
Subordinated Debentures will mature on May 6, 2027. Such maturity may be
shortened by the Corporation in certain circumstances upon the occurrence of a
Tax Event or a Capital Treatment Event as described under "--Conditional Right
to Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event."
The Series A Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt of the Corporation.
See "Description of Junior Subordinated Debentures--Subordination" in the
accompanying Prospectus. Substantially all of the Corporation's existing
indebtedness constitutes Senior Debt. Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary, including the Bank, upon such subsidiary's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Series A Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary, except to the
extent that the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Series A Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Series A Subordinated Debentures
should look only to the assets of the Corporation for payments on the Series A
Subordinated Debentures. The Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including
Senior Debt, whether under the Indenture or any existing or other indenture
that the Corporation may enter into in the future or otherwise. See
"Description of Junior Subordinated Debentures--Subordination" in the
accompanying Prospectus.
OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture at any time or
from time to time during the term of the Series A Subordinated Debentures to
defer payment of interest on the Series A Subordinated Debentures for a period
not exceeding ten consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series A Subordinated Debentures. At the end of such
Extension Period, the Corporation must pay all interest then accrued and
unpaid on the Series A Subordinated Debentures (together with interest on such
unpaid interest at an annual rate equal to 9.33%, compounded semi-annually
from the relevant Interest Payment Date, to the extent permitted by applicable
law). During an Extension Period, interest will continue to accrue and holders
of Series A Subordinated Debentures (or holders of Series A Capital Securities
while such series is outstanding) will be required to accrue interest income
for United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--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 or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation (including
other Junior Subordinated Debentures) that rank pari passu in all respects
with or junior in interest to the Series A Subordinated Debentures (other than
(a) repurchases, redemptions or other acquisitions of shares of capital stock
of the Corporation in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of
capital stock of the Corporation (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange or conversion of any class or series of the
Corporation's capital stock (or any capital stock of a subsidiary of the
Corporation) for any class or series of the Corporation's capital stock or of
any class or series of the Corporation's indebtedness for any class or series
of the Corporation's capital stock, (c) 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, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise
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of such warrants, options or other rights is the same stock as that on which
the dividend is being paid or ranks pari passu with or junior to such stock).
Prior to the termination of any such Extension Period, the Corporation may
further defer the payment of interest on the Series A Subordinated Debentures,
provided that no Extension Period may exceed ten consecutive semi-annual
periods or extend beyond the Stated Maturity of the Series A Subordinated
Debentures. Upon the termination of any such Extension Period and the payment
of all interest then accrued and unpaid (together with interest thereon at a
rate equal to 9.33% per annum 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. 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 to begin such Extension Period at
least one Business Day prior to the earlier of (i) the date interest on the
Series A Subordinated Debentures would have been payable except for the
election to begin such Extension Period or (ii) the date the Administrative
Trustees are required to give notice to any applicable stock exchange or
automated quotation system on which the Series A Capital Securities are then
listed or quoted or to holders of Series A Subordinated Debentures of the
record date or (iii) the date such interest is payable, but in any event not
less than one Business Day prior to such record date. The Debenture Trustee
shall give notice of the Corporation's election to begin a new Extension
Period to the holders of the Series A Subordinated Debentures. 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 Defer Interest Payments" in the accompanying Prospectus.
ADDITIONAL SUMS
If the Series A Issuer 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 Series A Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by
the Series A Issuer shall not be reduced as a result of any such additional
taxes, duties or other governmental charges.
REDEMPTION
The Series A Subordinated Debentures are redeemable prior to maturity at the
option of the Corporation (i) on or after May 6, 2007, in whole at any time or
in part from time to time, (ii) at any time, in certain circumstances as
described under "Certain Terms of Series A Subordinated Debentures--
Conditional Right to Shorten Maturity or Redeem upon a Tax Event or Capital
Treatment Event," in whole (but not in part) within 90 days following the
occurrence of a Tax Event or a Capital Treatment Event, or (iii) on or after
May 6, 2002, in certain circumstances as described under "Risk Factors--
Imposition of Holding Company Capital Rules," in whole (but not in part) if
the Corporation is not then subject to the Holding Company Capital Rules. The
proceeds of any such redemption will be used by the Series A Issuer to redeem
the Series A Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed as percentages of the principal amount,
together with accrued and unpaid interest to but excluding the Redemption
Date, if redeemed during the 12-month period beginning May 6:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007........................................................... 104.665%
2008........................................................... 104.199
2009........................................................... 103.732
2010........................................................... 103.266
2011........................................................... 102.799
2012........................................................... 102.333
2013........................................................... 101.866
2014........................................................... 101.400
2015........................................................... 100.933
2016........................................................... 100.467
</TABLE>
and at 100% on or after May 6, 2017.
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The Redemption Price, in the case of a redemption under (ii) or (iii) above,
shall be equal to the Tax/Capital Make-Whole Amount or the Regulatory Make-
Whole Amount, respectively (each as defined under "Certain Terms of Series A
Capital Securities--Redemption"), together with accrued and unpaid interest
thereon to but excluding the Redemption Date.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES
As described under "Certain Terms of Series A Capital Securities--
Liquidation of Series A Issuer and Distribution of Series A Subordinated
Debentures to Holders," under certain circumstances involving the termination
of the Series A Issuer, Series A Subordinated Debentures may be distributed to
the holders of the Series A Capital Securities in exchange therefor upon
liquidation of the Series A Issuer after satisfaction of liabilities to
creditors of the Series A Issuer as provided by applicable law. If distributed
to holders of Series A Capital Securities, the Series A Subordinated
Debentures will initially be issued in the form of one or more global
securities and DTC, or any successor depositary for the Series A Capital
Securities, will act as depositary for the Series A Subordinated Debentures.
It is anticipated that the depositary arrangements for the Series A
Subordinated Debentures would be substantially identical to those in effect
for the Series A Capital Securities. If Series A Subordinated Debentures are
distributed to the holders of Series A Capital Securities in exchange therefor
upon liquidation of the Series A Issuer, the Corporation will use its best
efforts to include the Series A Subordinated Debentures on such stock
exchanges or automated quotation system, if any, on which the Series A Capital
Securities are then listed or quoted. There can be no assurance as to the
market price of any Series A Subordinated Debentures that may be distributed
to the holders of Series A Capital Securities.
CONDITIONAL RIGHT TO SHORTEN MATURITY OR REDEEM UPON A TAX EVENT OR CAPITAL
TREATMENT EVENT
If a Tax Event or a Capital Treatment Event occurs and either (i) in the
opinion of counsel to the Corporation experienced in such matters, there would
in all cases, after effecting the termination of the Series A Issuer and the
distribution of the Series A Subordinated Debentures to the holders of the
Series A Capital Securities in exchange therefor upon liquidation of the
Series A Issuer, be more than an insubstantial risk that an Adverse Tax
Consequence (as defined in "Risk Factors--Tax Event or Capital Treatment
Event--Exchange of Series A Capital Securities for Series A Subordinated
Debentures, Shortening of Maturity of Series A Subordinated Debentures or
Redemption") would continue to exist, (ii) in the reasonable determination of
the Corporation, there would in all cases, after effecting the termination of
the Series A Issuer and distribution of the Series A Subordinated Debentures
to the holders of the Series A Capital Securities in exchange therefor upon
liquidation of the Series A Issuer, be more than an insubstantial risk that
the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Series A Capital Securities as "Tier 1 Capital" (or
the equivalent thereof, if applicable) or (iii) the Series A Subordinated
Debentures are not held by the Series A Issuer, then the Corporation shall
have the right (a) to shorten the Stated Maturity of the Series A Subordinated
Debentures to the minimum extent required, but in any event to a date not
earlier than May 6, 2012 (the action referred to in this clause (a) being
referred to herein as a "Maturity Advancement"), such that, in the opinion of
counsel to the Corporation experienced in such matters, after advancing the
Stated Maturity, interest paid on the Series A Subordinated Debentures will be
deductible for United States federal income tax purposes, or (b) if either (x)
in the opinion of counsel to the Corporation experienced in such matters,
there would in all cases, after affecting a Maturity Advancement, be more than
an insubstantial risk that an Adverse Tax Consequence would continue to exist
or (y) in the reasonable determination of the Corporation, there would in all
cases, after effecting a Maturity Advancement, be more than an insubstantial
risk that the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Series A Capital Securities as "Tier 1 Capital" (or
the equivalent thereof, if applicable) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation, to redeem the Series A Subordinated Debentures, in whole but not
in part, at any time within 90 days following the occurrence of the Tax Event
or Capital Treatment Event at a Redemption Price equal to the Tax/Capital
Make-Whole Amount. See "Certain Terms of Series A Capital Securities--
Liquidation of Series A Issuer and Distribution of Series A Subordinated
Debentures to Holders" and "--Redemption" and "Certain Terms of Series A
Subordinated Debentures--General" and "--Redemption."
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<PAGE>
Holders of Series A Capital Securities should consult their own tax advisors
regarding the tax consequences to them of a Maturity Advancement.
See "Certain Federal Income Tax Consequences--Possible Tax Law Changes" for
a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Corporation to shorten the Stated
Maturity of the Series A Subordinated Debentures or to cause a redemption of
the Series A Capital Securities prior to May 6, 2007.
REGISTRATION OF SERIES A SUBORDINATED DEBENTURES
The Series A Subordinated Debentures will be represented by global
certificates registered in the name of DTC or its nominee. Beneficial
interests in the Series A Subordinated Debentures will be shown on, and
transfers thereof will be effected only through, records maintained by
Participants in DTC. Except as described below and in the accompanying
Prospectus, Series A Subordinated Debentures in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance" in
the accompanying Prospectus.
A global security shall be exchangeable for Series A Subordinated Debentures
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Corporation that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have
been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act, at a time when DTC is required to be so
registered to act as such depositary, (ii) the Corporation in its sole
discretion determines that such global security shall be so exchangeable, or
(iii) there shall have occurred and be continuing an event of default under
the Indenture with respect to the Series A Subordinated Debentures. Any global
security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants with respect to ownership of beneficial
interests in such global security. In the event that Series A Subordinated
Debentures are issued in definitive form, such Series A Subordinated
Debentures will be in denominations of $1,000 and integral multiples thereof
and may be transferred or exchanged at the offices described below.
Payments on Series A Subordinated Debentures represented by a global
security will be made to DTC, as the depositary for the Series A Subordinated
Debentures. In the event Series A Subordinated Debentures are issued in
certificated form, principal and interest will be payable, the transfer of the
Series A Subordinated Debentures will be registrable, and Series A
Subordinated Debentures will be exchangeable for Series A Subordinated
Debentures of other denominations of a like aggregate principal amount, at the
corporate office of the Debenture Trustee in New York, New York, or at the
offices of any paying agent or transfer agent appointed by the Corporation,
provided that payment of interest may be made at the option of the Corporation
by check mailed to the address of the persons entitled thereto or by wire
transfer. In addition, if the Series A Subordinated Debentures are issued in
certificated form, the record dates for payment of interest will be the 15th
day of the last month of each semi-annual period. 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 "Book-
Entry Issuance" in the accompanying Prospectus.
CERTAIN TERMS OF SERIES A GUARANTEE
The Series A Guarantee guarantees to the holders of the Series A Capital
Securities the following payments, to the extent not paid by the Series A
Issuer: (i) any accumulated and unpaid Distributions required to be paid on
the Series A Capital Securities, to the extent that the Series A Issuer has
funds on hand available therefor at such time; (ii) the Redemption Price with
respect to any Series A Capital Securities called for redemption, to the
extent that the Series A Issuer has funds on hand available therefor at such
time; and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Series A Issuer (unless the Series A Subordinated
Debentures are distributed to holders of the Series A Capital Securities), the
lesser of (a) the aggregate of the
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Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Series A Issuer has funds on hand available
therefor at such time, and (b) the amount of assets of the Series A Issuer
remaining available for distribution to holders of the Series A Capital
Securities after payment of creditors of the Series A Issuer as required by
applicable law. The Series A Guarantee will be qualified as an indenture under
the Trust Indenture Act. The Chase Manhattan Bank will act as the Guarantee
Trustee for the purpose of compliance with the Trust Indenture Act and will
hold the Series A Guarantee for the benefit of the holders of the Series A
Capital Securities. The Chase Manhattan Bank will also act as Debenture
Trustee for the Series A Subordinated Debentures and as Property Trustee.
Chase Manhattan Bank Delaware will act as Delaware Trustee.
The holders of not less than a majority in aggregate Liquidation Amount of
the Series A Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect to the Series A Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Series A
Guarantee without first instituting a legal proceeding against the Series A
Issuer, the Guarantee Trustee or any other person or entity. If the
Corporation were to default on its obligation to pay amounts payable under the
Series A Subordinated Debentures, the Series A Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Series A
Capital Securities or otherwise, and, in such event, holders of the Series A
Capital Securities would not be able to rely upon the Series A Guarantee for
payment of such amounts. Instead, if any event of default under the Indenture
shall have occurred and be continuing and such event is attributable to the
failure of the Corporation to pay interest or premium, if any, on or principal
of the Series A Subordinated Debentures on the applicable Interest Payment
Date, then a holder of Series A Capital Securities may institute a Direct
Action against the Corporation pursuant to the terms of the Indenture for
enforcement of payment to such holder of the principal of or interest or
premium, if any, on such Series A Subordinated Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Series A Capital
Securities of such holder. In connection with such Direct Action, the
Corporation will have a right to set-off under the Indenture to the extent of
any payment made by the Corporation to such holder of Series A Securities in
the Direct Action. Except as described herein, holders of Series A Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Series A Subordinated Debentures or assert directly any
other rights in respect of the Series A Subordinated Debentures. See
"Description of Guarantees" in the accompanying Prospectus. The Trust
Agreement provides that each holder of Series A Capital Securities by
acceptance thereof agrees to the provisions of the Series A Guarantee, the
Expense Agreement and the Indenture.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
(a "Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an
investment in the Series A Capital Securities. Accordingly, among other
factors, the fiduciary should consider whether the investment would satisfy
the prudence and diversification requirements of ERISA and would be consistent
with the documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), prohibit Plans, as well as individual retirement
accounts and Keogh plans subject to Section 4975 of the Code (also "Plans"),
from engaging in certain transactions involving "plan assets" with persons who
are "parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") with respect to such Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other
liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans
(as defined in Section 3(32) of ERISA), certain church plans (as defined in
Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of
ERISA) are not subject to the requirements of ERISA or Section 4975 of the
Code.
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<PAGE>
Under a regulation (the "Plan Assets Regulation") issued by the United
States Department of Labor (the "DOL"), the assets of the Series A Issuer
would be deemed "plan assets" of a Plan for purposes of ERISA and Section 4975
of the Code if "plan assets" of the Plan were used to acquire an equity
interest in the Series A Issuer and no exception were applicable under the
Plan Assets Regulation. An "equity interest" is defined under the Plan Assets
Regulation as any interest in an entity other than an instrument which is
treated as indebtedness under applicable local law and which has no
substantial equity features and specifically includes a beneficial interest in
a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the assets
of the Series A Issuer would not be deemed to be "plan assets" of investing
Plans if, immediately after the most recent acquisition of any equity interest
in the Series A Issuer, less than 25% of the value of each class of equity
interests in the Series A Issuer were held by Plans, other employee benefit
plans not subject to ERISA or Section 4975 of the Code (such as governmental,
church and foreign plans), and entities holding assets deemed to be "plan
assets" of any Plan (collectively, "Benefit Plan Investors"), or if the Series
A Capital Securities were "publicly-offered securities" for purposes of the
Plan Assets Regulation. No assurance can be given that the value of the Series
A Capital Securities held by Benefit Plan Investors will be less than 25% of
the total value of such Series A Capital Securities at the completion of the
initial offering or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception. In
addition, the Series A Capital Securities will be deemed "publicly-offered
securities" for the purposes of the Plan Asset Regulations only if owned by
100 or more investors independent of the Series A Issuer and each other. No
assurance can be given that the Series A Capital Securities would be
considered to be "publicly-offered securities" under the Plan Assets
Regulation. All of the Series A Common Securities will be purchased and
initially held by the Corporation.
Certain transactions involving the Series A Issuer could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Series A Capital Securities
were acquired with "plan assets" of such Plan and the assets of the Series A
Issuer were deemed to be "plan assets" of Plans investing in the Series A
Issuer. For example, if the Corporation is a Party in Interest with respect to
an investing Plan, extensions of credit between the Corporation and the Series
A Issuer (as represented by the Series A Subordinated Debentures and the
Guarantee) would likely be prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available
under an applicable administrative exemption (see below). In addition, if the
Corporation were considered to be a fiduciary with respect to the Series A
Issuer as a result of certain powers it holds (such as the powers to remove
and replace the Property Trustee and the Administrative Trustees), certain
operations of the Series A Issuer, including the optional redemption or
acceleration of the Series A Subordinated Debentures, could be considered to
be prohibited transactions under Section 406(b) of ERISA and Section
4975(c)(1)(E) of the Code. In order to avoid such prohibited transactions,
each investing plan, by purchasing the Series A Capital Securities, will be
deemed to have directed the Series A Issuer to invest in the Series A
Subordinated Debentures and to have appointed the Property Trustee.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect
prohibited transactions that may arise from the purchase or holding of the
Series A Capital Securities if assets of the Series A Issuer were deemed to be
"plan assets" of Plans investing in the Series A Issuer as described above.
Those class exemptions are PTCE 96-23 (for certain transactions determined by
in-house asset managers), PTCE 95-60 (for certain transactions involving
insurance company general accounts), PTCE 91-38 (for certain transactions
involving bank collective investment funds), PTCE 90-1 (for certain
transactions involving insurance company separate accounts), and PTCE 84-14
(for certain transactions determined by independent qualified professional
asset managers).
Because the Series A Capital Securities may be deemed equity interests in
the Series A Issuer for purposes of applying ERISA and Section 4975 of the
Code, the Series A Capital Securities may not be purchased and should not be
held by any Plan, any entity whose underlying assets include "plan assets" by
reason of any Plan's investment in the entity (a "Plan Asset Entity") or any
person investing "plan assets" of any Plan, unless such
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purchaser or holder is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1, or 84-14 or another applicable exemption. Any
purchaser or holder of the Series A Capital Securities or any interest therein
will be deemed to have represented by its purchase and holding thereof that it
either (a) is not a Plan or (b) is eligible for the exemptive relief available
under PTCE 96-23, 95-60, 91-38, 90-1, or 84-14 or another applicable exemption
with respect to such purchase or holding. If a purchaser or holder of the
Series A Capital Securities that is a Plan or a Plan Asset Entity elects to
rely on an exemption other than PTCE 96-23, 95-60, 91-38, 90-1, or 84-14, the
Corporation and the Series A Issuer may require a satisfactory opinion of
counsel or other evidence with respect to the availability of such exemption
for such purchase and holding.
DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALTIES THAT MAY BE IMPOSED
UPON PERSONS INVOLVED IN NON-EXEMPT PROHIBITED TRANSACTIONS, IT IS
PARTICULARLY IMPORTANT THAT FIDUCIARIES OR OTHER PERSONS CONSIDERING
PURCHASING THE SERIES A CAPITAL SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS"
OF ANY PLAN CONSULT WITH THEIR COUNSEL REGARDING THE POTENTIAL CONSEQUENCES IF
THE ASSETS OF THE SERIES A ISSUER WERE DEEMED TO BE "PLAN ASSETS" AND THE
AVAILABILITY OF EXEMPTIVE RELIEF UNDER PTCE 96-23, 95-60, 91-38, 90-1, OR 84-
14 OR ANY OTHER APPLICABLE EXEMPTION.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Series A Capital
Securities. This summary only addresses the federal income tax consequences to
a person that acquires Series A Capital Securities on their original issue at
their original offering price and that is (i) an individual citizen or
resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, (iii) an estate the income of which is subject to United States
federal income tax regardless of source or (iv) a trust if (A) a court within
the United States is able to exercise primary supervision over the
administration of the trust and (B) one or more United States trustees have
the authority to control all substantial decisions of the trust (collectively,
a "United States Person"). This summary does not address all tax consequences
that may be applicable to a United States Person that is a beneficial owner of
Series A Capital Securities, nor does it address the tax consequences to (i)
persons that are not United States Persons, (ii) persons that may be subject
to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment
companies, real estate investment trusts, tax-exempt organizations and dealers
in securities or currencies, (iii) persons that will hold Series A Capital
Securities as part of a position in a "straddle" or as part of a "hedging,"
"conversion" or other integrated investment transaction for United States
federal income tax purposes, (iv) persons whose functional currency is not the
United States dollar or (v) persons that do not hold Series A Capital
Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, counsel to the Corporation and
the Series A Issuer. This summary is based upon the Code, Treasury
regulations, Internal Revenue Service (the "IRS") rulings and pronouncements
and judicial decisions now in effect, all of which are subject to change at
any time. Such changes may be applied retroactively in a manner that could
cause the tax consequences to vary substantially from the consequences
described below, possibly adversely affecting a beneficial owner of Series A
Capital Securities. In particular, certain tax law changes have been proposed
that could adversely affect the Corporation's ability to deduct interest on
the Series A Subordinated Debentures, which may in turn permit the Corporation
to cause a redemption of the Series A Capital Securities. See "--Possible Tax
Law Changes." The authorities on which this summary is based are subject to
various interpretations, and it is therefore possible that the federal income
tax treatment of the purchase, ownership and disposition of Series A Capital
Securities may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A
CAPITAL SECURITIES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX
LAWS.
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CLASSIFICATION OF THE SERIES A SUBORDINATED DEBENTURES AND THE SERIES A ISSUER
Under current law and assuming compliance with the terms of the Trust
Agreement, the Series A Issuer will not be classified as an association
taxable as a corporation for United States federal income tax purposes. As a
result, each beneficial owner of Series A Capital Securities (a
"Securityholder") will be required to include in its gross income its pro rata
share of the interest income, including original issue discount, paid or
accrued with respect to the Series A Subordinated Debentures whether or not
cash is actually distributed to the Securityholders. See "--Original Issue
Discount." The Series A Subordinated Debentures will be classified as
indebtedness of the Corporation for United States federal income tax purposes.
ORIGINAL ISSUE DISCOUNT
Under the Indenture, the Corporation has the right to defer the payment of
interest on the Series A Subordinated Debentures at any time or from time to
time for a period not exceeding ten consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series A Subordinated Debentures. Because of
this option, all interest payable on the Series A Subordinated Debentures will
be treated as "original issue discount" ("OID") for federal income tax
purposes. Accordingly, a Securityholder will recognize income (in the form of
OID) on a daily basis under a constant yield method over the term of the
Series A Subordinated Debentures (including during any Extension Period),
regardless of the receipt of cash with respect to the period to which such
income is attributable. (Subsequent uses of the term "interest" in this
summary shall include income in the form of OID.) The amount of OID that
accrues in any semi-annual period (other than during an Extension Period) will
equal approximately the amount of the interest that accrues on the Series A
Subordinated Debentures in that semi-annual period at the stated interest
rate.
In the event that the interest payment period is extended, Securityholders
will include interest in gross income in advance of the receipt of cash, and
any Securityholders who dispose of the Series A Capital Securities prior to
the record date for the payment of Distributions following such Extension
Period will include interest in gross income but will not receive any cash
related thereto from the Series A Issuer. Any amount of OID included in a
Securityholder's gross income (whether or not during an Extension Period) will
increase such Securityholder's tax basis in its Series A Capital Securities,
and the amount of Distributions received by a Securityholder will reduce such
Securityholder's tax basis in its Series A Capital Securities.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES TO HOLDERS OF SERIES A
CAPITAL SECURITIES
Under current law, a distribution by the Series A Issuer of the Series A
Subordinated Debentures as described under the caption "Certain Terms of
Series A Capital Securities--Liquidation of Series A Issuer and Distribution
of Series A Subordinated Debentures to Holders" will be non-taxable and will
result in the Securityholder receiving directly its pro rata share of the
Series A Subordinated Debentures previously held indirectly through the Series
A Issuer, with a holding period and aggregate tax basis equal to the holding
period and aggregate tax basis such Securityholder had in its Series A Capital
Securities before such distribution. If, however, the liquidation of the
Series A Issuer were to occur because the Series A Issuer is subject to United
States federal income tax with respect to income accrued or received on the
Series A Subordinated Debentures, the distribution of Series A Subordinated
Debentures to Securityholders by the Series A Issuer would be a taxable event
to the Series A Issuer and each Securityholder, and each Securityholder would
recognize gain or loss as if the Securityholder had exchanged its Series A
Capital Securities for the Series A Subordinated Debentures it received upon
the liquidation of the Series A Issuer. A Securityholder will include interest
in income in respect of Series A Subordinated Debentures received from the
Series A Issuer in the manner described above under""--Original Issue
Discount."
SALE OR REDEMPTION OF SERIES A CAPITAL SECURITIES
A Securityholder that sells (including a redemption for cash) Series A
Capital Securities will recognize gain or loss equal to the difference between
its adjusted tax basis in the Series A Capital Securities and the amount
S-31
<PAGE>
realized on the sale of such Series A Capital Securities. Such gain or loss
generally will be a capital gain or loss (except to the extent any amount
realized is treated as a payment of accrued interest with respect to such
Securityholder's pro rata share of the Series A Subordinated Debentures
required to be included in income) and generally will be a long-term capital
gain or loss if the Series A Capital Securities have been held for more than
one year.
The Series A Capital Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to
the underlying Series A Subordinated Debentures. A Securityholder who disposes
of its Series A Capital Securities between record dates for payments of
distributions thereon (and consequently does not receive a Distribution from
the Series A Issuer for the period prior to such disposition) will be required
to include in income as ordinary income accrued but unpaid interest on the
Series A Subordinated Debentures to the date of disposition and to add such
amount to its adjusted tax basis in its Series A Capital Securities. To the
extent the selling price (which may not fully reflect the value of accrued but
unpaid interest) is less than the Securityholder's adjusted tax basis (which
will include accrued but unpaid interest), such 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.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid and OID accrued on the Series A Capital
Securities held of record by United States Persons (other than corporations
and other exempt Securityholders) will be reported to the IRS. "Backup"
withholding at a rate of 31% will apply to payments of interest to nonexempt
United States Persons unless the Securityholder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Series A Capital Securities
to or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the IRS on a timely basis.
It is anticipated that income on the Series A Capital Securities will be
reported to holders on Form 1099 and mailed to holders of the Series A Capital
Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the Budget Proposal was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15
years and that is not shown as indebtedness on the separate balance sheet of
the issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. The above-described provision of the Budget Proposal is
proposed to be effective generally for instruments issued on or after the date
of first Congressional committee action. If a similar provision were to apply
to the Series A Subordinated Debentures, the Corporation would be unable to
deduct interest on the Series A Subordinated Debentures. Under current law,
the Corporation will be able to deduct interest on the Series A Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the Series A Subordinated Debentures. Such a
change could give rise to a Tax Event, which in certain circumstances would
permit the Corporation to terminate the Series A Issuer and cause the Series A
Subordinated Debentures to be distributed to the holders of the Series A
Capital Securities in exchange therefor upon liquidation of the Series A
Issuer, to shorten the maturity of the
S-32
<PAGE>
Series A Subordinated Debentures to a date not earlier than May 6, 2012 or to
cause a redemption of the Series A Capital Securities, as described more fully
under "Certain Terms of Subordinated Debentures--Conditional Right to Shorten
Maturity or Redeem Upon a Tax Event or Capital Treatment Event" and "Certain
Terms of Series A Capital Securities--Redemption." If legislation were enacted
that affected the Corporation's ability to deduct interest expense on the
Series A Subordinated Debentures, it is unclear whether an exercise by the
Corporation of its right to shorten the maturity of the Series A Subordinated
Debenture or to distribute the Series A Subordinated Debentures to
Securityholders following a Tax Event or a Capital Treatment Event would be a
taxable event to the Securityholders.
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement between the
Underwriters, the Series A Issuer and the Corporation (the "Underwriting
Agreement"), the Corporation and the Series A Issuer have agreed that the
Series A Issuer will sell to each of the Underwriters named below, and each of
such Underwriters has severally agreed to purchase from the Series A Issuer,
the respective number of Series A Capital Securities set forth opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
CAPITAL
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... 100,000
BT Securities Corporation...................................... 50,000
Lehman Brothers Inc............................................ 50,000
-------
Total..................................................... 200,000
=======
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Series A Capital
Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series A Capital Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement and in part to certain securities
dealers at such price less a concession of $10.00 per Series A Capital
Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $3.75 per Series A Capital Security to certain
brokers and dealers. After the Series A Capital Securities are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the Underwriters.
In view of the fact that the proceeds from the sale of the Series A Capital
Securities will be used to purchase the Series A Subordinated Debentures
issued by the Corporation, the Underwriting Agreement provides that the
Corporation will pay as Underwriters' compensation for the Underwriters'
arranging the investment therein of such proceeds an amount of $16.25 per
Series A Capital Security for the accounts of the several Underwriters. The
Underwriters have agreed to reimburse the Corporation for certain of the
expenses of the offering which are payable by the Corporation, up to an
aggregate amount of $62,500.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Series A Capital Securities offered hereby as interests
in a direct participation program, the offering is being made in compliance
with Rule 2810 of the NASD's Conduct Rules. Offers and sales of Series A
Capital Securities will be made only to (i) "qualified institutional buyers,"
as defined in Rule 144A under the Securities Act; (ii) institutional
"accredited investors," as defined in Rule 501(a)(1)-(3) of Regulation D under
the Securities Act or (iii) individual investors for whom an investment in
non-convertible non-investment grade preferred securities is appropriate. The
Underwriters may not confirm sales to any accounts over which they exercise
discretionary authority without prior written approval of the transaction by
the customer.
S-33
<PAGE>
The Corporation and the Series A Issuer have agreed that, during a period of
45 days from the date of the Prospectus, they will not offer, sell, contract
to sell or otherwise dispose of any Series A Capital Securities, any other
beneficial interests in the assets of any Issuer, or any preferred securities
or any other securities of any Issuer or the Corporation that are
substantially similar to the Series A Capital Securities, including any
guarantee of such securities, or any securities convertible into or
exchangeable for or representing the right to receive preferred securities or
any such substantially similar securities of either any Issuer or the
Corporation, without the prior written consent of the Underwriters, except for
the Series A Capital Securities offered in connection with this offering.
The Series A Capital Securities are a new issue of securities with no
established trading market. The Underwriters have advised the Corporation and
the Series A Issuer that they intend to make a market in the Series A Capital
Securities, but are not obligated to do so and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity of
the trading market for the Series A Capital Securities.
During and after the offering, the Underwriters and selling group members
and their respective affiliates may purchase and sell the Series A Capital
Securities in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover short positions created by
the Underwriters in connection with the offering. The Underwriters also may
impose a penalty bid, whereby selling concessions allowed to broker-dealers in
respect of the Series A Capital Securities sold in the offering may be
reclaimed by the Underwriters if such securities are repurchased by the
Underwriters in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Series A
Capital Securities, which may be higher than the price that might otherwise
prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the over-the-
counter market or otherwise.
The Corporation and the Series A Issuer have agreed to indemnify the several
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series A
Capital Securities, the enforceability of the Trust Agreement and the
formation of the Series A Issuer will be passed upon by Richards, Layton &
Finger, One Rodney Square, P.O. Box 551, Wilmington, Delaware 19899, Special
Delaware Counsel to the Corporation and the Series A Issuer. The validity of
the Series A Guarantee and the Series A Subordinated Debentures will be passed
upon for the Corporation by Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004, and for the Underwriters by Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York 10006.
S-34
<PAGE>
PROSPECTUS
[Logo of Dime Bancorp, Inc.]
$200,000,000
DIME BANCORP, INC.
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
DIME CAPITAL TRUST I
DIME CAPITAL TRUST II
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED
HEREIN, BY
DIME BANCORP, INC.
----------------
Dime Bancorp, Inc., a Delaware corporation (the "Corporation"), may from
time to time offer, in one or more series or issuances, its junior
subordinated deferrable interest debentures (the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to all Senior Debt (as defined in
"Description of Junior Subordinated Debentures--Subordination") of the
Corporation. If provided in an accompanying Prospectus Supplement, the
Corporation will have the right to defer payments of interest on any series of
Junior Subordinated Debentures by extending the interest payment period
thereon at any time or from time to time for up to such number of consecutive
interest payment periods (which shall not extend beyond the Stated Maturity
(as defined herein) of the Junior Subordinated Debentures) with respect to
each deferral period as may be specified in such Prospectus Supplement (each,
an "Extension Period"). In such circumstances, however, the Corporation would
not be permitted, subject to certain exceptions set forth herein, to declare
or pay any dividends, distributions or other payments with respect to, or
repay, repurchase, redeem or otherwise acquire, the Corporation's capital
stock or debt securities that rank pari passu in all respects with or junior
to such series of Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures--Option to Defer Interest Payments" and "--
Restrictions on Certain Payments."
Dime Capital Trust I and Dime Capital Trust II, each a statutory business
trust created under the laws of the State of Delaware (each, an "Issuer," and
collectively, the "Issuers"), may severally offer, from time to time,
preferred securities (the "Preferred Securities") representing preferred
beneficial interests in such Issuer. The Corporation will be the owner of the
common securities representing common ownership interests in such Issuer (the
"Common Securities" and, together with the Preferred Securities, the "Trust
Securities").
Holders of the Preferred Securities will be entitled to receive preferential
cumulative cash distributions ("Distributions") accumulating from the date of
original issuance and payable periodically as provided in an accompanying
Prospectus Supplement. Concurrently with the issuance by an Issuer of its
Preferred Securities, such Issuer will invest the proceeds thereof and of any
contributions received in respect of the Common Securities in a corresponding
series of the Corporation's Junior Subordinated Debentures (the "Corresponding
Junior Subordinated Debentures") with terms corresponding to the terms of that
Issuer's Preferred Securities (the "Related Preferred Securities"). The
Corresponding Junior Subordinated Debentures will be the sole assets of each
Issuer, and payments under the Corresponding Junior Subordinated Debentures
will be the only revenue
(continued on next page)
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
----------------
The date of this Prospectus is April 29, 1997
<PAGE>
(cover page continued)
of each Issuer. If provided in an accompanying Prospectus Supplement, the
Corporation may redeem the Corresponding Junior Subordinated Debentures (and
cause the redemption of the Related Preferred Securities) or may terminate
each Issuer and cause the Corresponding Junior Subordinated Debentures to be
distributed to the holders of the Related Preferred Securities in liquidation
of their interests in such Issuer. See "Description of Preferred Securities--
Liquidation Distribution Upon Termination."
If provided in an accompanying Prospectus Supplement, the Corporation will
have the right to defer payments of interest on any series of Corresponding
Junior Subordinated Debentures. If interest payments are so deferred,
Distributions on the Related Preferred Securities will also be deferred and
the Corporation will not be permitted, subject to certain exceptions set forth
herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or debt securities that rank pari passu in all
respects with or junior to the Corresponding Junior Subordinated Debentures.
During an Extension Period, Distributions will continue to accumulate (and the
Related Preferred Securities will accumulate additional Distributions thereon
at the rate per annum set forth in the Prospectus Supplement). See
"Description of Preferred Securities--Distributions."
Taken together, the Corporation's obligations under each series of Junior
Subordinated Debentures, the Indenture, the related Trust Agreement, the
related Expense Agreement and the related Guarantee (each, as defined herein),
in the aggregate, provide a full, irrevocable and unconditional guarantee of
payments of distributions and other amounts due on the Related Preferred
Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures, the Expense Agreements and the
Guarantees--Full and Unconditional Guarantee." The payment of Distributions
with respect to the Preferred Securities of each Issuer and payments on
liquidation or redemption with respect to such Preferred Securities, in each
case out of funds held by such Issuer, are each irrevocably guaranteed by the
Corporation to the extent described herein (each, a "Guarantee"). See
"Description of Guarantees." The obligations of the Corporation under each
Guarantee will be subordinate and junior in right of payment to all Senior
Debt of the Corporation.
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, the aggregate initial public offering price of all Junior
Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of
which this Prospectus forms a part shall not exceed $200,000,000. Certain
specific terms of the Junior Subordinated Debentures or Preferred Securities
in respect of which this Prospectus is being delivered will be described in an
accompanying Prospectus Supplement, including without limitation and where
applicable and to the extent not set forth herein, (a) in the case of Junior
Subordinated Debentures, the specific designation, aggregate principal amount,
denominations, Stated Maturity (including any provisions for the shortening or
extension thereof), interest payment dates, interest rate (which may be fixed
or variable) or method of calculating interest, if any, applicable Extension
Period or interest deferral terms, if any, place or places where principal,
premium, if any, and interest, if any, will be payable, any terms of
redemption, any sinking fund provisions, terms for any conversion or exchange
into other securities, initial offering or purchase price, methods of
distribution and any other special terms, and (b) in the case of Preferred
Securities, the identity of the Issuer, specific title, aggregate amount,
stated liquidation amount, number of securities, Distribution rate or method
of calculating such rate, Distribution payment dates, applicable Distribution
deferral terms, if any, place or places where Distributions will be payable,
any terms of redemption, exchange, initial offering or purchase price, methods
of distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which
this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them will be set forth in a Prospectus Supplement.
The Prospectus Supplement will state whether the Junior Subordinated
Debentures or Preferred Securities will be listed on any national securities
exchange or automated quotation system. If the Junior Subordinated Debentures
or Preferred Securities are not listed on any national securities exchange or
automated quotation system, there can be no assurance that there will be a
secondary market for the Junior Subordinated Debentures or Preferred
Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
2
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities of the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York
10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov. The Corporation's common stock is listed on the New
York Stock Exchange, Inc. (the "NYSE"). Copies of reports, proxy statements
and other information may be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
The Corporation became the holding company of The Dime Savings Bank of New
York, FSB (the "Bank") pursuant to a reorganization effected on May 25, 1994;
until that time, such reports, proxy statements and other information were
filed with the Office of Thrift Supervision (the "OTS"). Reports, proxy
statements and other information filed prior to May 25, 1994 should be
available for inspection and copying at the public reference facilities
maintained by the OTS at the Office of Public Information, Office of Thrift
Supervision, 1700 G Street, N.W., Washington, D.C. 20552, and also can be
obtained by written request from such office at prescribed rates.
The Corporation and the Issuers have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Corporation and the securities offered hereby,
reference is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission at the addresses set forth above or
through the Commission's home page on the Internet. Statements made in this
Prospectus concerning the contents of any documents referred to herein are not
necessarily complete, and in each instance are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement.
No separate financial statements of any Issuer have been included herein.
The Corporation and the Issuers do not consider that such financial statements
would be material to holders of the Preferred Securities because each Issuer
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 Corresponding Junior
Subordinated Debentures of the Corporation and issuing the Trust Securities.
Furthermore, taken together, the Corporation's obligations under each series
of Corresponding Junior Subordinated Debentures, the Indenture, the related
Trust Agreement, the related Expense Agreement and the related Guarantee
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the Related Preferred
Securities of an Issuer. See "The Issuers," "Description of Preferred
Securities," "Description of Junior Subordinated Debentures--Corresponding
Junior Subordinated Debentures" and "Description of Guarantees." In addition,
the Corporation does not expect that any of the Issuers will be filing reports
under the Exchange Act with the Commission.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation's (1) Annual Report on Form 10-K for the year ended December
31, 1996 and (2) Current Reports on Form 8-K dated April 22, 1997 and April
25, 1997, each of which has been filed with the Commission are hereby
incorporated into this Prospectus by reference.
Each document or report 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 any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be made a
part of this Prospectus from the date of filing of such document. Any
statement contained herein, or in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and
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
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein
(other than exhibits not specifically incorporated by reference into the texts
of such documents). Requests for such documents should be directed to Dime
Bancorp, Inc., 589 Fifth Avenue, New York, New York 10017, Attention: Investor
Relations Department. Telephone requests should be directed to (212) 326-6170.
4
<PAGE>
THE CORPORATION
This information is qualified in its entirety by the detailed information,
definitions and financial statements appearing elsewhere herein or
incorporated herein by reference. Unless the context otherwise requires,
references herein to the Corporation include the Corporation and its
consolidated subsidiaries; references herein to the Bank include the Bank and
its consolidated subsidiaries.
GENERAL
The Corporation, a Delaware corporation headquartered in New York, New York,
is the holding company for the Bank, a federally-chartered savings bank. At
December 31, 1996, the Corporation had total assets of $18.9 billion, total
stockholders' equity of $1.0 billion, and total deposits of $12.9 billion. The
Corporation's core business activities include consumer financial services,
mortgage banking, commercial and multifamily real estate lending, consumer
lending, and business banking. The Bank currently operates 85 branches in the
greater New York metropolitan area and one branch in Florida.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Corporation's consolidated ratios of
earnings to fixed charges calculated excluding and including interest on
deposits. The following ratios should be read in conjunction with the
Consolidated Financial Statements, the notes thereto and other financial
information included herein by reference. For the purpose of computing the
consolidated ratios of earnings to fixed charges, earnings represent
consolidated income before income taxes, extraordinary item and cumulative
effect of a change in accounting principle, plus fixed charges. Fixed charges
excluding interest on deposits consist of interest on long-term debt and
short-term borrowings and one-third of rental expense (which is deemed
representative of the interest factor). Fixed charges including interest on
deposits consist of the foregoing items plus interest on deposits.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Excluding Interest on Deposits................... 1.42x 1.26x 1.22x 1.11x 1.62x
Including Interest on Deposits................... 1.17 1.12 1.09 1.03 1.13
</TABLE>
5
<PAGE>
THE ISSUERS
Each Issuer is a statutory business trust formed under Delaware law pursuant
to (i) a trust agreement executed by the Corporation, as Depositor of the
Issuer, and the Delaware Trustee (as defined herein) of such Issuer and (ii)
the filing of a certificate of trust with the Delaware Secretary of State.
Each trust agreement will be amended and restated in its entirety (each, as so
amended and restated, a "Trust Agreement") substantially in the form filed as
an exhibit to the Registration Statement of which this Prospectus forms a
part. Each Trust Agreement will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Each Issuer
exists for the exclusive purposes of (i) issuing and selling its Trust
Securities, (ii) using the proceeds from the sale of such Trust Securities to
acquire a series of Corresponding Junior Subordinated Debentures issued by the
Corporation, and (iii) engaging in only those other activities necessary or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the Corresponding Junior Subordinated Debentures and the right to
reimbursement of expenses under the related Expense Agreement will be the sole
assets of each Issuer, and payments under the Corresponding Junior
Subordinated Debentures and the related Expense Agreement will be the sole
revenue of each Issuer.
All of the Common Securities of each Issuer will be owned by the
Corporation. The Common Securities of an Issuer will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities of such
Issuer, except that upon the occurrence and continuance of an event of default
under a Trust Agreement resulting from an event of default under the
Indenture, as defined herein, the rights of the Corporation, as holder of the
Common Securities, to payment in respect of Distributions and payments upon
liquidation or redemption will be subordinated to the rights of the holders of
the Preferred Securities of such Issuer. See "Description of Preferred
Securities--Subordination of Common Securities." The Corporation will acquire
Common Securities in an aggregate Liquidation Amount equal to not less than 3%
of the total capital of each Issuer.
Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, each appointed by the Corporation as holder of
the Common Securities. The trustees for each Issuer will be The Chase
Manhattan Bank, as Property Trustee (the "Property Trustee"); and Chase
Manhattan Bank Delaware as Delaware Trustee (the "Delaware Trustee"), and two
individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with the Corporation (collectively, the "Issuer
Trustees"). The Chase Manhattan Bank, as Property Trustee, will act as sole
indenture trustee under each Trust Agreement for purposes of compliance with
the Trust Indenture Act. The Chase Manhattan Bank will also act as trustee
under the Guarantees, as defined herein, and the Indenture. See "Description
of Guarantees" and "Description of Junior Subordinated Debentures." The holder
of the Common Securities of an Issuer, or the holders of a majority in
Liquidation Amount of the Related Preferred Securities if an event of default
under the Trust Agreement for such Issuer has occurred and is continuing, will
be entitled to appoint, remove or replace the Property Trustee and/or the
Delaware Trustee for such Issuer. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights are vested exclusively in the
holder of the Common Securities. The duties and obligations of each Issuer
Trustee are governed by the applicable Trust Agreement. The Corporation will
pay all fees and expenses related to each Issuer and the offering of the
Preferred Securities will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of each Issuer.
The principal executive office of each Issuer is 589 Fifth Avenue, New York,
New York 10017 and its telephone number is (212) 326-6170.
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USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Corporation intends to use the proceeds from the sale of its Junior
Subordinated Debentures (including Corresponding Junior Subordinated
Debentures issued to the Issuers in connection with the investment by the
Issuers of all of the proceeds from the sale of Trust Securities) for general
corporate purposes, including working capital, capital expenditures,
investments in or loans to subsidiaries, refinancing of debt, including
outstanding commercial paper and other short-term indebtedness, redemption or
repurchase of shares of its outstanding common stock, the satisfaction of
other obligations or for such other purposes as may be specified in the
applicable Prospectus Supplement.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under a Junior Subordinated Indenture, as supplemented from time to time (as
so supplemented, the "Indenture"), between the Corporation and The Chase
Manhattan Bank, as trustee (the "Debenture Trustee"). This summary of certain
terms and provisions of the Junior Subordinated Debentures and the Indenture,
which summarizes the material provisions thereof, does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Indenture, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and to the Trust Indenture
Act, to each of which reference is hereby made. The Indenture is qualified
under the Trust Indenture Act. Whenever particular defined terms of the
Indenture (as supplemented or amended from time to time) are referred to
herein or in a Prospectus Supplement, such defined terms are incorporated
herein or therein by reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures and will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Indenture to all Senior Debt (as defined below) of the
Corporation. See""--Subordination." The Corporation is a non-operating holding
company and almost all of the operating assets of the Corporation and its
consolidated subsidiaries are owned by such subsidiaries. The Corporation
relies primarily on dividends from such subsidiaries to meet its obligations.
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary, upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of the subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Junior Subordinated Debentures should look only
to the assets of the Corporation for payments on the Junior Subordinated
Debentures. Except as otherwise provided in the applicable Prospectus
Supplement, the Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Debt, whether
under the Indenture, any other existing indenture or any other indenture that
the Corporation may enter into in the future or otherwise. See "--
Subordination" and the Prospectus Supplement relating to any offering of
Preferred Securities or Junior Subordinated Debentures.
The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms of
the Junior Subordinated Debentures: (1) the title of the Junior Subordinated
Debentures; (2) any limit upon the aggregate principal amount of the Junior
Subordinated Debentures; (3) the date or dates on which the principal of the
Junior Subordinated Debentures is payable (the "Stated Maturity") or the
method of determination thereof; (4) the rate or rates, if any, or method of
calculating the rate or rates, if any, at which the Junior Subordinated
Debentures shall bear interest, the dates on which any such interest shall be
payable (the "Interest Payment Dates"), the right, if any, of the Corporation
to defer or extend an Interest Payment Date, and the record dates for any
interest
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payable on any Interest Payment Date or the method by which any of the
foregoing shall be determined; (5) the place or places where, subject to the
terms of the Indenture as described below under "--Payment and Paying Agents,"
the principal of and premium, if any, and interest on the Junior Subordinated
Debentures will be payable and where, subject to the terms of the Indenture as
described below under "--Denominations, Registration and Transfer," the Junior
Subordinated Debentures may be presented for registration of transfer or
exchange and the place or places where notices and demands to or upon the
Corporation in respect of the Junior Subordinated Debentures and the
Indentures may be made ("Place of Payment"); (6) any period or periods within
which or date or dates on which, the price or prices at which and the terms
and conditions upon which Junior Subordinated Debentures may be redeemed, in
whole or in part, at the option of the Corporation or a holder thereof; (7)
the obligation or the right, if any, of the Corporation or a holder thereof to
redeem, purchase or repay the Junior Subordinated Debentures and the period or
periods within which, the price or prices at which, the currency or currencies
(including currency unit or units) in which and the other terms and conditions
upon which the Junior Subordinated Debentures shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation; (8) the
denominations in which any Junior Subordinated Debentures shall be issuable if
other than denominations of $1,000 and any integral multiple thereof; (9) if
other than in U.S. Dollars, the currency or currencies (including currency
unit or units) in which the principal of (and premium, if any) and interest
and Additional Interest, if any, on the Junior Subordinated Debentures shall
be payable, or in which the Junior Subordinated Debentures shall be
denominated; (10) any additions, modifications or deletions in the events of
default under the Indenture or covenants of the Corporation specified in the
Indenture with respect to the Junior Subordinated Debentures; (11) if other
than the principal amount thereof, the portion of the principal amount of
Junior Subordinated Debentures that shall be payable upon declaration of
acceleration of the maturity thereof; (12) any additions or changes to the
Indenture with respect to a series of Junior Subordinated Debentures as shall
be necessary to permit or facilitate the issuance of such series in bearer
form, registrable or not registrable as to principal, and with or without
interest coupons; (13) any index or indices used to determine the amount of
payments of principal of and premium, if any, on the Junior Subordinated
Debentures and the manner in which such amounts will be determined; (14) the
terms and conditions relating to the issuance of a temporary Global Security
representing all of the Junior Subordinated Debentures of such series and the
exchange of such temporary Global Security for definitive Junior Subordinated
Debentures of such series; (15) subject to the terms described herein under
"--Global Junior Subordinated Debentures," whether the Junior Subordinated
Debentures of the series shall be issued in whole or in part in the form of
one or more Global Securities and, in such case, the Depositary for such
Global Securities, which Depositary shall be a clearing agency registered
under the Exchange Act; (16) the appointment of any paying agent or agents;
(17) the terms and conditions of any obligation or right of the Corporation or
a holder to convert or exchange the Junior Subordinated Debentures into
Preferred Securities; (18) the form of Trust Agreement, Guarantee Agreement
and Expense Agreement, if applicable; (19) the relative degree, if any, to
which such Junior Subordinated Debentures of the series shall be senior to or
be subordinated to other series of such Junior Subordinated Debentures or
other indebtedness of the Corporation in right of payment, whether such other
series of Junior Subordinated Debentures or other indebtedness are outstanding
or not; and (20) any other terms of the Junior Subordinated Debentures not
inconsistent with the provisions of the Indenture.
Junior Subordinated Debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States federal
income tax consequences and special considerations applicable to any such
Junior Subordinated Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, or (premium, if any, or) interest on
any Junior Subordinated Debentures is payable in one or more foreign
currencies or currency units, the restrictions, elections, certain United
States federal income tax consequences, specific terms and other information
with respect to such series of Junior Subordinated Debentures and such foreign
currency or currency units will be set forth in the applicable Prospectus
Supplement.
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If any index is used to determine the amount of payments of principal of or
(premium, if any, or) interest on any series of Junior Subordinated
Debentures, special United States federal income tax, accounting and other
considerations applicable thereto will be described in the applicable
Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
Junior Subordinated Debentures of any series will be exchangeable for other
Junior Subordinated Debentures of the same issue and series, of any authorized
denominations, of a like aggregate principal amount, of the same original
issue date and Stated Maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate securities registrar or at
the office of any transfer agent designated by the Corporation for such
purpose with respect to any series of Junior Subordinated Debentures and
referred to in the applicable Prospectus Supplement, without service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. The Corporation will appoint the Debenture Trustee as
securities registrar under the Indenture. If the applicable Prospectus
Supplement refers to any transfer agents (in addition to the securities
registrar) initially designated by the Corporation with respect to any series
of Junior Subordinated Debentures, the Corporation may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, provided that the Corporation
maintains a transfer agent in each place of payment for such series. The
Corporation may at any time designate additional transfer agents with respect
to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during the period beginning at
the opening of business 15 days before the day of selection for redemption of
Junior Subordinated Debentures of that series and ending at the close of
business on the day of mailing of the relevant notice of redemption or (ii)
transfer or exchange any Junior Subordinated Debentures so selected for
redemption, except, in the case of any Junior Subordinated Debentures being
redeemed in part, any portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that
will be deposited with, or on behalf of, a depositary (the "Depositary")
identified in the Prospectus Supplement relating to such series. Global Junior
Subordinated Debentures may be issued only in fully registered form and in
either temporary or permanent form. Unless and until it is exchanged in whole
or in part for the individual Junior Subordinated Debentures represented
thereby, a Global Junior Subordinated Debenture may not be transferred except
as a whole by the Depositary for such Global Junior Subordinated Debenture to
a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by the Depositary or any
nominee to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. The Corporation anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the deposit
of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or
its nominee will credit, on its book-entry registration and transfer system,
the respective principal amounts of the individual Junior Subordinated
Debentures represented by such Global Junior Subordinated
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Debenture to the accounts of persons that have accounts with such Depositary
("Participants"). Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Junior Subordinated Debentures or
by the Corporation if such Junior Subordinated Debentures are offered and sold
directly by the Corporation. Ownership of beneficial interests in a Global
Junior Subordinated Debenture will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such Global Junior Subordinated Debenture will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
applicable Depositary or its nominee (with respect to interests of
Participants) and the records of Participants (with respect to interests of
persons who hold through Participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Junior Subordinated Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture, or its
nominee, is the registered owner of such Global Junior Subordinated Debenture,
such Depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the Junior Subordinated Debentures represented by such
Global Junior Subordinated Debenture for all purposes under the Indenture
governing such Junior Subordinated Debentures. Except as provided below,
owners of beneficial interests in a Global Junior Subordinated Debenture will
not be entitled to have any of the individual Junior Subordinated Debentures
of the series represented by such Global Junior Subordinated Debenture
registered in their names, will not receive or be entitled to receive physical
delivery of any such Junior Subordinated Debentures of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depositary or its nominee will be made
to the Depositary or its nominee, as the case may be, as the registered owner
of the Global Junior Subordinated Debenture representing such Junior
Subordinated Debentures. None of the Corporation, the Debenture Trustee, any
Paying Agent, or the Securities Registrar for such Junior Subordinated
Debentures will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Junior Subordinated Debenture representing such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a permanent Global
Junior Subordinated Debenture representing any of such Junior Subordinated
Debentures, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of such Global Junior Subordinated Debenture for such Junior
Subordinated Debentures as shown on the records of such Depositary or its
nominee. The Corporation also expects that payments by Participants to owners
of beneficial interests in such Global Junior Subordinated Debenture held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Such payments will
be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and the Corporation
is unable to locate a qualified successor, the Corporation will issue
individual Junior Subordinated Debentures of such series in exchange for the
Global Junior Subordinated Debenture representing such series of Junior
Subordinated Debentures. In addition, the Corporation may at any time and in
its sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Junior Subordinated Debentures, determine not to
have any Junior Subordinated Debentures of such series represented by one or
more Global Junior Subordinated Debentures and, in such event, will issue
certificated Junior Subordinated Debentures of such series in exchange for the
Global Junior Subordinated Debenture or Securities representing such series of
Junior Subordinated Debentures. Further, if the Corporation so specifies with
respect to the Junior Subordinated
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Debentures of a series, an owner of a beneficial interest in a Global Junior
Subordinated Debenture representing Junior Subordinated Debentures of such
series may, on terms acceptable to the Corporation, the Debenture Trustee and
the Depositary for such Global Junior Subordinated Debenture, receive
certificated Junior Subordinated Debentures of such series in exchange for
such beneficial interests, subject to any limitations described in the
Prospectus Supplement relating to such Junior Subordinated Debentures. In any
such instance, an owner of a beneficial interest in a Global Junior
Subordinated Debenture will be entitled to physical delivery of certificated
Junior Subordinated Debentures of the series represented by such Global Junior
Subordinated Debenture equal in principal amount to such beneficial interest
and to have such Junior Subordinated Debentures registered in its name.
Individual Junior Subordinated Debentures of such series so issued will be
issued in denominations, unless otherwise specified by the Corporation, of
$1,000 and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debentures will be made at the office of the Debenture Trustee in the City of
New York or at the office of such paying agent or paying agents as the
Corporation may designate from time to time, except that at the option of the
Corporation payment of any interest may be made (i) except in the case of
Global Junior Subordinated Debentures, by check mailed to the address of the
Person entitled thereto as such address shall appear in the securities
register, or (ii) by transfer to an account maintained by the person entitled
thereto as specified in the securities register, provided that proper transfer
instructions have been received by the Regular Record Date. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of any interest on
Junior Subordinated Debentures will be made to the person in whose name such
Junior Subordinated Debenture is registered at the close of business on the
Regular 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 each series of Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or then
held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the
Corporation, be repaid to the Corporation and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured creditor,
only to the Corporation for payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Corporation will
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debentures to defer payment of interest for up to such
number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the
Stated Maturity of such series of Junior Subordinated Debentures. Certain
United States federal income tax consequences and special considerations
applicable to any such Junior Subordinated Debentures will be described in the
applicable Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation may, at its option, redeem the Junior Subordinated Debentures of
any series in whole at any time or in part from time to time. If the Junior
Subordinated Debentures of any series are so redeemable only on or after a
specified date or upon the satisfaction of additional conditions, the
applicable Prospectus Supplement will specify such date or describe
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such conditions. Junior Subordinated Debentures in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of $1,000.
Except as otherwise specified in the applicable Prospectus Supplement, the
redemption price for any Junior Subordinated Debenture so redeemed shall equal
any accrued and unpaid interest (including Additional Interest) thereon to the
redemption date, plus 100% of the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Tax Event (as defined below) in respect of the Issuer of any Related Preferred
Securities shall occur and be continuing, the Corporation may, at its option,
redeem such series of Corresponding Junior Subordinated Debentures in whole
(but not in part) at any time within 90 days following the occurrence of such
Tax Event, at a redemption price equal to 100% of the principal amount of such
Junior Subordinated Debentures then outstanding plus accrued and unpaid
interest to the date fixed for redemption, except as otherwise specified in
the applicable Prospectus Supplement.
"Tax Event" means the receipt by an Issuer of a series of Related Preferred
Securities 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 which pronouncement or decision is announced on or after the
date of issuance of such Related Preferred Securities, there is more than an
insubstantial risk that (i) such Issuer is, or within 90 days of the date of
such opinion will be, subject to United States federal income tax with respect
to income received or accrued on the Corresponding Junior Subordinated
Debentures, (ii) interest payable by the Corporation on such Corresponding
Junior Subordinated Debentures is not, or within 90 days of the date of such
opinion, will not be, deductible by the Corporation, in whole or in part, for
United States federal income tax purposes, or (iii) such Issuer is, or within
90 days of the date of such opinion will be, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
Notice of any redemption will be mailed at least 45 days but not more than
75 days before the redemption date to each Holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date
interest shall cease to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will covenant, as to each series of Junior Subordinated
Debentures, that it will not, and will not permit any subsidiary of the
Corporation to, (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 or (ii) make any payment of principal of or
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Corporation (including other Junior Subordinated Debentures)
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Corporation in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or
in connection with the issuance of capital stock of the Corporation (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period, (b) as a result of any exchange or conversion of
any class or series of the Corporation's capital stock (or any capital stock
of a subsidiary of the Corporation) for any class or series of the
Corporation's capital stock or of any class or series of the Corporation's
indebtedness for any class or series of the Corporation's capital stock, (c)
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, (d) any declaration of a
dividend in connection with any stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in
the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights
is the same stock as that on which the dividend is being paid or ranks
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pari passu with or junior to such stock), if at such time (i) there shall have
occurred any event of which the Corporation has actual knowledge that (a) with
the giving of notice or the lapse of time, or both, would constitute an "Event
of Default" under the Indenture with respect to the Junior Subordinated
Debentures of such series and (b) in respect of which the Corporation shall
not have taken reasonable steps to cure, (ii) if such Junior Subordinated
Debentures are held by an Issuer of a series of Related Preferred Securities,
the Corporation shall be in default with respect to its payment of any
obligations under the Guarantee relating to such Related Preferred Securities
or (iii) the Corporation shall have given notice of its selection of an
Extension Period as provided in the Indenture with respect to the Junior
Subordinated Debentures of such series and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be
continuing.
MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without the
consent of the holders of any series of Junior Subordinated Debentures, amend,
waive or supplement the Indenture for specified purposes, including, among
other things, curing ambiguities, defects or inconsistencies (provided that
any such action does not materially adversely affect the interest of the
holders of any series of Junior Subordinated Debentures or, in the case of
Corresponding Junior Subordinated Debentures, the holders of the Related
Preferred Securities so long as they remain outstanding) 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 not less than a majority in
principal amount of each outstanding series of Junior Subordinated Debentures
affected, to modify the Indenture in a manner affecting adversely the rights
of the holders of such series of the Junior Subordinated Debentures in any
material respect; provided, that no such modification may, without the consent
of the holder of each outstanding Junior Subordinated Debenture so affected,
(i) change the Stated Maturity of any series of Junior Subordinated Debentures
(except as otherwise specified in the applicable Prospectus Supplement), or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or change the method of calculating the rate of
interest thereon, or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures of any series, the holders of which are required to
consent to any such modification of the Indenture, provided that, in the case
of Corresponding Junior Subordinated Debentures, so long as any of the Related
Preferred Securities remain outstanding, (a) no such modification may be made
that adversely affects the holders of such Related Preferred Securities in any
material respect, and no termination of the Indenture may occur, and no waiver
of any event of default or compliance with any covenant under the Indenture
may be effective, without the prior consent of the holders of at least a
majority of the aggregate Liquidation Amount of all outstanding Related
Preferred Securities affected unless and until the principal of the
Corresponding Junior Subordinated Debentures and all accrued and unpaid
interest thereon have been paid in full and certain other conditions have been
satisfied and (b) where a consent under the Indenture would require the
consent of each holder of Corresponding Junior Subordinated Debentures, no
such consent will be given by the Property Trustee without the prior consent
of each holder of Related Preferred Securities.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debentures, any supplemental
Indenture for the purpose of creating any new series of Junior Subordinated
Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debentures, including any Additional Interest in respect
thereof, when due (subject to the deferral of any interest payment in the
case of an Extension Period); or
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(ii) failure to pay any principal or premium, if any, on such series of
Junior Subordinated Debentures when due whether, at maturity or upon
redemption; or
(iii) failure to observe or perform any other covenants contained in the
Indenture for 90 days after written notice to the Corporation from the
Debenture Trustee or the holders of at least 25% in aggregate outstanding
principal amount of such affected series of outstanding Junior Subordinated
Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee. The Debenture Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of Junior
Subordinated Debentures of each series affected may declare the principal due
and payable immediately upon a Debenture Event of Default. In case a Debenture
Event of Default shall occur and be continuing as to a series of Corresponding
Junior Subordinated Debentures, the Property Trustee will have the right to
declare the principal of and the interest on such Corresponding Junior
Subordinated Debentures, and any other amounts payable under the Indenture, to
be forthwith due and payable and to enforce its other rights as a creditor
with respect to such Corresponding Junior Subordinated Debentures. In the case
of Corresponding Junior Subordinated Debentures, should the Debenture Trustee
or the Property Trustee fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the Related Preferred Securities shall
have such right. The Property Trustee may annul such declaration and waive
such default, provided all defaults have been cured and all payment
obligations have been made current. Should the Property Trustee fail to annul
such declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of the Related Preferred Securities shall have
such right.
The holders of a majority in aggregate outstanding principal amount of each
series of Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures of such series, waive
any default, except a default in the payment of principal or interest
(including any Additional Interest) (unless such default has been cured and a
sum sufficient to pay all matured installments of interest (including any
Additional Interest) 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 of
such series. In the case of Corresponding Junior Subordinated Debentures, the
holders of a majority in aggregate Liquidation Amount of the Related Preferred
Securities shall have such right. The Corporation is required to file annually
with the Debenture Trustee a certificate as to whether or not the Corporation
is in compliance with all the conditions and covenants applicable to it under
the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event
is attributable to the failure of the Corporation to pay interest or principal
on such Corresponding Junior Subordinated Debentures on the date such interest
or principal is due and payable, a holder of Related Preferred Securities may
institute a legal proceeding directly against the Corporation for enforcement
of payment to such holder of the principal of or interest (including any
Additional Interest) on such Corresponding Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Related Preferred Securities of such holder (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
Preferred Securities outstanding. If the right to bring a Direct Action is
removed, the applicable Issuer may become subject to the reporting obligations
under the Exchange Act. The Corporation shall have the right under the
Indenture to set-off any payment made to such holder of Preferred Securities
by the Corporation in connection with a Direct Action.
The holders of the Preferred 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 Corresponding Junior Subordinated
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Debentures unless there shall have been an event of default under the Trust
Agreement. See "Description of Preferred Securities--Events of Default;
Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with or
merge into any other person or convey, transfer or lease its properties and
assets substantially as an entirety to any person, and no person shall
consolidate with or merge into the Corporation or convey, transfer or lease
its properties and assets substantially as an entirety to the Corporation,
unless (i) in case the Corporation consolidates with or merges into another
person or conveys or transfers its properties and assets substantially as an
entirety to any person, the successor is organized under the laws of the
United States or any state or the District of Columbia, and such successor
expressly assumes the Corporation's obligations on the Junior Subordinated
Debentures issued under the Indenture; (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
by 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 their Stated Maturity within one year, and the Corporation deposits
or causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount in the currency or currencies in which the Junior
Subordinated Debentures are payable 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 any Additional Interest) to the date of the deposit or
to the Stated Maturity, 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.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or
exchangeable into Junior Subordinated Debentures of another series or into
Preferred Securities of another series. The specific terms on which Junior
Subordinated Debentures of any series may be so converted or exchanged will be
set forth in the applicable Prospectus Supplement. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Corporation, in which case the number of
shares of Preferred Securities or other securities to be received by the
holders of Junior Subordinated Debentures would be calculated as of a time and
in the manner stated in the applicable Prospectus Supplement.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate in right of payment,
to the extent set forth in the Indenture, to all Senior Debt (as defined
below) of the Corporation. If the Corporation defaults in the payment of any
principal, premium, if any, or interest, if any, or any other amount payable
on any Senior Debt when the same becomes due and payable, whether at maturity
or at a date fixed for redemption or by declaration of acceleration or
otherwise, then, unless and until such default has been cured or waived or has
ceased to exist or all Senior Debt has been paid, no direct or indirect
payment (in cash, property, securities, by set-off or otherwise)
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may be made or agreed to be made on the Junior Subordinated Debentures, or in
respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Junior Subordinated Debentures.
As used herein, "Senior Debt" means any obligation of the Corporation to its
creditors, whether now outstanding or subsequently incurred, other than any
obligation as to which, in the instrument creating or evidencing the
obligation or pursuant to which the obligation is outstanding, it is provided
that such obligation is not Senior Debt, but does not include trade accounts
payable and accrued liabilities arising in the ordinary course of business.
Senior Debt includes the Corporation's outstanding subordinated debt
securities and any subordinated debt securities issued in the future with
substantially similar subordination terms, but does not include the Junior
Subordinated Debentures of any Series or any junior subordinated debt
securities issued in the future with subordination terms substantially similar
to those of the Junior Subordinated Debentures. Substantially all of the
existing indebtedness of the Corporation constitutes Senior Debt.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv)
any other marshalling of the assets of the Corporation, all Senior Debt
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will
be paid or delivered directly to the holders of Senior Debt in accordance with
the priorities then existing among such holders until all Senior Debt
(including any interest thereon accruing after the commencement of any such
proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Debt, the holders of Junior Subordinated Debentures,
together with the holders of any obligations of the Corporation ranking on a
parity with the Junior Subordinated Debentures, will be entitled to be paid
from the remaining assets of the Corporation the amounts at the time due and
owing on the Junior Subordinated Debentures and such other obligations before
any payment or other distribution, whether in cash, property or otherwise,
will be made on account of any capital stock or obligations of the Corporation
ranking junior to the Junior Subordinated Debentures. If any payment or
distribution on account of the Junior Subordinated Debentures of any character
or any security, whether in cash, securities or other property is received by
any holder of any Junior Subordinated Debentures in contravention of any of
the terms hereof and before all the Senior Debt has been paid in full, such
payment or distribution or security will be received in trust for the benefit
of, and must be paid over or delivered and transferred to, the holders of the
Senior Debt at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior Debt
remaining unpaid to the extent necessary to pay all such Senior Debt in full.
By reason of such subordination, in the event of the insolvency of the
Corporation, holders of Senior Debt may receive more, ratably, and holders of
the Junior Subordinated Debentures may receive less, ratably, than the other
creditors of the Corporation. Such subordination will not prevent the
occurrence of any Event of Default under the Indenture.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Debt that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional indebtedness
constituting Senior Debt.
TRUST EXPENSES
Pursuant to the Expense Agreement for each series of Corresponding Junior
Subordinated Debentures, the Corporation will irrevocably and unconditionally
agree with each Issuer that holds Junior Subordinated Debentures that the
Corporation will pay the full amounts of any costs, expenses or liabilities of
the Issuer, other
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than obligations of the Issuer to pay to the holders of any Preferred
Securities or other similar interests in the Issuer the amounts due such
holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. Such payment obligation will include
any such costs, expenses or liabilities of the Issuer that are required by
applicable law to be satisfied in connection with a termination of such
Issuer.
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.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
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 if the Debenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In
that event, concurrently with the issuance of each Issuer's Preferred
Securities, such Issuer will invest the proceeds thereof and the consideration
paid by the Corporation for the Common Securities of such Issuer in such
series of Corresponding Junior Subordinated Debentures issued by the
Corporation to such Issuer. Each series of Corresponding Junior Subordinated
Debentures will be in a principal amount equal to the aggregate stated
Liquidation Amount of the Related Preferred Securities and the Common
Securities of such Issuer and will rank pari passu with all other series of
Junior Subordinated Debentures. Holders of the Related Preferred Securities
will have the rights in connection with modifications to the Indenture or upon
occurrence of Debenture Events of Default described under "--Modification of
Indenture" and "--Debenture Events of Default," unless provided otherwise in
the Prospectus Supplement for such Related Preferred Securities.
Unless otherwise specified in the applicable Prospectus Supplement, if a Tax
Event shall occur and be continuing, the Corporation may, at its option,
redeem the Corresponding Junior Subordinated Debentures at any time within 90
days of the occurrence of such Tax Event, in whole but not in part, subject to
the provisions of the Indenture and whether or not such Corresponding Junior
Subordinated Debentures are then otherwise redeemable at the option of the
Corporation. The redemption price for any Corresponding Junior Subordinated
Debentures shall be equal to 100% of the principal amount of such
Corresponding Junior Subordinated Debentures then outstanding plus accrued and
unpaid interest to the date fixed for redemption. For so long as the
applicable Issuer is the holder of all the outstanding Corresponding Junior
Subordinated Debentures, the proceeds of any such redemption will be used by
the Issuer to redeem the corresponding Trust Securities in accordance with
their terms. The Corporation may not redeem a series of Corresponding Junior
Subordinated Debentures in part unless all accrued and unpaid interest has
been paid in full on all outstanding Corresponding Junior Subordinated
Debentures of such series for all interest periods terminating on or prior to
the Redemption Date.
The Corporation will covenant in the Indenture, as to each series of
Corresponding Junior Subordinated Debentures, that if and so long as (i) the
Issuer of the related series of Trust Securities is the holder of all such
Corresponding Junior Subordinated Debentures, (ii) a Tax Event in respect of
such Issuer has occurred and is continuing and (iii) the Corporation has
elected, and has not revoked such election, to pay Additional Sums (as defined
under "Description of Preferred Securities--Redemption or Exchange") in
respect of such Trust Securities, the Corporation will pay to such Issuer such
Additional Sums. The Corporation will also covenant, as
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to each series of Corresponding Junior Subordinated Debentures, (i) to
maintain directly or indirectly 100% ownership of the Common Securities of the
Issuer to which such Corresponding Junior Subordinated Debentures have been
issued, provided that certain successors which are permitted pursuant to the
Indenture may succeed to the Corporation's ownership of the Common Securities,
(ii) not to voluntarily terminate, wind-up or liquidate any Issuer, except (a)
in connection with a distribution of Corresponding Junior Subordinated
Debentures to the holders of the Preferred Securities in exchange therefor
upon liquidation of such Issuer or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the related Trust Agreement, and
(iii) to use its reasonable efforts, consistent with the terms and provisions
of the related Trust Agreement, to cause such Issuer to remain classified as a
grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer, the Issuer
Trustees on behalf of such Issuer will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular Issuer will
represent preferred beneficial interests in the Issuer and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities of such Issuer, as well as other benefits as described in the
related Trust Agreement. This summary of certain provisions of the Preferred
Securities and each Trust Agreement, which summarizes the material terms
thereof, does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of each Trust Agreement,
including the definitions therein of certain terms, and the Trust Indenture
Act, to which reference is hereby made. Wherever particular defined terms of a
Trust Agreement (as amended or supplemented from time to time) are referred to
herein or in a Prospectus Supplement, such defined terms are incorporated
herein or therein by reference. The form of the Trust Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. Each of the Issuers is a legally separate entity and the assets of one
are not available to satisfy the obligations of any of the others.
GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer
except as described under "--Subordination of Common Securities." Legal title
to the Corresponding Junior Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the Related
Preferred Securities and Common Securities. Each Guarantee Agreement executed
by the Corporation for the benefit of the holders of an Issuer's Preferred
Securities (the "Guarantee" for such Preferred Securities) will be a guarantee
on a subordinated basis with respect to such Preferred Securities but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when such Issuer does not have funds
on hand available to make such payments. See "Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such
dates as specified in the applicable Prospectus Supplement. In the event that
any date on which Distributions are payable on the Preferred 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 Business Day is in the next succeeding calendar year, payment of
such Distribution shall be made on the immediately preceding Business Day, in
either 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 or
a day on which the corporate trust office of the Property Trustee or the
Debenture Trustee is closed for business.
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Each Issuer's Preferred Securities represent preferred beneficial interests
in the applicable Issuer, and the Distributions on each Preferred Security
will be payable at a rate specified in the applicable Prospectus Supplement
for such Preferred 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
unless otherwise specified in the applicable Prospectus Supplement.
Distributions to which holders of Preferred Securities are entitled will
accumulate additional Distributions at the rate per annum if and as specified
in the applicable Prospectus Supplement. The term "Distributions" as used
herein includes any such additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Corporation has the
right under the Indenture, pursuant to which it will issue the Corresponding
Junior Subordinated Debentures, to defer the payment of interest at any time
or from time to time on any series of the Corresponding Junior Subordinated
Debentures for up to such number of consecutive interest payment periods which
will be specified in such Prospectus Supplement relating to such series (each,
an "Extension Period"), provided that no Extension Period may extend beyond
the Stated Maturity of the Corresponding Junior Subordinated Debentures. As a
consequence of any such deferral, Distributions on the Related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Issuer of such Related
Preferred Securities during any such Extension Period. 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 or (ii) make any
payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation that rank pari
passu in all respects with or junior in interest to the Corresponding Junior
Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Corporation in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or
in connection with the issuance of capital stock of the Corporation (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period, (b) as a result of any exchange or conversion of
any class or series of the Corporation's capital stock (or any capital stock
of a subsidiary of the Corporation) for any class or series of the
Corporation's capital stock or of any class or series of the Corporation's
indebtedness for any class or series of the Corporation's capital stock, (c)
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, (d) any declaration of a
dividend in connection with any stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in
the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights
is the same stock as that on which the dividend is being paid or ranks pari
passu with or junior to such stock).
The revenue of each Issuer available for distribution to holders of its
Related Preferred Securities will be limited to payments under the
Corresponding Junior Subordinated Debentures in which the Issuer will invest
the proceeds from the issuance and sale of its Trust Securities. See
"Description of Junior Subordinated Debentures--Corresponding Junior
Subordinated Debentures." If the Corporation does not make interest payments
on such Corresponding Junior Subordinated Debentures, the Property Trustee
will not have funds available to pay Distributions on the Related Preferred
Securities. The payment of Distributions (if and to the extent the Issuer has
funds legally available for the payment of such Distributions and cash
sufficient to make such payments) is guaranteed by the Corporation on a
limited basis as set forth herein under "Description of Guarantees."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to
any applicable laws and regulations and the provisions of the applicable Trust
Agreement, each such payment will be made as described under "Book-Entry
Issuance." In the event any Preferred Securities are not in book-entry form,
the relevant record
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date for such Preferred Securities shall be the date at least 15 days prior to
the relevant Distribution Date, as specified in the applicable Prospectus
Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in part,
of any Corresponding Junior Subordinated Debentures, whether at maturity or
upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Related Preferred Securities and the
Common Securities, upon not less than 30 nor more than 60 days' notice, at a
redemption price (the "Redemption Price") equal to the aggregate Liquidation
Amount of such Trust Securities plus accumulated but unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related
amount of the premium, if any, paid by the Corporation upon the concurrent
redemption of such Corresponding Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures--Redemption." If less than all
of any series of Corresponding Junior Subordinated Debentures are to be repaid
or redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the Related
Preferred Securities and the Common Securities. The amount of premium, if any,
paid by the Corporation upon the redemption of all or any part of any series
of any Corresponding Junior Subordinated Debentures to be repaid or redeemed
on a Redemption Date shall be allocated to the redemption pro rata of the
Related Preferred Securities and the Common Securities.
The Corporation will have the right to redeem any series of Corresponding
Junior Subordinated Debentures (i) on or after such date as may be specified
in the applicable Prospectus Supplement, in whole at any time or in part from
time to time, (ii) at any time, in whole (but not in part), upon the
occurrence of a Tax Event or (iii) as may be otherwise specified in the
applicable Prospectus Supplement.
Distribution of Corresponding Junior Subordinated Debentures. The
Corporation has the right at any time to terminate any Issuer and, after
satisfaction of the liabilities of creditors of such Issuer as provided by
applicable law, cause the Corresponding Junior Subordinated Debentures in
respect of the Related Preferred Securities and Common Securities issued by
such Issuer to be distributed to the holders of such Related Preferred
Securities and Common Securities in liquidation of the Issuer.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Related Preferred Securities
(i) such series of Related Preferred Securities will no longer be deemed to be
outstanding, (ii) the depositary or its nominee, as the record holder of such
series of Related Preferred Securities, will receive a registered global
certificate or certificates representing the Corresponding Junior Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing such series of Related Preferred Securities not held by DTC or
its nominee will be deemed to represent the Corresponding Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
such series of Related Preferred Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on such
series of Related Preferred Securities, until such certificates are presented
to the Property Trustee or its agent for transfer or reissuance.
Any distribution of Corresponding Junior Subordinated Debentures to holders
of Related Preferred Securities shall be made to the applicable recordholders
thereof as they appear on the register for such Related Preferred Securities
on the relevant record date, which shall be one Business Day prior to the
liquidation date; provided, however, that in the event that any Related
Preferred Securities are not in book-entry form, the relevant record date
shall be a date at least 15 days prior to the liquidation date, as specified
in the applicable Prospectus Supplement.
There can be no assurance as to the market prices for the Related Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Related Preferred Securities if a dissolution and
liquidation of an Issuer were to occur. Accordingly, the Related Preferred
Securities that an
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investor may purchase, or the Corresponding Junior Subordinated Debentures
that the investor may receive on dissolution and liquidation of an Issuer, may
trade at a discount to the price that the investor paid to purchase the
Related Preferred Securities offered hereby.
Tax Event Redemption. If a Tax Event in respect of a series of Related
Preferred Securities and Common Securities shall occur and be continuing, the
Corporation has the right to redeem the Corresponding Junior Subordinated
Debentures in whole (but not in part) and thereby cause a mandatory redemption
of such Related Preferred Securities and Common Securities in whole (but not
in part) at the Redemption Price within 90 days following the occurrence of
such Tax Event. In the event a Tax Event in respect of a series of Related
Preferred Securities and Common Securities has occurred and is continuing and
the Corporation does not elect to redeem the Corresponding Junior Subordinated
Debentures and thereby cause a mandatory redemption of such Related Preferred
Securities or to liquidate the related Issuer and cause the Corresponding
Junior Subordinated Debentures to be distributed to holders of such Related
Preferred Securities and Common Securities in exchange therefor upon
liquidation of the Issuer as described above, such Related Preferred
Securities will remain outstanding and Additional Sums (as defined below) may
be payable on the Corresponding Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by an Issuer on the
outstanding Preferred Securities and Common Securities of the Issuer shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which such Issuer has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to the principal amount of Corresponding Junior
Subordinated Debentures to be contemporaneously redeemed in accordance with
the Indenture, the proceeds of which will be used to pay the Redemption Price
of such Trust Securities, and (ii) with respect to a distribution of
Corresponding Junior Subordinated Debentures to holders of any series of Trust
Securities in connection with a dissolution or liquidation of the related
Issuer, Corresponding Junior Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities in respect of which
such distribution is made.
"Liquidation Amount" means the stated amount per Trust Security of $1,000
(or such other stated amount as is set forth in the applicable Prospectus
Supplement).
"Tax Event" with respect to an Issuer of a series of Related Preferred
Securities means the receipt by such Issuer 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 which
pronouncement or decision is announced on or after the date of issuance of
such Related Preferred Securities, there is more than an insubstantial risk
that (i) such Issuer 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 Corresponding Junior Subordinated Debentures, (ii)
interest payable by the Corporation on such Corresponding Junior Subordinated
Debentures is not, or within 90 days of the date of such opinion, will not be,
deductible by the Corporation, in whole or in part, for United States federal
income tax purposes, or (iii) such Issuer 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.
Possible Tax Law Changes. On February 6, 1997, the revenue portion of
President Clinton's 1997 budget (the "Budget Proposal"), was released. If
enacted, the Budget Proposal would generally deny interest deductions for
interest on an instrument issued by a corporation that has a maximum term of
more than 15 years and that is not shown as indebtedness on the separate
balance sheet of the issuer or, where the instrument is issued to a related
party (other than a corporation), where the holder or some other related party
issues a related instrument
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that is not shown as indebtedness on the issuer's consolidated balance sheet.
The above described provision of the Budget Proposal is proposed to be
effective generally for instruments issued on or after the date of first
Congressional committee action. If a similar provision were to apply to the
corresponding Junior Subordinated Debentures, the Corporation would be unable
to deduct interest on the corresponding Junior Subordinated Debentures. Under
current law, the Corporation will be able to deduct interest on the
corresponding Junior Subordinated Debentures. There can be no assurance,
however, that current or future legislation proposals or final legislation
will not affect the ability of the Corporation to deduct interest on the
corresponding Junior Subordinated Debentures. Such a change could give rise to
a Tax Event, which may permit the Corporation to cause a redemption of the
Preferred Securities, as described more fully under "Description of Junior
Subordinated Debentures--Redemptions."
If legislation were enacted that affected the Corporation's ability to
deduct interest expense on the Junior Subordinated Debentures, it is unclear
whether an exercise by the Corporation of its right to shorten the maturity of
the Junior Subordinated Debentures or to distribute the Junior Subordinated
Debentures following a Tax Event would be a taxable event to holders of the
Related Preferred Securities.
REDEMPTION PROCEDURES
Related Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Corresponding Junior Subordinated
Debentures. Redemptions of the Preferred Securities shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the related Issuer has funds on hand available for the payment of such
Redemption Price. See also "--Subordination of Common Securities."
If the Property Trustee gives a notice of redemption in respect of Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are available, the Property Trustee will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price
and will give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of such Preferred Securities. See "Book-Entry Issuance."
If such Preferred Securities are no longer in book-entry form, the Property
Trustee, to the extent funds are available, will irrevocably deposit with the
paying agent for such Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the holders of such Preferred 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 such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price and any Distribution payable in
respect of the Preferred Securities on or prior to the Redemption Date, but
without interest on such Redemption Price, and such Preferred Securities will
cease to be outstanding. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day, in each
case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of Preferred Securities called
for redemption is improperly withheld or refused and not paid either by the
Issuer or by the Corporation pursuant to the Guarantee as described under
"Description of Guarantees", Distributions on such Preferred Securities will
continue to accrue at the then applicable rate from the Redemption Date
originally established by the Issuer for such Preferred Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the
Redemption Price.
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Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time
and from time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
Payment of the Redemption Price on the Related Preferred Securities shall be
made to the applicable recordholders thereof as they appear on the register
for such Related Preferred Securities on the relevant record date, which shall
be one Business Day prior to the Redemption Date; provided, however, that in
the event that any Preferred Securities are not in book-entry form, the
relevant record date shall be a date at least 15 days prior to the Redemption
Date, as specified in the applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities issued by
an Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the
Common Securities based upon the relative Liquidation Amounts of such classes.
The particular Preferred Securities to be redeemed shall be selected on a pro
rata basis not more than 60 days prior to the Redemption Date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or an integral multiple of $1,000 in excess thereof, unless a
different amount is specified in the applicable Prospectus Supplement) of the
Liquidation Amount of Preferred Securities of a denomination larger than
$1,000 (or such other denomination as is specified in the applicable
Prospectus Supplement). The Property Trustee shall promptly notify the
Securities registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
each Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case
of any Preferred Securities redeemed or to be redeemed only in part, to the
portion of the aggregate Liquidation Amount of Preferred Securities which has
been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed, at its registerted address. Unless the Corporation defaults in
payment of the Redemption Price on the Corresponding Junior Subordinated
Debentures, on and after the Redemption Date interest will cease to accrue on
such Corresponding Junior Subordinated Debentures or portions thereof (and
Distributions will cease to accrue on the Related Preferred Securities or
portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the liquidation amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date, Redemption
Date or liquidation date a Debenture Event of Default shall have occurred and
be continuing as a result of any failure by the Corporation to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution, as
defined below, in respect of, any of the Issuer's Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition
of such Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the Issuer's outstanding
Preferred Securities for all Distribution periods terminating on or prior
thereto, or in the case of payment of the Redemption Price the full amount of
such Redemption Price on all of the Issuer's outstanding Preferred Securities
then called for redemption, or in the case of payment of the Liquidation
Distribution the full amount of such Liquidation Distribution on all
Outstanding Preferred Securities, 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
Issuer's Preferred Securities then due and payable.
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In the case of any event of default under the applicable Trust Agreement
resulting from a Debenture Event of Default, the Corporation as holder of such
Issuer's Common Securities will be deemed to have waived any right to act with
respect to any such Event of Default under the applicable Trust Agreement
until the effect of all such Events of Default with respect to such Preferred
Securities have been cured, waived or otherwise eliminated. Until any such
Events of Default under the applicable Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of such Preferred
Securities and not on behalf of the Corporation as holder of the Issuer's
Common Securities, and only the holders of such Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Issuer shall terminate automatically
upon expiration of its term and shall terminate on 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 Corresponding Junior
Subordinated Debentures to the holders of its Trust Securities, if the
Corporation, as Depositor, has given written direction to the Property Trustee
to terminate such Issuer; (iii) redemption of all of the Issuer's Preferred
Securities as described under "--Redemption or Exchange"; and (iv) the entry
of an order for the dissolution of the Issuer by a court of competent
jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer 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 such Issuer as provided by
applicable law, to the holders of such Trust Securities in exchange therefor a
Like Amount of the Corresponding Junior Subordinated Debentures, unless such
distribution is determined by the Administrative Trustees not to be practical,
in which event such holders will be entitled to receive out of the assets of
the Issuer available for distribution to holders, after satisfaction of
liabilities to creditors of such Issuer as provided by applicable law, an
amount equal to, in the case of holders of Preferred Securities, the aggregate
of the Liquidation Amount plus accrued 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 such Issuer has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by such Issuer on its
Preferred Securities shall be paid on a pro rata basis. The holder(s) of such
Issuer's Common Securities will be entitled to receive distributions upon any
such liquidation pro rata with the holders of its Preferred Securities, except
that if a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Corporation to pay any amounts in respect of the
Junior Subordinated Debentures when due, the Preferred Securities shall have a
priority over the Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under each
Trust Agreement with respect to the Preferred Securities issued thereunder
(whatever the reason for such 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) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures--Debenture Events of
Default"); or
(ii) default by the Issuer in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days; or
(iii) default by the Issuer in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of
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which or the breach of which is dealt with in clause (ii) or (iii) above),
and continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the defaulting
Issuer Trustee or Trustees by the holders of at least 25% in aggregate
Liquidation Amount of the outstanding Preferred Securities of the
applicable Issuer, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" under such Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 90 days thereof.
Within five 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 such Issuer's Preferred
Securities, the Administrative Trustees and the Corporation, as Depositor,
unless such Event of Default shall have been cured or waived. The Corporation,
as Depositor, 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 each
Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described above. See "--Liquidation Distribution Upon Termination." The
existence of an Event of Default does not entitle the holders of Preferred
Securities to accelerate the maturity thereof.
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 Preferred
Securities. In no event will the holders of the Preferred 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
applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements
of the Trust Indenture Act or of any jurisdiction in which any part of the
Trust Property may at the time be located, the Corporation, as the holder of
the Common Securities, and the Administrative Trustees shall have power to
appoint one or more persons either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power deemed necessary
or desirable, subject to the provisions of the applicable Trust Agreement. In
case a Debenture Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make such appointment.
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 resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust
Agreement, provided such person shall be otherwise qualified and eligible.
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MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUERS
An Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. An Issuer may, at the request of the Corporation, with the
consent of the Administrative Trustees and without the consent of the holders
of the Preferred Securities, merge with or into, consolidate, amalgamate, or
be replaced by or convey, transfer or lease its properties and assets
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 such Issuer with respect to the Preferred
Securities or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the same as
the Preferred Securities 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 as the holder of the Corresponding
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 Preferred
Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities to be downgraded by any nationally recognized statistical
rating organization which assigns ratings to the Preferred Securities, (v)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor Securities) in
any material respect, (vi) such successor entity has a purpose identical to
that of the Issuer, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Corporation has received an
opinion from independent counsel to the Issuer 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 Preferred Securities
(including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Issuer nor such successor entity will be
required to register as an investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and (viii) the Corporation
or any permitted successor or assignee owns all of the Common Securities of
such successor entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the
Guarantee. Notwithstanding the foregoing, an Issuer shall not, except with the
consent of holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets 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 Issuer or the
successor entity to be classified as an association taxable as a corporation
or as other than a grantor trust for United States federal income tax
purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees--Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each 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 Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under such Trust Agreement, which shall not be
inconsistent with the other provisions of such Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of such Trust Agreement to such
extent as shall be necessary to ensure that the Issuer will be classified for
United States federal income tax purposes as a grantor trust or as other than
an association taxable as a corporation at all times that any Trust Securities
are outstanding or to ensure that the Issuer will not be required to register
as an "investment company" under the Investment Company Act; provided,
however, that
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in the case of either clause (i) or clause (ii), such action shall not
adversely affect in any material respect the interests of any holder of
Preferred Securities, and any amendments of such Trust Agreement shall become
effective when notice thereof is given to the holders of Trust Securities.
Each Trust Agreement may be amended by the Issuer Trustees and the Corporation
with (i) the consent of holders representing not less than a majority (based
upon Liquidation Amounts) of the outstanding Trust Securities, and (ii)
receipt by the Issuer Trustees of an opinion of counsel to the effect that
such amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not cause the Issuer to be taxable as a
corporation or affect the Issuer's status as a grantor trust for United States
federal income tax purposes or the Issuer's exemption from status as an
"investment company" under the Investment Company Act, provided that without
the consent of each holder of Trust Securities, such 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 Corresponding Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on the Property
Trustee with respect to such Corresponding Junior Subordinated Debentures,
(ii) waive any past default that is waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Junior Subordinated Debentures shall be due and payable or (iv) consent to
any amendment, modification or termination of the Indenture or such
Corresponding Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders
of a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Corresponding Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the corresponding
Preferred Securities. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Preferred
Securities except by subsequent vote of the holders of the Preferred
Securities. The Property Trustee shall notify each holder of Preferred
Securities of any notice of default with respect to the Corresponding Junior
Subordinated Debentures. In addition to obtaining the foregoing approvals of
the holders of the Preferred 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 Issuer will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action and such action would not cause the Issuer
to be classified as other than a grantor trust for United States federal
income tax purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees, or at the written
request of the Administrative Trustees, the Property Trustee will cause a
notice of any meeting at which holders of Preferred Securities are entitled to
vote, or of any matter upon which action by written consent of such holders is
to be taken, to be given to each holder of record of Preferred Securities in
the manner set forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Issuer to redeem and cancel its Preferred Securities in accordance with
the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited
with, or on behalf of, the Depositary identified in the Prospectus
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Supplement relating to such series. Unless otherwise indicated in the
applicable Prospectus Supplement, the Depositary will be DTC. Global Preferred
Securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for
the individual Preferred Securities represented thereby, a Global Preferred
Security may not be transferred except as a whole by the Depositary for such
Global Preferred Security to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series of
Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Corporation anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-
entry registration and transfer system, the respective aggregate Liquidation
Amounts of the individual Preferred Securities represented by such Global
Preferred Securities to the accounts of Participants. Such accounts shall be
designated by the dealers, underwriters or agents with respect to such
Preferred Securities or by the Corporation if such Preferred Securities are
offered and sold directly by the Corporation. Ownership of beneficial
interests in a Global Preferred Security will be limited to Participants or
persons that may hold interests through Participants. Ownership of beneficial
interests in such Global Preferred Security will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
applicable Depositary or its nominee (with respect to interests of
Participants) and the records of Participants (with respect to interests of
persons who hold through Participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Preferred Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Preferred Securities represented by such Global Preferred Security for
all purposes under the related Trust Agreement. Except as provided below,
owners of beneficial interests in a Global Preferred Security will not be
entitled to have any of the individual Preferred Securities of the series
represented by such Global Preferred Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Preferred
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the related Trust Agreement.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
premium or Distributions, including any payment of Redemption Price, in
respect of a Global Preferred Security representing any of such Preferred
Securities immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the aggregate
Liquidation Amount of such Global Preferred Security for such Preferred
Securities as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Preferred Security held through such Participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of
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customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is
not appointed by the Issuer within 90 days, or if there shall have occurred
and be continuing a Debenture Event of Default under the Indenture with
respect to the Corresponding Junior Subordinated Debentures, the Issuer will
issue individual Preferred Securities of such series in registered form in
exchange for the Global Preferred Security representing such series of
Preferred Securities. In addition, the Issuer may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Preferred Securities, determine not to have any Preferred
Securities of such series represented by one or more Global Preferred
Securities and, in such event, will issue individual Preferred Securities of
such series in registered form in exchange for the Global Preferred Security
representing such series of Preferred Securities. Further, if the Issuer so
specifies with respect to the Preferred Securities of a series, an owner of a
beneficial interest in a Global Preferred Security representing Preferred
Securities of such series may, on terms acceptable to the Issuer, the Property
Trustee and the Depositary for such Global Preferred Security, receive
individual Preferred Securities of such series in registered form in exchange
for such beneficial interests, subject to any limitations described in the
Prospectus Supplement relating to such Preferred Securities. In any such
instance, an owner of a beneficial interest in a Global Preferred Security
will be entitled to physical delivery of individual Preferred Securities in
registered form of the series represented by such Global Preferred Security
equal in principal amount to such beneficial interest and to have such
Preferred Securities registered in its name. Individual Preferred Securities
of such series so issued will be issued in denominations, unless otherwise
specified by the Issuer, and integral multiples thereof that are the same as
the denominations and multiples in which the Preferred Securities are issued.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Issuer's Preferred Securities 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. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Corporation. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall appoint
a successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuers will not be required to register or cause to be
registered the transfer of their Preferred Securities after such Preferred
Securities 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, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his
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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 applicable
Trust Agreement at the request of any holder of Preferred 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 applicable Trust
Agreement or is unsure of the application of any provision of the applicable
Trust Agreement, and the matter is not one on which holders of Preferred
Securities are entitled under such 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 Issuer Trustees are authorized and directed to conduct the affairs of
and to operate the Issuers in such a way that no Issuer will be deemed to be
an "investment company" required to be registered under the Investment Company
Act or classified as an association taxable as a corporation or as other than
a grantor trust for United States federal income tax purposes and so that the
Corresponding Junior Subordinated Debentures will be treated as indebtedness
of the Corporation for United States federal income tax purposes. In this
connection, the Corporation and the Issuer Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of each
Issuer or each Trust Agreement, that the Corporation and the Issuer 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 related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise referred to in the
Prospectus Supplement relating to an offering of Preferred Securities or
Junior Subordinated Debentures. The Preferred Securities and the Junior
Subordinated Debentures will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more fully-
registered global certificates will be issued for the Preferred Securities of
each Issuer and the Junior Subordinated Debentures, representing in the
aggregate the total number of such Issuer's Preferred Securities or aggregate
principal balance of Junior Subordinated Debentures, respectively, and will be
deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. "Direct Participants" include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated
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Debentures on DTC's records. The ownership interest of each actual purchaser
of each Preferred Security and each Junior Subordinated Debenture ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities or Junior
Subordinated Debentures. Transfers of ownership interests in the Preferred
Securities or Junior Subordinated Debentures are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities or Junior Subordinated Debentures, except in
the event that use of the book-entry system for the Preferred Securities of
such Issuer or Junior Subordinated Debentures is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred
Securities or Junior Subordinated Debentures are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all
of an Issuer's Preferred Securities or the Junior Subordinated Debentures are
being redeemed, DTC's current practice is to determine by lot the amount of
the interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities or Junior Subordinated Debentures. Under its
usual procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts such Preferred Securities or Junior Subordinated Debentures
are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Distribution payments on the Preferred Securities or the Junior Subordinated
Debentures will be made by the relevant Trustee to DTC. DTC's practice is to
credit Direct Participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the relevant Trustee, the Issuer thereof or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the
responsibility of the relevant Trustee, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursements of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities or the Junior Subordinated
Debentures at any time by giving reasonable notice to the relevant Trustee and
the Corporation. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Corporation, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default,
the holders of a majority in liquidation preference of Preferred Securities or
aggregate principal
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amount of Junior Subordinated Debentures may determine to discontinue the
system of book-entry transfers through DTC. In any such event, definitive
certificates for such Preferred Securities or Junior Subordinated Debentures
will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and the Corporation believe to
be accurate, but the Issuers and the Corporation assume no responsibility for
the accuracy thereof. Neither the Issuers nor the Corporation has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Corporation concurrently
with the issuance by each Issuer of its Preferred Securities for the benefit
of the holders from time to time of such Preferred Securities. The Chase
Manhattan Bank will act as indenture trustee ("Guarantee Trustee") under each
Guarantee for the purposes of compliance with the Trust Indenture Act and each
Guarantee will be qualified as an indenture under the Trust Indenture Act.
This summary of certain provisions of the Guarantees, which summarizes the
material terms thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of each
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act, to each of which reference is hereby made. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Reference in this summary to Preferred
Securities means that Issuer's Preferred Securities to which a Guarantee
relates. The Guarantee Trustee will hold each Guarantee for the benefit of the
holders of the related Issuer's Preferred Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined
below) to the holders of the Preferred Securities, as and when due, regardless
of any defense, right of set-off or counterclaim that such Issuer may have or
assert other than the defense of payment. The following payments with respect
to the Preferred Securities, to the extent not paid by or on behalf of the
related Issuer (the "Guarantee Payments"), will be subject to the Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on such
Preferred Securities, to the extent that such Issuer has funds on hand
available therefor at such time, (ii) the Redemption Price with respect to any
Preferred Securities called for redemption, to the extent that such Issuer has
funds on hand available therefor at such time, or (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of such Issuer (unless the
Corresponding Junior Subordinated Debentures are distributed to holders of
such Preferred Securities in exchange therefor), the lesser of (a) the
Liquidation Distribution, to the extent such Issuer has funds on hand
available therefor at such time, and (b) the amount of assets of such Issuer
remaining available for distribution to holders of Preferred Securities after
satisfaction of liabilities to creditors of such Issuer 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 applicable Preferred Securities or by causing the Issuer to
pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer's obligations under the Preferred Securities, but will
apply only to the extent that such related Issuer has funds sufficient to make
such payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the Corresponding
Junior Subordinated Debentures held by the Issuer, the Issuer will not be able
to pay Distributions on the Related Preferred Securities and will not have
funds legally available therefor. Each Guarantee will rank subordinate and
junior in right of payment to all Senior Debt of the Corporation. See "--
Status of the Guarantees." Because the Corporation is a holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary upon such
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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 Guarantees will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and claimants should look only to the assets of
the Corporation for payments thereunder. See "The Corporation." Except as
otherwise provided in the applicable Prospectus Supplement, the Guarantees do
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Debt, whether under the Indenture, any other
existing indenture or any other indenture that the Corporation may enter into
in the future or otherwise. See the applicable Prospectus Supplement relating
to any offering of Preferred Securities.
The Corporation has, through the applicable Guarantee, the applicable Trust
Agreement, the applicable series of Corresponding Junior Subordinated
Debentures, the Indenture and the applicable Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the
Issuer's obligations under the Related Preferred 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 Issuer's obligations under the Related
Preferred Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures, the Expense Agreements and the
Guarantees."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior Debt of
the Corporation in the same manner as Junior Subordinated Debentures.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Corporation. Each 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 Guarantee
without first instituting a legal proceeding against any other person or
entity). Each Guarantee will be held for the benefit of the holders of the
Related Preferred Securities. Each Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
or upon distribution to the holders of the Preferred Securities of the
Corresponding Junior Subordinated Debentures. None of the Guarantees places a
limitation on the amount of additional Senior Debt that may be incurred by the
Corporation. The Corporation expects from time to time to incur additional
indebtedness constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no
vote will be required), no Guarantee may be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of such outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Preferred Securities--
Voting Rights; Amendment of Each Trust Agreement." All guarantees and
agreements contained in each Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Corporation and shall inure to
the benefit of the holders of the related Preferred Securities then
outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Corporation to perform any of its payment obligations thereunder or to perform
any non-payment obligations if such non-payment default remains unremedied for
30 days. The holders of not less than a majority in aggregate Liquidation
Amount of the related Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of such Guarantee or to direct the exercise of
any trust or power conferred upon the Guarantee Trustee under such Guarantee.
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Any holder of the Preferred Securities may, to the extent permissible under
applicable law, institute a legal proceeding directly against the Corporation
to enforce its rights under such Guarantee without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other person or
entity.
The Corporation, as guarantor, is 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.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Corporation in performance of any Guarantee, undertakes to
perform only such duties as are specifically set forth in each Guarantee and,
after default with respect to any Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by any Guarantee at
the request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Issuer or
upon distribution of Corresponding Junior Subordinated Debentures to the
holders of the Related Preferred Securities in exchange therefor. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the related Preferred Securities must restore
payment of any sums paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by the Corporation under each
Trust Agreement (the "Expense Agreement"), the Corporation will irrevocably
and unconditionally guarantee to each Person or entity to whom the Issuer
becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Issuer, other than obligations of the Issuer to pay to the
holders of any Preferred Securities or other similar interests in the Issuer
of the amounts due such holders pursuant to the terms of the Preferred
Securities or such other similar interests, as the case may be. The Expense
Agreement will be enforceable by third parties.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING
JUNIOR SUBORDINATED DEBENTURES, THE EXPENSE AGREEMENTS
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of Guarantees." Taken together, the
Corporation's obligations under each series of Corresponding Junior
Subordinated Debentures, the Indenture, the related Trust Agreement, the
related Expense Agreement, and the related Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Related Preferred Securities. No
single
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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 Issuer's obligations under the Related
Preferred Securities. If and to the extent that the Corporation does not make
payments on any series of Corresponding Junior Subordinated Debentures, such
Issuer will not pay Distributions or other amounts due on its Related
Preferred Securities. The Guarantees do not cover payment of Distributions
when the related Issuer does not have sufficient funds to pay such
Distributions. In such event, the remedy of a holder of a series of Related
Preferred Securities is to institute a legal proceeding directly against the
Corporation pursuant to the terms of the Indenture for enforcement of payment
of amounts of such Distributions to such holder. The obligations of the
Corporation under each Guarantee are subordinate and junior in right of
payment to all Senior Debt of the Corporation.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on each
series of Corresponding Junior Subordinated Debentures, such payments will be
sufficient to cover Distributions and other payments due on the Related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to
the sum of the aggregate stated Liquidation Amount of the Related Preferred
Securities and Common Securities; (ii) the interest rate and interest and
other payment dates on each series of Corresponding Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Related Preferred Securities; (iii) the Corporation shall pay
for all and any costs, expenses and liabilities of such Issuer except the
Issuer's obligations to holders of its Preferred Securities under such
Preferred Securities; and (iv) each Trust Agreement provides that the Issuer
will not engage in any activity that is not consistent with the limited
purposes of such Issuer.
Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make
thereunder with and to the extent the Corporation has theretofore made, or is
concurrently on the date of such payment making, a payment under the related
Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may, to the extent permissible under
applicable law, institute a legal proceeding directly against the Corporation
to enforce its rights under the related Guarantee without first instituting a
legal proceeding against the Guarantee Trustee, the related Issuer or any
other person or entity.
A default or event of default under any Senior Debt of the Corporation would
not constitute a default or Debenture Event of Default under the Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Debt of the Corporation, the subordination provisions of the Indenture provide
that no payments may be made in respect of the Junior Subordinated Debentures
until such Senior Debt has been paid in full or any payment default thereunder
has been cured or waived. Failure to make required payments on any series of
Junior Subordinated Debentures would constitute a Debenture Event of Default
under the Indenture.
LIMITED PURPOSE OF ISSUERS
Each Issuer's Preferred Securities evidence a beneficial interest in such
Issuer, and each Issuer exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in Junior
Subordinated Debentures. A principal difference between the rights of a holder
of a Preferred Security and a holder of a Junior Subordinated Debenture is
that a holder of a Junior Subordinated Debenture is entitled to receive from
the Corporation the principal amount of and interest accrued on Junior
Subordinated Debentures held, while a holder of Preferred Securities is
entitled to receive Distributions from such Issuer (or from the Corporation
under the applicable Guarantee) if and to the extent such Issuer has funds
available for the payment of such Distributions.
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RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer involving the liquidation of the Corporation, the holders of the
Related Preferred Securities will be entitled to receive, out of the assets
held by such Issuer, the Liquidation Distribution in cash. See "Description of
Preferred Securities--Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of the Corporation, the
Property Trustee, as holder of the Corresponding Junior Subordinated
Debentures, would be a subordinated creditor of the Corporation, subordinated
in right of payment to all Senior Debt as set forth in the Indenture, but
entitled to receive payment in full of principal and interest, before any
stockholders of the Corporation receive payments or distributions. Since the
Corporation is the guarantor under each Guarantee and has agreed to pay for
all costs, expenses and liabilities of each Issuer (other than the Issuer's
obligations to the holders of its Preferred Securities), the positions of a
holder of such Preferred Securities and a holder of such Corresponding 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.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures or the Preferred Securities may be sold
in a public offering to or through underwriters or dealers designated from
time to time. The Corporation and each Issuer may sell its Junior Subordinated
Debentures or Preferred Securities as soon as practicable after effectiveness
of the Registration Statement of which this Prospectus forms a part. The names
of any underwriters or dealers involved in the sale of the Junior Subordinated
Debentures or Preferred Securities in respect of which this Prospectus is
delivered, the amount or number of Junior Subordinated Debentures and
Preferred Securities to be purchased by any such underwriters and any
applicable commissions or discounts will be set forth in the applicable
Prospectus Supplement.
Underwriters may offer and sell Junior Subordinated Debentures or Preferred
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. In connection with the
sale of Preferred Securities, underwriters may be deemed to have received
compensation from the Corporation and/or the applicable Issuer in the form of
underwriting discounts or commissions and may also receive commissions.
Underwriters may sell Junior Subordinated Debentures or Preferred Securities
to or through dealers, and such dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters.
Any underwriting compensation paid by the Corporation and/or the applicable
Issuer to underwriters in connection with the offering of Junior Subordinated
Debentures or Preferred Securities, and any discounts, concessions or
commissions allowed by such underwriters to participating dealers, will be
described in an accompanying Prospectus Supplement. Underwriters and dealers
participating in the distribution of Junior Subordinated Debentures or
Preferred Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of such
Junior Subordinated Debentures or Preferred Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act. Underwriters
and dealers may be entitled, under agreement with the Corporation and the
applicable Issuer, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act, and to
reimbursement by the Corporation for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set
forth in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set
forth in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/or the applicable Issuer and/or any of their
affiliates in the ordinary course of business.
36
<PAGE>
The Junior Subordinated Debentures and the Preferred Securities will be new
issues of securities and will have no established trading market. Any
underwriters to whom Junior Subordinated Debentures or Preferred Securities
are sold for public offering and sale may make a market in such Junior
Subordinated Debentures and Preferred Securities, but such underwriters will
not be obligated to do so and may discontinue any market making at any time
without notice. Such Junior Subordinated Debentures or Preferred Securities
may or may not be listed on a national securities exchange or the Nasdaq
National Market. No assurance can be given as to the liquidity of or the
existence of trading markets for any Junior Subordinated Debentures or
Preferred Securities.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreements and the formation of
the Issuers will be passed upon by Richards, Layton & Finger, Wilmington,
Delaware, Special Delaware Counsel to the Corporation and the Issuers to be
named in the Prospectus Supplement. Unless otherwise indicated in the
applicable Prospectus Supplement, the validity of the Guarantees and the
Junior Subordinated Debentures will be passed upon for the Corporation by
Sullivan & Cromwell, New York, New York, and for any Underwriter by Cleary,
Gottlieb, Steen & Hamilton, New York, New York. Certain matters relating to
United States federal income tax considerations will be passed upon for the
Corporation by Sullivan & Cromwell.
EXPERTS
The consolidated financial statements of the Corporation and subsidiaries as
of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996 have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. Such report refers to a change in the method of accounting for
goodwill.
37
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUP-
PLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURI-
TIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................. S-4
The Series A Issuer...................................................... S-11
Recent Developments...................................................... S-12
The Corporation.......................................................... S-13
Dime Bancorp, Inc. and Subsidiaries
Selected Consolidated Financial Data.................................... S-16
Use of Proceeds.......................................................... S-18
Accounting Treatment..................................................... S-18
Capitalization........................................................... S-18
Certain Terms of Series A Capital Securities............................. S-19
Certain Terms of Series A Subordinated Debentures........................ S-23
Certain Terms of Series A Guarantee...................................... S-27
ERISA Considerations..................................................... S-28
Certain Federal Income Tax Consequences.................................. S-30
Underwriting............................................................. S-33
Validity of Securities................................................... S-34
PROSPECTUS
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 4
The Corporation.......................................................... 5
The Issuers.............................................................. 6
Use of Proceeds.......................................................... 7
Description of Junior Subordinated Debentures............................ 7
Description of Preferred Securities...................................... 18
Book-Entry Issuance...................................................... 30
Description of Guarantees................................................ 32
Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures, the Expense Agreements and the Guarantees...... 34
Plan of Distribution..................................................... 36
Validity of Securities................................................... 37
Experts.................................................................. 37
</TABLE>
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$200,000,000
DIME CAPITAL TRUST I
9.33% CAPITAL SECURITIES,
SERIES A
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
DIME BANCORP, INC.
[Logo of Dime Bancorp, Inc.]
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
BT SECURITIES CORPORATION
LEHMAN BROTHERS
APRIL 29, 1997
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