<PAGE>
As filed with the Securities and Exchange Commission on July 29, 1997
Registration Nos. 333-27847
333-27847-01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
INVESTORS FINANCIAL INVESTORS CAPITAL
SERVICES CORP. TRUST I
(Exact name of Registrant (Exact name of Registrant as specified
as specified in its charter) in its Declaration of Trust)
Delaware Delaware
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
6289 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
04-3279817
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
--------------------
200 Clarendon Street, Boston, Massachusetts 02117-9130
(617) 330-6700
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
--------------------
John E. Henry, Esq.
General Counsel and Secretary
200 Clarendon Street
P.O. Box 9130
Boston, Massachusetts 02117-9130
(617) 330-6700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------
Copies to:
Steven C. Browne, Esq. Mitchell Kleinman, Esq.
Testa, Hurwitz & Thibeault, LLP Brown & Wood LLP
High Street Tower One World Trade Center
125 High Street New York, NY 10048
Boston, MA 02110
--------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
--------------------
If the securities being registered pursuant to this Registration Statement are
to be offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. [_]
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
DATED JULY 29, 1997
INVESTORS CAPITAL TRUST I
OFFER TO EXCHANGE ITS
9.77% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9.77% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED BY
INVESTORS FINANCIAL SERVICES CORP.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
BOSTON TIME, ON AUGUST 29, 1997, UNLESS EXTENDED
--------------------
Investors Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus (as the same may be
amended or supplemented from time to time, the "Prospectus") and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to $25,000,000 aggregate Liquidation Amount of its 9.77%
Series B Capital Securities (the "New Capital Securities") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for an identical Liquidation Amount of its
outstanding 9.77% Series A Capital Securities (the "Old Capital Securities"), of
which $25,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the
Exchange Offer, Investors Financial Services Corp., a Delaware corporation (the
"Corporation"), is also offering to exchange (i) its guarantee of payments of
cash distributions and payments on liquidation of the Trust or redemption of the
Old Capital Securities (the "Old Guarantee"), along with certain back-up
undertakings made by the Corporation pursuant to its contractual obligations
under, the Indenture and Declaration (each as defined herein) to pay directly
all the expenses, fees, debts and obligations of the Trust (other than the Trust
Securities) and to make payments directly to holders of the Old Capital
Securities if the Corporation has not made payments required by the Old Junior
Subordinated Debentures, see "Relationship Among the New Capital Securities, the
New Junior Subordinated Debentures and the New Guarantee -- Enforcement of
Rights of Holders of New Capital Securities," for a new guarantee in respect of
the New Capital Securities (the "New Guarantee") with the same material terms as
the Old Guarantee and identical undertakings made by the Corporation applicable
to payment of the New Capital Securities and (ii) all of its 9.77% Series A
Junior Subordinated Deferrable Interest Debentures due February 1, 2027 (the
"Old Junior Subordinated Debentures") for the same aggregate principal amount of
its 9.77% Series B Junior Subordinated Deferrable Interest Debentures due
February 1, 2027 (the "New Junior Subordinated Debentures"), which New Guarantee
and New Junior Subordinated Debentures also have been registered under the
Securities Act. The Old Capital Securities, the Old Guarantee and the Old
Junior Subordinated Debentures and the related undertakings are collectively
referred to herein as the "Old Securities" and the New Capital Securities, the
New Guarantee and the New Junior Subordinated Debentures and the related
undertakings are collectively referred to herein as the "New Securities."
Pursuant to the Indenture, the Corporation has agreed to pay all fees, expenses,
debts and obligations of the Trust, other than the Old Capital Securities, the
New Capital Securities and the beneficial interests represented by the Common
Securities of the Trust (the "Common Securities")
(Continued on the following page)
See "Index of Defined Terms" commencing on page 71 for an index of defined terms
- --------------------------------------------------------------------------------
used herein.
------------
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of Old Capital Securities on July 30, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE 17 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL SECURITIES IN
THE EXCHANGE OFFER AND BY PROSPECTIVE PURCHASERS OF NEW CAPITAL SECURITIES.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is July 29, 1997.
<PAGE>
The New Capital Securities and the Old Capital Securities
(collectively, the "Capital Securities, and together with the Common Securities
the "Trust Securities") represent preferred undivided beneficial interests in
the assets of the Trust. The Corporation is the owner of all of the beneficial
interests represented by the common securities of the Trust (the "Common
Securities," and together with the Capital Securities, the "Trust Securities").
The Common Securities and Capital Securities are the same in all materials
respects, except that (i) the Common Securities are non-transferable, (ii) the
holder of the Common Securities has, until the occurrence of an Event of Default
(as defined herein), the sole right to remove the trustees of the Trust, (iii)
the holder of the Common Securities has, until the occurrence of an Event of
Default (as defined herein), the sole right to increase or decrease the number
of trustees of the Trust, and (iv) the Capital Securities will have a preference
over the Common Securities with respect to cash distributions and amounts
payable on liquidation, redemption or otherwise under the circumstances
described in "Description of New Securities -- Description of New Capital
Securities --Subordination of Common Securities." The Bank of New York is the
Property Trustee of the Trust. The Trust exists for the sole purpose of issuing
the Trust Securities and investing the proceeds thereof in the Junior
Subordinated Debentures (as defined herein). The Junior Subordinated Debentures
will mature on February 1, 2027 (the "Stated Maturity Date") except that such
Stated Maturity Date may under certain circumstances be advanced in the event of
a Tax Event (as defined herein). See "Description of New Capital Securities --
Conditional Right to Advance Maturity and Special Event Redemption".
Holders of the New Capital Securities will be entitled to receive
cumulative cash distributions, accumulating from January 31, 1997 and payable
semi-annually in arrears on February 1 and August 1 of each year, commencing
August 1, 1997, at the annual rate of 9.77% of the Liquidation Amount of $1,000
per New Capital Security ("Distributions"). So long as no Debenture Event of
Default (as defined herein) has occurred and is continuing, the Corporation will
have the right to defer payments of interest on the Junior Subordinated
Debentures at any time and from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each deferral period (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity Date. Upon the termination of any such Extension Period and the
payment of all amounts then due, the Corporation may elect to begin a new
Extension Period, subject to the requirements set forth in the Indenture (as
defined herein). If and for so long as interest payments on the Junior
Subordinated Debentures are so deferred, Distributions on the Trust Securities
will also be deferred and the Corporation will not be permitted, subject to
certain exceptions described herein, to declare or pay any cash distributions
with respect to the Corporation's capital stock (which includes common and
preferred stock) or to make any payment with respect to debt securities of the
Corporation that rank equal or at the same level with respect to priority of
payment or exercise of rights ("pari passu") with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Trust Securities are entitled will continue to
accumulate) at the rate of 9.77% per annum, compounded semi-annually, and
holders of Trust Securities will be required to accrue interest income for
United States federal income tax purposes prior to receipt of cash payments
attributable to such interest income. See "Description of New Securities --
3
<PAGE>
Description of New Junior Subordinated Debentures -- Option to Extend Interest
Payment Date" and "Certain Federal Income Tax Considerations --Interest Income
and Original Issue Discount."
Through the Guarantee, the Common Guarantee, the Declaration, the
Junior Subordinated Debentures and the Indenture (each as defined herein), taken
together, the Corporation has guaranteed or will guarantee, as the case may be,
fully, irrevocably and unconditionally all of the Trust's obligations under the
Trust Securities. See "Relationship Among the New Capital Securities, the New
Junior Subordinated Debentures and the New Guarantee -- Full and Unconditional
Guarantee." The Old Guarantee and the Common Guarantee, and the New Guarantee
will guarantee, payments of Distributions and payments on liquidation or
redemption of the Trust Securities, but in each case only to the extent that the
Trust holds funds on hand legally available therefor and has failed to make such
payments. See "Description of the New Securities -- Description of the New
Guarantee." If the Corporation fails to make a required payment on the Junior
Subordinated Debentures, the Trust will not have sufficient funds to make the
related payments, including Distributions, on the Trust Securities. The New
Guarantee and the Common Guarantee will not cover any such payment when the
Trust does not have sufficient funds on hand legally available therefor. In such
event, a holder of New Capital Securities may institute a legal proceeding
directly against the Corporation to enforce payment to such holder of accrued
but unpaid interest on New Junior Subordinated Debentures with a principal
amount equal to the Liquidation Amount of the New Capital Securities held by
such holder. See "Description of New Securities -- Description of New Junior
Subordinated Debentures -- Enforcement of Certain Rights by Holders of New
Capital Securities." The obligations of the Corporation under the Guarantee, the
Common Guarantee and the Junior Subordinated Debentures will be unsecured and
subordinate and rank junior in right of payment to all Senior Indebtedness (as
defined in "Description of New Securities -- Description of New Junior
Subordinated Debentures -- Subordination") of the Corporation to the extent and
in the manner set forth in the Indenture and the Guarantees, respectively.
4
<PAGE>
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY INVESTORS FINANCIAL SERVICES CORP.
OR INVESTORS CAPITAL TRUST I OR THE INITIAL PURCHASER. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE
AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF INVESTORS
FINANCIAL SERVICES CORP. OR INVESTORS CAPITAL TRUST I SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., Boston time, on August 29, 1997 (such time on such date being hereinafter
called the "Expiration Date"), unless the Exchange Offer is extended by the
Corporation or the Trust (in which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange Offer is extended). Tenders of
Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Trust and to the terms and provisions of
the Registration Rights Agreement. Old Capital Securities may be tendered in
whole or in part having an aggregate Liquidation Amount of not less than
$100,000 (100 Capital Securities) provided that if any Old Capital Securities
are tendered in exchange in part, the
5
<PAGE>
untendered principal amount must be no less than $100,000 (100 Capital
Securities). The Corporation has agreed to pay all expenses of the Exchange
Offer. See "The Exchange Offer -- Fees and Expenses." Holders of the Old Capital
Securities whose Old Capital Securities are accepted for exchange will not
receive Distributions on such Old Capital Securities and will be deemed to have
waived the right to receive any Distributions on such Old Capital Securities
accumulated from and after January 31, 1997. See "The Exchange Offer --
Distributions on New Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. No dealer-
manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
As used herein, (i) the "Indenture" means the Indenture, dated as of
January 31, 1997, as amended and supplemented from time to time, between the
Corporation and The Bank of New York, as trustee (the "Debenture Trustee"),
relating to the Junior Subordinated Debentures, (ii) the "Declaration" means the
Amended and Restated Declaration of Trust relating to the Trust among the
Corporation, as Sponsor, The Bank of New York, as Property Trustee (the
"Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the
"Delaware Trustee"), the Administrative Trustees named therein (collectively,
with the Property Trustee and Delaware Trustee, the "Issuer Trustees") and the
holders, from time to time, of the Trust Securities and (iii) the "Common
Guarantee" means the Guarantee Agreement relating to the Common Securities by
the Corporation. In addition, as the context may require, (i) "Capital
Securities" includes the Old Capital Securities and New Capital Securities, (ii)
"Trust Securities" include the Capital Securities and Common Securities,
(iii)"Junior Subordinated Debentures" includes the Old Junior Subordinated
Debentures and the New Junior Subordinated Debentures and (iv) "Guarantee"
includes the Old Guarantee and New Guarantee.
--------------------
Investors Bank & Trust Company(R) is a registered servicemark of the
Corporation. Hub and Spoke(R) is a registered servicemark of Signature Financial
Group, Inc. This Prospectus also includes trademarks and trade names of other
companies.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information........................... 6
Incorporation of Certain Documents by
Reference.................................... 6
Summary......................................... 8
Risk Factors.................................... 17
Use of Proceeds................................. 24
Ratios of Earnings to Fixed Charges............. 24
Capitalization.................................. 25
Selected Consolidated Financial Data............ 26
Investors Capital Trust I....................... 28
Investors Financial Services Corp............... 28
The Exchange Offer.............................. 29
Description of the New Securities............... 38
Description of the Common Securities............ 61
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Description of the Old Securities............... 61
Relationship Among the New Capital Securities,
the New Junior Subordinated Debentures and
the New Guarantee............................ 62
Federal Income Tax Consequences.................. 64
ERISA Considerations............................ 68
Plan of Distribution............................ 69
Legal Matters................................... 70
Independent Auditors............................ 70
Index of Defined Terms.......................... 71
</TABLE>
7
<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"). Reports, proxy
statements and other information concerning the Corporation filed with the
Commission can be inspected and copied at prescribed rates at the Commission's
Public Reference Room, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as the following Regional Offices of the Commission: 7 World
Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained by
mail from the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. If available, such reports and
other information may also be accessed through the Commission's electronic data
gathering, analysis and retrieval system ("EDGAR") via electronic means,
including the Commission's web site on the Internet (http://www.sec.gov).
No separate financial statements of the Trust have been included or
incorporated by reference herein. Neither the Corporation nor the Trust
consider that such financial statements would be material to holders of the
Capital Securities because (i) all of the voting securities of the Trust will be
owned, directly or indirectly, by the Corporation, a reporting company under the
Exchange Act, (ii) the Trust has no independent operations but exists for the
sole purpose of issuing securities representing undivided beneficial interests
in the assets of the Trust and holding as assets the Junior Subordinated
Debentures issued by the Corporation, and (iii) the Corporation's obligations
described herein to provide certain indemnities in respect of, and be
responsible for, certain costs, expenses, debts and liabilities of the Trust
under the Indenture and any supplemental indenture thereto and pursuant to the
Declaration, the Guarantee issued with respect to Capital Securities issued by
the Trust, the Junior Subordinated Debentures purchased by the Trust and the
related Indenture, taken together, constitute a full and unconditional guarantee
of payments due on the Capital Securities as described herein. See "Investors
Capital Trust I," "Description of New Securities -- Description of New Junior
Subordinated Debentures" and "Description of New Securities -- Description of
New Guarantee."
The Trust is not currently subject to the information reporting
requirements of the Exchange Act. The Trust will become subject to such
requirements upon the effectiveness of the Registration Statement, although it
intends to seek exemptions therefrom.
This Prospectus constitutes a part of a registration statement on Form
S-4 (the "Registration Statement") filed by the Corporation and the Trust with
the Commission under the Securities Act. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission, and reference is hereby made to the Registration Statement and to
the exhibits relating thereto for further information with respect to the
Corporation, the Trust and the New Securities. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Corporation
are incorporated into this Prospectus by reference:
(a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996; and
(b) Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
8
<PAGE>
All documents filed by the Corporation pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the New Securities offered
hereby shall be deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of such documents. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus, including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document. The
Corporation will provide without charge to any person to whom this Prospectus is
delivered, upon the written or oral request of such person, a copy of any or all
of the documents referred to above which have been or may be incorporated by
reference herein (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Investors Financial Services Corp., 200 Clarendon
Street, P.O. Box 9130, Boston, Massachusetts 02117-9130, Attention: Investor
Relations, telephone number (617) 330-6032.
9
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information contained elsewhere in this
Prospectus.
Investors Financial Services Corp.
Investors Financial Services Corp. (the "Corporation"), based in
Boston, Massachusetts, provides asset administration services for the financial
services industry through its wholly-owned subsidiary, Investors Bank & Trust
Company(R). The Corporation provides domestic and global custody, multicurrency
accounting, institutional transfer agency, performance measurement, foreign
exchange, securities lending, mutual fund administration and investment advisory
services to a variety of financial asset managers, including mutual fund
complexes, investment advisors, banks and insurance companies. The Corporation
provides financial asset administration services for assets that totaled
approximately $131 billion at March 31, 1997, including assets managed by 54
mutual fund complexes and insurance companies and approximately $10 billion of
foreign assets. The Corporation also engages in private banking transactions,
including secured lending and deposit accounts.
Investors Capital Trust I
The Trust is a statutory business trust created under Delaware law
pursuant to (i) the Declaration and (ii) the filing of a certificate of trust
with the Delaware Secretary of State on January 17, 1997. The Trust's affairs
are conducted by the Issuer Trustees: The Bank of New York, as Property Trustee,
The Bank of New York (Delaware), as Delaware Trustee, and the three individual
Administrative Trustees who are officers of the Corporation. The Trust exists
for the exclusive purposes of (i) issuing and selling the Trust Securities, (ii)
using the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures issued by the Corporation, and (iii) engaging in only
those other activities necessary, advisable or incidental thereto (such as
registering the transfer of the Capital Securities). Accordingly, the Junior
Subordinated Debentures are the sole assets of the Trust, and payments under the
Junior Subordinated Debentures are the sole revenue of the Trust. All of the
Common Securities are owned by the Corporation. The Corporation, as the holder
of the outstanding Common Securities, will have the right at any time to
terminate the Trust and, after satisfaction of liabilities to creditors of the
Trust as required by applicable law, cause a Like Amount (as defined herein) of
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust, subject to (i) the Corporation having
received an opinion of counsel to the effect that such distribution will not be
a taxable event to holders of the Capital Securities and (ii) the prior approval
of the Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve.
The Exchange Offer
Exchange Offer....... Up to $25,000,000 aggregate Liquidation Amount of New
Capital Securities are being offered in exchange for an
identical aggregate Liquidation Amount of Old Capital
Securities. Old Capital Securities may be tendered for
exchange in whole or in part in an aggregate Liquidation
Amount of no less than $100,000 (100 Capital Securities),
provided that if any Old Capital Securities are tendered
in exchange in part, the untendered principal amount must
be no less than $100,000 (100 Capital Securities). The
Corporation and the Trust are making the Exchange Offer
in order to satisfy their obligations under the
Registration Rights Agreement relating to the Old Capital
Securities. For a description of the procedures for
tendering Old Capital Securities, see "The Exchange
Offer --Procedures for Tendering Old Capital Securities."
The Corporation has agreed to pay all expenses of the
Exchange Offer. See "The Exchange Offer-- Fees and
Expenses."
10
<PAGE>
Expiration Date...... 5:00 p.m., Boston time, on August 29, 1997 (the
"Expiration Date"), unless the Exchange Offer is extended
by the Corporation or the Trust (in which case the
Expiration Date will be the latest date and time to which
the Exchange Offer is extended). See "The Exchange Offer
--Terms of the Exchange Offer."
Conditions to the
Exchange Offer...... The Exchange Offer is subject to certain conditions,
which may be waived by the Corporation and the Trust in
their sole discretion, and is subject to the terms and
provisions of the Registration Rights Agreement. The
Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being
tendered. See "The Exchange Offer -- Conditions to the
Exchange Offer."
Offer................ The Corporation and the Trust reserve the right in their
sole and absolute discretion, subject to applicable law,
at any time and from time to time, (i) to delay the
acceptance of the Old Capital Securities for exchange,
(ii) to terminate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all Old
Capital Securities tendered pursuant to the Exchange
Offer, subject, however, to the right of holders of Old
Capital Securities to withdraw their tendered Old Capital
Securities, or (iv) to waive any condition or otherwise
amend the terms of the Exchange Offer in any respect. See
"The Exchange Offer -- Terms of the Exchange Offer."
Withdrawal Rights.... Tenders of Old Capital Securities may be withdrawn at
any time on or prior to the Expiration Date by delivering
a written notice of such withdrawal to the Exchange Agent
in conformity with certain procedures set forth below
under "The Exchange Offer -- Withdrawal Rights."
Procedures for
Tendering Old Capital
Securities........... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in accordance
with the instructions contained therein and forward the
same by mail, facsimile or hand delivery, together with
any other required documents, to the Exchange Agent (as
defined herein), either with the Old Capital Securities
to be tendered or in compliance with the specified
procedures for guaranteed delivery of Old Capital
Securities. Certain brokers, dealers, commercial banks,
trust companies and other nominees may also effect
tenders by book-entry transfer which may include
transmission of an Agent's Message (as defined herein) in
lieu of delivery of the Letter of Transmittal. Holders
of Old Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee are urged to contact such person promptly if they
wish to tender Old Capital Securities pursuant to the
Exchange Offer. See "The Exchange Offer -- Procedures
for Tendering Old Capital Securities."
Letters of Transmittal and certificates representing Old
Capital Securities should not be sent to the Corporation
or the Trust. Such documents should only be sent to the
Exchange Agent.
Resales of New
Capital Securities... The Corporation and the Trust are making the Exchange
Offer in reliance on the position of the staff of the
Division of Corporation Finance of the Commission as set
forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the
Corporation nor the Trust has sought an opinion of its
legal counsel or its own interpretive letter from the
Division of Corporation Finance of the Commission and
there can be no
11
<PAGE>
assurance that the staff of the Division of Corporation
Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it
has in such interpretive letters to third parties. Based
on these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the
two immediately following sentences, the Corporation and
the Trust believe that New Capital Securities issued
pursuant to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance
with the registration and prospectus delivery
requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary
course of such holder's business and that such holder is
not participating, and has no arrangement or
understanding with any person to participate, in a
distribution (within the meaning of the Securities Act)
of such New Capital Securities. However, any holder of
Old Capital Securities who is an "affiliate" of the
Corporation or the Trust or who intends to participate in
the Exchange Offer for the purpose of distributing the
New Capital Securities, or any broker-dealer who
purchased the Old Capital Securities from the Trust to
resell pursuant to Rule 144A under the Securities Act
("Rule 144A") or any other available exemption under the
Securities Act, (a) will not be able to rely on the
interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be
permitted or entitled to tender such Old Capital
Securities in the Exchange Offer and (c) must comply with
the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other
transfer of such Old Capital Securities unless such sale
is made pursuant to an exemption from such requirements.
In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account
as a result of market-making or other trading activities
and exchanges such Old Capital Securities for New Capital
Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act
in connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities who wishes to
exchange Old Capital Securities for New Capital
Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the
Corporation or the Trust, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary
course of its business, (iii) it has no arrangement or
understanding with any person to participate in a
distribution (within the meaning of the Securities Act)
of such New Capital Securities, and (iv) if such holder
is not a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution (within
the meaning of the Securities Act) of such New Capital
Securities. In addition, the Corporation and the Trust
may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to
furnish to the Corporation and the Trust (or an agent
thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3
under the Exchange Act) on behalf of whom such holder
holds the Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that receives New
Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old
Capital Securities for its own account as the result of
market-making activities or other trading activities and
must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of such New Capital Securities. The Letter of
Transmittal
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states that, by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff
of the Division of Corporation Finance of the Commission
in the interpretive letters referred to above, the
Corporation and the Trust believe that broker-dealers who
acquired Old Capital Securities for their own accounts as
a result of market-making activities or other trading
activities ("Participating Broker-Dealers") may fulfill
their prospectus delivery requirements with respect to
the New Capital Securities received upon exchange of such
Old Capital Securities (other than Old Capital Securities
which represent an unsold allotment from the original
sale of the Old Capital Securities) with a prospectus
meeting the requirements of the Securities Act, which may
be the prospectus prepared for an exchange offer so long
as it contains a description of the plan of distribution
with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by
a Participating Broker-Dealer during the period referred
to below in connection with resales of New Capital
Securities received in exchange for Old Capital
Securities where such Old Capital Securities were
acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading
activities. Subject to certain provisions set forth in
the Registration Rights Agreement and to the limitations
described below under "The Exchange Offer -- Resales of
New Capital Securities," the Corporation and the Trust
have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a
Participating Broker-Dealer during the period referred to
below in connection with resales of such New Capital
Securities for a period ending 90 days after the
Expiration Date (subject to extension under certain
limited circumstances) or, if earlier, when all such New
Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution."
However, a Participating Broker-Dealer who intends to use
this Prospectus in connection with the resale of New
Capital Securities received in exchange for Old Capital
Securities pursuant to the Exchange Offer must notify the
Corporation or the Trust, or cause the Corporation or the
Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may
be given in the space provided for that purpose in the
Letter of Transmittal or may be delivered to the Exchange
Agent at one of the addresses set forth herein under "The
Exchange Offer -- Exchange Agent." Any Participating
Broker-Dealer who is an "affiliate" of the Corporation or
the Trust may not rely on such interpretive letters and
must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any
resale transaction. The Corporation has agreed to
register shares held by any such Participating Broker-
Dealer. See "The Exchange Offer -- Resales of New Capital
Securities."
Old Capital
Securities Not
Exchanged............ Any Old Capital Securities not tendered and accepted in
the Exchange Offer will remain outstanding and will be
entitled to all the same rights and will be subject to
the same limitations applicable thereto under the
Declaration (except for those rights to registration of
the Old Capital Securities under the Securities Act
granted under the Registration Rights Agreement, which
terminate upon consummation of the Exchange Offer).
Following consummation of the Exchange Offer, the holders
of Old Capital Securities will continue to be subject to
all of the existing restrictions upon transfer
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thereof and neither the Corporation nor the Trust will
have any further obligation to such holders to provide
for registration under the Securities Act of the Old
Capital Securities held by them. To the extent that Old
Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old
Capital Securities could be adversely affected. See "Risk
Factors -- Consequences of a Failure to Exchange Old
Capital Securities."
Exchange Agent....... The exchange agent with respect to the Exchange Offer is
The Bank of New York (the "Exchange Agent"). The
addresses, and telephone and facsimile numbers, of the
Exchange Agent are set forth in "The Exchange Offer --
Exchange Agent" and in the Letter of Transmittal.
Use of Proceeds...... Neither the Corporation nor the Trust will receive any
cash proceeds from the issuance of the New Capital
Securities offered hereby. No dealer-manager is being
used in connection with this Exchange Offer. See "Use of
Proceeds."
Certain Federal
Income Tax
Considerations; ERISA
Considerations....... Holders of Old Capital Securities should review the
information set forth under "Certain Federal Income Tax
Considerations" and "ERISA Considerations" prior to
tendering Old Capital Securities in the Exchange Offer.
The New Capital Securities
Securities Offered... Up to $25,000,000 aggregate Liquidation Amount of the
Trust's New Capital Securities which have been registered
under the Securities Act (Liquidation Amount $1,000 per
New Capital Security). The New Capital Securities will be
issued and the Old Capital Securities were issued under
the Declaration. The New Capital Securities and any Old
Capital Securities which remain outstanding after
consummation of the Exchange Offer will vote together as
a single class for purposes of determining whether
holders of the requisite percentage in outstanding
Liquidation Amount thereof have taken certain actions or
exercised certain rights under the Declaration. See
"Description of New Securities -- Description of New
Capital Securities -- Voting Rights; Amendment of the
Declaration." The terms of the New Capital Securities are
identical in all material respects to the terms of the
Old Capital Securities, except that (i) the New Capital
Securities have been registered under the Securities Act
and therefore will not be subject to certain restrictions
on transfer applicable to the Old Capital Securities,
(ii) the New Capital Securities have been registered
under the Securities Act and therefore will not provide
for any increase in the Distribution rate thereon due to
a failure to so register them and (iii) the New Junior
Subordinated Debentures have been registered under the
Securities Act and therefore will not provide for any
increase in the interest rate thereon due to a failure to
so register them. See "The Exchange Offer -- Purpose of
the Exchange Offer," "Description of New Securities" and
"Description of Old Securities." The New Capital
Securities will be issued in blocks having a Liquidation
Amount of not less than $100,000 (100 New Capital
Securities). Any transfer of New Capital Securities in a
block having a Liquidation Amount of less than $100,000
shall be deemed to be void and of no legal effect
whatsoever. See "Description of
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<PAGE>
New Securities --Description of New Capital Securities --
Restrictions on Transfer."
Distribution Dates.. Holders of the New Capital Securities will be entitled
to receive cumulative cash distributions, accumulating
from January 31, 1997 and payable semi-annually in
arrears on February 1 and August 1 of each year,
commencing August 1, 1997 at an annual rate of 9.77% of
the Liquidation Amount of $1,000 per New Capital
Securities.
Extension Periods... So long as no Debenture Event of Default (as defined
herein) has occurred and is continuing, Distributions on
New Capital Securities may be deferred for the duration
of any Extension Period elected by the Corporation with
respect to the payment of interest on the New Junior
Subordinated Debentures. No Extension Period will exceed
10 consecutive semi-annual periods or extend beyond the
Stated Maturity Date. See "Description of New Securities
-- Description of the New Junior Subordinated Debentures
-- Option to Extend Interest Payment Date" and "Certain
Federal Income Tax Considerations -- Interest Income and
Original Issue Discount."
Ranking.............. The New Capital Securities will rank pari passu, and
payments thereon will be made pro rata, with the Old
Capital Securities and the Common Securities, except the
Capital Securities will have a preference over the Common
Securities under certain circumstances with respect to
cash distributions and amounts payable on liquidation,
redemption or otherwise as described under "Description
of New Securities -- Description of the New Capital
Securities -- Subordination of Common Securities." The
New Junior Subordinated Debentures will rank pari passu
with the Old Junior Subordinated Debentures and all other
junior subordinated debentures to be issued by the
Corporation (collectively, the "Other Debentures"), which
will be issued and sold (if at all) to other trusts to be
established by the Corporation (if any), in each case
similar to the Trust ("Other Trusts"), and will be
unsecured and subordinate and rank junior in right of
payment to all Senior Indebtedness to the extent and in
the manner set forth in the Indenture. See "Description
of New Securities -- Description of the New Junior
Subordinated Debentures." The New Guarantee will rank
pari passu with the Old Guarantee and all other
guarantees issued by the Corporation with respect to
capital securities to be issued by Other Trusts and will
constitute an unsecured obligation of the Corporation and
will be subordinate and rank junior in right of payment
to all Senior Indebtedness. See "Description of New
Securities -- Description of the New Guarantee --Status."
Holding Company
Structure............ Because the Corporation is a holding company, the
right of the Corporation to participate in any
distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise
is subject to the prior claims of creditors of that
subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the New
Guarantee 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
"Description of New Junior Subordinated Debentures --
General." The New Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt
of the Corporation, including
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<PAGE>
Senior Indebtedness, whether under the Indenture, any
other indenture that the Corporation may enter into the
future or otherwise.
Redemption........... The Trust Securities are subject to mandatory redemption
in a Like Amount, (i) in whole but not in part, on the
Stated Maturity Date upon repayment of the Junior
Subordinated Debentures at a redemption price equal to
the principal amount of, plus accrued and unpaid interest
on, the Junior Subordinated Debentures (the "Maturity
Redemption Price"), (ii) in whole but not in part, at any
time before February 1, 2007 (the "Initial Optional
Prepayment Date"), contemporaneously with the optional
prepayment of the Junior Subordinated Debentures by the
Corporation upon the occurrence and continuation of a
Special Event (as defined herein) at a redemption price
equal to the Special Event Redemption Price (the "Special
Event Redemption Price") and (iii) in whole or in part,
on or after the Initial Optional Prepayment Date
contemporaneously with the optional prepayment by the
Corporation of the Junior Subordinated Debentures, at a
redemption price equal to the Optional Prepayment Price
(as defined herein) (the "Optional Redemption Price").
Any of the Maturity Redemption Price, the Special
Redemption Price and the Optional Redemption Price may be
referred to herein as the "Redemption Price." See
"Description of New Securities -- Description of the New
Capital Securities -- Redemption."
Conditional Right to
Advance Maturity..... If a Tax Event (as defined under "Description of New
Securities -- Description of the New Junior Subordinated
Debentures --Conditional Right to Advance Maturity and
Special Event Prepayment) occurs, then the Corporation
will have the right, in lieu of terminating the Trust, to
advance the Stated Maturity Date of the Junior
Subordinated Debentures to the minimum extent required in
order to allow for the payments of interest in respect of
the Junior Subordinated Debentures to continue to be
deductible by the Corporation for U.S. federal income tax
purposes, but in no event shall the resulting maturity of
the Junior Subordinated Debentures be less than 20 years
from the date of original issuance thereof. Such maturity
date shall be advanced only (i) if, in the opinion of
counsel to the Corporation experienced in such matters,
after advancing the maturity date, interest payable on
the Junior Subordinated Debentures will be deductible for
United Stated federal income tax purposes and (ii) upon
receipt of prior approval of the Federal Reserve, if then
so required under applicable capital guidelines or
policies of the Federal Reserve. Subject to (i) and (ii)
above, the Junior Subordinated Debentures will be
prepayable prior to the Stated Maturity Date at the
option of the Corporation (i) on or after the Initial
Optional Prepayment Date, in whole or in part, at a
prepayment price (the "Optional Prepayment Price") equal
to 104.885% of the principal amount thereof on the
Initial Optional Prepayment Date, declining ratably on
each February 1 thereafter to 100% on or after February
1, 2017, plus accrued and unpaid interest thereon to the
date of prepayment, or (ii) at any time before the
Initial Optional Prepayment Date, in whole but not in
part, upon the occurrence and continuation of a Special
Event, at a prepayment price (the "Special Event
Prepayment Price") equal to the greater of (a) 100% of
the principal amount thereof or (b) the sum, as
determined by a Quotation Agent (as defined herein), of
the present values of the principal amount and premium
payable as part of the Optional Prepayment Price with
respect to an optional redemption of such Junior
Subordinated Debentures on the Initial Optional
Prepayment Date, together with scheduled payments of
interest from the prepayment date to the Initial Optional
Prepayment Date, in each case
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discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined herein)
plus, in either case, accrued and unpaid interest thereon
to the date of prepayment. Either of the Optional
Prepayment Price or the Special Event Prepayment Price
may be referred to herein as the "Prepayment Price." See
"Description of New Securities -- Description of New
Junior Subordinated Debentures -- Conditional Right to
Advance Maturity and Special Event Prepayment."
Sale by Affiliated
Broker-Dealers....... Any Participating Broker-Dealer who is an "affiliate" of
the Corporation or the Trust must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
See "The Exchange Offer." Each Participating Broker-
Dealer who surrenders Old Capital Securities pursuant to
the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an
Agent's Message in lieu thereof, that, upon receipt of
notice from the Corporation or the Trust of the
occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by
reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state
a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light
of the circumstances under which they were made, not
misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of New
Capital Securities (or the New Guarantee or the New
Junior Subordinated Debentures, as applicable) pursuant
to this Prospectus until the Corporation or the Trust has
amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the
amended or supplemented Prospectus to such Participating
Broker-Dealer or the Corporation or the Trust has given
notice that the sale of the New Capital Securities (or
the New Guarantee or the New Junior Subordinated
Debentures, as applicable) may be resumed, as the case
may be. The Corporation and the Trust may delay the
filing of any amendment or supplement in good faith and
for a valid corporate purpose for a period not to exceed
120 days, such right to delay to be exercisable by the
Corporation and the Trust only once in any 365 day
period. If the Corporation or the Trust gives such notice
to suspend the sale of the New Capital Securities (or the
New Guarantee or the New Junior Subordinated Debentures,
as applicable), it shall extend the 90 day period
referred to above during which Participating Broker-
Dealers are entitled to use this Prospectus in connection
with the resale of New Capital Securities by the number
of days during the period from and including the date of
the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies
of the amended or supplemented Prospectus necessary to
permit resales of the New Capital Securities or to and
including the date on which the Corporation or the Trust
has given notice that the sale of New Capital Securities
(or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) may be resumed, as the case
may be.
Absence of Market
for the New Capital
Securities........... Prior to the Exchange Offer, there has only been a
limited secondary market and no public market for the Old
Capital Securities. The New Capital Securities will be a
new issue of securities for which there currently is no
market. Although Keefe, Bruyette & Woods, Inc., the
initial purchaser of the Old Capital Securities (the
"Initial Purchaser"), has informed the Trust and the
17
<PAGE>
Corporation that it currently intends to make a market in
the New Capital Securities, the Initial Purchaser is not
obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or
liquidity of any market for the New Capital Securities.
The Trust and the Corporation do not intend to apply for
listing of the Capital Securities on any securities
exchange or for quotation through the National
Association of Securities Dealers Automated Quotation
System ("NASDAQ"). See "Plan of Distribution."
Risk Factors......... Holders of Old Capital Securities and prospective
purchasers of New Capital Securities should carefully
consider the matters set forth under "Risk Factors."
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<PAGE>
RISK FACTORS
Holders of Old Capital Securities and prospective purchasers of New
Capital Securities should carefully review the information contained elsewhere
in this Prospectus and should particularly consider the following matters in
connection with the Exchange Offer and the New Securities offered hereby.
Risk of Non-Payment of Obligations Under the Guarantee and the Junior
Subordinated Debentures Due to Subordinate Ranking
The ability of the Trust to pay amounts due on the Capital Securities
is dependent upon the Corporation making payments on the Junior Subordinated
Debentures as and when required. The obligations of the Corporation under the
Guarantee and under the Junior Subordinated Debentures will be unsecured and
subordinate and rank junior in right of payment to all present and future Senior
Indebtedness of the Corporation. See "Description of New Securities --
Description of New Guarantee -- Status". No payment may be made of the
principal of, or premium, if any, or interest on the Junior Subordinated
Debentures, or in respect of any redemption, retirement, purchase or other
acquisition of any of the Junior Subordinated Debentures, at any time when (i)
there shall have occurred and be continuing a default in any payment in respect
of any Senior Indebtedness, or there has been an acceleration of the maturity
thereof because of a default or (ii) in the event of the acceleration of the
maturity of the Junior Subordinated Debentures until payment has been made on
all Senior Indebtedness. At March 31, 1997, the Corporation had no outstanding
Senior Indebtedness. Because the Corporation is a bank holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of holders of the Capital Securities to benefit indirectly
from such distribution) is subject to the prior claims of creditors of that
subsidiary, except to the extent that the Corporation may itself be recognized
as a creditor of that subsidiary. At March 31, 1997, the subsidiaries of the
Corporation had total liabilities (excluding liabilities owed to the
Corporation) of approximately $903 million, including deposits. In addition,
Investors Bank & Trust Company, the bank subsidiary of the Corporation (the
"Bank"), is subject to certain restrictions imposed by federal law on any
extensions of credit to, and certain other transactions with, the Corporation
and certain other affiliates, and on investments in stock or other securities
thereof. Such restrictions prevent the Corporation and such other affiliates
from borrowing from the Bank unless the loans are secured by various types of
collateral. Further, such secured loans, other transactions and investments by
the Bank are generally limited in amount as to the Corporation and as to each of
such other affiliates to 10% of the Bank's capital and surplus and as to the
Corporation and all of such other affiliates to an aggregate of 20% of the
Bank's capital and surplus. In addition, payment of dividends to the
Corporation by the Bank is subject to ongoing review by banking regulators and
is subject to various statutory limitations and in certain circumstances
requires approval by banking regulatory authorities. None of the Indenture, the
Guarantee, the Common Guarantee or the Declaration places any limitation on the
amount of secured or unsecured debt, including Senior Indebtedness, that may be
incurred by the Corporation or any of its subsidiaries. See "Description of New
Securities -- Description of New Guarantee -- Status" and "-- Description of
New Junior Subordinated Debentures -- Subordination."
Risk of Deferral of Distribution Payments and Potential Decrease in or
Volatility of Market Price due to Option to Extend Interest Payment Period
So long as no Debenture Event of Default (as defined herein) shall
have occurred and be continuing, the Corporation will have the right under the
Indenture to defer payments of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding 10 consecutive semi-
annual periods with respect to each Extension Period, provided that no Extension
Period may extend beyond the Stated Maturity Date. Upon any such deferral,
semi-annual Distributions on the Capital Securities by the Trust will be
deferred (and the amount of Distributions to which holders of the Capital
Securities are entitled will accumulate additional Distributions thereon at the
rate of 9.77% per annum, compounded semi-annually) from the relevant payment
date for such Distributions during any such Extension Period.
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<PAGE>
The Corporation may extend any existing Extension Period, provided
that such extension does not cause such Extension Period to exceed 10
consecutive semi-annual periods or to extend beyond the Stated Maturity Date.
Upon the expiration of any Extension Period and the payment of all interest then
accrued and unpaid on the Junior Subordinated Debentures (together with interest
thereon at the annual rate of 9.77%, compounded semi-annually, to the extent
permitted by applicable law), the Corporation may elect to begin a new Extension
Period, subject to the above requirements. There is no limitation on the number
of times that the Corporation may elect to begin an Extension Period. See
"Description of New Securities -- Description of New Capital Securities --
Distributions" and "Description of New Securities -- Description of New Junior
Subordinated Debentures -- Option to Extend Interest Payment Period."
The Corporation has no current plan to exercise its right to defer
payments of interest on the Junior Subordinated Debentures. Should the
Corporation elect to exercise its right to defer payments of interest on the
Junior Subordinated Debentures, the market price of the Capital Securities is
likely to be affected. A holder that disposes of its Capital Securities during
an Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Capital Securities. In
addition, the mere existence of the Corporation's right to defer payments of
interest on the Junior Subordinated Debentures may cause the market price of the
Capital Securities to be more volatile than the market prices of other
securities that are not subject to such deferrals.
Potential Treatment of the Exchange of Old Capital Securities for New Capital
Securities as a Taxable Disposition
Although the United States Treasury Department has released guidance
regarding the United States federal income tax consequences of certain
modifications to, and transfers of, debt instruments, that guidance does not
directly address the tax consequences of exchanges of instruments such as the
Capital Securities, and neither the Internal Revenue Service (the "IRS") nor
the courts have interpreted such guidance as it applies to exchanges of
instruments such as the Capital Securities. Accordingly, the United States
federal income tax consequences of such exchanges cannot be definitively stated.
Under current law, it is more likely than not that for United States
federal income tax purposes, the exchange of Old Capital Securities for New
Capital Securities either will not be treated as an "exchange", or, if it were
to be treated as an exchange, such exchange would be treated as a
recapitalization. Assuming that for United States federal income tax purposes,
the exchange of Old Capital Securities for New Capital Securities will not be
treated as exchange, or treated as an exchange and a recapitalization, the
holder will not recognize any gain or loss on such exchange, and the New Capital
Securities received will have the same issue price as the Old Capital
Securities, and a holder will have the same adjusted tax basis and holding
period in the New Capital Securities as the holder had in the Old Capital
Securities immediately before the exchange.
If the exchange of Old Capital Securities for New Capital Securities
were treated as an exchange, but not as a recapitalization, that exchange would
be treated as a taxable disposition of the Old Capital Securities. See "Federal
Income Tax Considerations--Sales of Capital Securities" and "--Exchange of
Capital Securities."
Requirement to Accrue Income in Advance of Receipt of Cash Due to Extension of
Interest Payment Period
Under recent issued Treasury regulations, the Junior Subordinated
Debentures will not be deemed to be issued with original issue discount ("OID")
if the likelihood of the Corporation exercising its option to defer payments of
interest on the Junior Subordinated Debentures is "remote". The Corporation
believes that the likelihood of its exercising, its option to defer payments of
interest on the Junior Subordinated Debentures is remote and, accordingly,
stated interest on the Junior Subordinated Debentures generally will be
taxable to a holder as ordinary income at the time it is paid or accrued in
accordance with such holder's method of accounting.
If the likelihood of the Corporation exercising its option to defer
payments of interest on the Junior Subordinated Debentures were not remote, the
Junior Subordinated Debentures would be treated as being issued with OID. As a
result, a holder's taxable income with respect to the stated interest on the
Junior Subordinated Debentures would be accounted for on an economic accrual
basis regardless of such holder's method of accounting.
Additionally, although the Corporation has no current plan to exercise
its right to defer payments of interest on the Junior Subordinated Debentures,
should the Corporation actually exercise that right, each holder of Capital
Securities will be required to accrue income (as OID) in respect of the deferred
stated interest allocable to its Capital Securities for United States federal
income tax purposes, which will be allocated but not distributed to holders of
Capital Securities. As a result, during an Extension Period, each holder of
Capital Securities will recognize income for United States federal income
tax purposes in advance of the receipt of cash and will not receive the cash
related to such income from the Trust if the holder disposes of the Capital
Securities prior to the record date for the payment of Distributions thereafter.
See "Certain Federal Income Tax Considerations -- Interest Income and Original
Issue Discount" and "--Sales of Capital Securities."
Absence of Sinking Fund or Other Accumulation of Money Segregated for the
Purpose of Repaying the Principal Amount of the Junior Subordinated Debentures
at Maturity; Potential Prepayment of Junior Subordinated Debentures and Early
Redemption of Capital Securities
The Corporation is obligated to repay the principal amount of the
Junior Subordinated Debentures on the Stated Maturity Date. The Corporation
will not be required to establish a sinking fund or other accumulation of money
invested or segregated for the purpose of repaying the principal amount of the
Junior Subordinated Debentures. Upon the occurrence and continuation of a
Special Event (including a Conditional Tax Redemption Event or a Regulatory
Capital Event, in each case, as defined under "Description of New Securities --
Description of the New Capital Securities -- Conditional Right to Advance
Maturity and Special Event Redemption" and "Description of New Securities --
Description of New Junior Subordinated Debentures -- Conditional Right to
Advance Maturity and Special Event Prepayment" respectively), the Corporation
will have the right to prepay the
20
<PAGE>
Junior Subordinated Debentures, before the Initial Optional Prepayment Date, in
whole (but not in part) at the Special Event Prepayment Price within 90 days
following the occurrence of such Special Event and therefore cause a mandatory
redemption of the Capital Securities at the Special Event Redemption Price. On
or after the Initial Optional Prepayment Date, the Corporation may prepay the
Junior Subordinated Debentures in whole or in part for any reason and thereby
cause an optional redemption of the Capital Securities, in whole or in part, at
the Optional Redemption Price. Any such redemption is subject to the Corporation
having received prior approval of the Federal Reserve to do so if then required
under applicable guidelines or policies of the Federal Reserve. See "Description
of New Securities --Description of New Capital Securities -- Redemption" and "--
Liquidation of the Trust and Distribution of the Junior Subordinated
Debentures;" "Description of New Securities -- Description of New Junior
Subordinated Debentures --Conditional Right to Advance Maturity and Special
Event Prepayment."
Potential for Taxable Distribution Due to Termination of Trust and Distribution
of Junior Subordinated Debentures
The Corporation will have the right at any time to terminate the Trust
and, after satisfaction of liabilities to creditors of the Trust as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. Such right is
subject to (i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Capital
Securities and (ii) prior approval of the Federal Reserve if then required.
Under current United States federal income tax law, a distribution of Junior
Subordinated Debentures upon the dissolution of the Trust would not be a taxable
event to holders of the Capital Securities. If, however, the Trust is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time of dissolution of the Trust, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities. Moreover, upon the occurrence of a
Special Event, a dissolution of the Trust in which holders of the Capital
Securities receive cash would be a taxable event to such holders. See "Certain
Federal Income Tax Considerations -- Receipt of Junior Subordinated Debentures
or Cash Upon Liquidation of the Trust."
Potential Exercise of Conditional Right to Advance Maturity and Earlier Return
to Holders of Capital Invested
If a Tax Event (as defined under "Description of New Securities --
Description of New Junior Subordinated Debentures -- Conditional Right to
Advance Maturity and Special Event Prepayment) occurs, then the Corporation will
have the right, in lieu of terminating the Trust, to advance the Stated Maturity
Date of the Junior Subordinated Debentures to the minimum extent required in
order to allow for the payments of interest in respect of the Junior
Subordinated Debentures to continue to be deductible by the Corporation for U.S.
federal income tax purposes, but in no event shall the resulting maturity of the
Junior Subordinated Debentures be less than 20 years from the date of original
issuance thereof (any such advancement of the Stated Maturity Date being a "Tax
Event Maturity Advancement"). Such maturity date shall be advanced only (i) if,
in the opinion of counsel to the Corporation experienced in such matters, after
advancing the maturity date, interest payable on the Junior Subordinated
Debentures will be deductible for United States federal income tax purposes and
(ii) upon receipt of prior approval of the Federal Reserve, if then so required
under applicable capital guidelines or policies of the Federal Reserve. See
"Description of New Securities -- Description of New Junior Subordinated
Debentures -- Conditional Right to Advance Maturity and Special Event
Prepayment."
Potential Early Redemption Due to Possible Tax Law Changes Affecting the Capital
Securities
On February 6, 1997, as part of the Clinton Administration's Fiscal
1998 Budget Proposal, the Treasury Department proposed legislation (the
"Proposed Legislation") which would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the New Junior Subordinated Debentures, if such debt
obligations had a maximum term in excess of 15 years and are not shown as
indebtedness on the issuer's applicable consolidated balance sheet. The
Proposed Legislation applies to debt obligations issued on or after the date of
"first committee action." The United States House of Representatives and Senate
tax-writing committees have released their respective proposal for the 1997
budget reconciliation bill. The Proposed Legislation was not included in such
proposals, and, as of the date of this Prospectus, the House and Senate bills
are awaiting action by the conference committee. If the Proposed Legislation or
other legislation is enacted
21
<PAGE>
by Congress and if it gives rise to a Tax Event, the Trust would be permitted to
cause a redemption of the Trust Securities at the Special Event Redemption Price
by electing to prepay the Junior Subordinated Debentures at the Special Event
Redemption Price. See "Description of New Securities -- Description of New
Capital Securities -- Special Redemption" and "-- Description of New Junior
Subordinated Debentures -- Conditional Right to Advance Maturity and Special
Event Prepayment."
Possible Adverse Effect on Market Prices if Trust is Terminated
There can be no assurance as to the market prices for Capital
Securities or Junior Subordinated Debentures distributed to the holders of
Capital Securities if a termination of the Trust were to occur. Accordingly,
the Capital Securities or the Junior Subordinated Debentures may trade at a
discount from the price that the investor paid to purchase the Capital
Securities offered hereby. Because holders of Capital Securities may receive
Junior Subordinated Debentures in liquidation of the Trust and because
Distributions are otherwise limited to payments on the Junior Subordinated
Debentures, holders tendering for exchange and prospective purchasers of New
Capital Securities are also making an investment decision with regard to the New
Junior Subordinated Debentures and should carefully review all the information
regarding the New Junior Subordinated Debentures contained herein. See
"Description of New Securities -- Description of New Junior Subordinated
Debentures."
Limits on Holders' Enforcement of Rights Under the Guarantee
The Bank of New York will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The Bank of
New York will also act as Property Trustee and as Debenture Trustee under the
Indenture. The Bank of New York (Delaware) will act as Delaware Trustee under
the Declaration. The Old Guarantee guarantees and the New Guarantee will
guarantee, as the case may be, to the holders of the Capital Securities the
following payments, to the extent not paid by the Trust: (i) any accumulated and
unpaid Distributions required to be paid on the Capital Securities, to the
extent that the Trust has funds on hand legally available therefor; (ii) the
applicable Redemption Price with respect to any Capital Securities called for
redemption, to the extent that the Trust has funds on hand legally available
therefor; and (iii) upon a voluntary or involuntary termination, winding up or
liquidation of the Trust (unless the Junior Subordinated Debentures are
distributed to holders of the Capital Securities), the lesser of (a) the
aggregate of the Liquidation Amount and all accumulated and unpaid Distributions
to the date of payment, to the extent that the Trust has funds on hand legally
available therefor on such date and (b) the amount of assets of the Trust
remaining available for distribution to holders of the Capital Securities on
such date. The holders of a majority in Liquidation Amount of the Capital
Securities will have the right to (i) waive any past event of default under the
Guarantee and (ii) direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee. Any holder of the Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity. If the Corporation defaults on
its obligation to pay amounts payable under the Junior Subordinated Debentures,
the Trust will not have sufficient funds for the payment of Distributions or
amounts payable on redemption of the Capital Securities or otherwise, and, in
such event, holders of the Capital Securities will not be able to rely upon the
Guarantee for payment of such amounts. Instead, in the event a Debenture Event
of Default shall have occurred and be continuing and such event is attributable
to the failure of the Corporation to pay principal of or premium, if any, or
interest on the Junior Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Capital Securities may institute a
legal proceeding directly against the Corporation for enforcement of payment to
such holder of the principal of or premium, if any, or interest on such Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Capital Securities of such holder (a "Direct Action").
Notwithstanding any payments made to a holder of Capital Securities by the
Corporation in connection with a Direct Action, the Corporation shall remain
obligated to pay the principal of and premium, if any, and interest on the
Junior Subordinated Debentures, and the Corporation shall be subrogated to the
rights of the holder of such Capital Securities with respect to payments on the
Capital Securities to the extent of any payments made by the Corporation to such
holder in any Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures or to assert directly any
other rights in respect of the Junior Subordinated Debentures. See "Description
of New
22
<PAGE>
Securities -- Description of New Junior Subordinated Debentures --Enforcement of
Certain Rights by Holders of Capital Securities" and "--Debenture Events of
Default" and "Description of New Securities -- Description of New Guarantee."
The Declaration will provide that each holder of Capital Securities by
acceptance thereof agrees to the provisions of the Indenture.
Limited Voting Rights of Holders of Capital Securities
Holders of Capital Securities generally will have voting rights
relating only to the modification of the terms of the Capital Securities and the
exercise of the Trust's rights as holder of Junior Subordinated Debentures.
Holders of Capital Securities will not be entitled to vote to appoint, remove or
replace, or to increase or decrease the number of, the Issuer Trustees, which
voting rights are vested exclusively in the holder of the Common Securities,
except as described under "Description of New Securities -- Description of New
Capital Securities -- Removal of Issuer Trustees." See "Description of New
Securities -- Description of New Capital Securities -- Voting Rights; Amendment
of the Declaration."
Trading Price May Not Fully Reflect Accrued But Unpaid Interest
The Capital Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) and who
disposes of its Capital Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Junior Subordinated Debentures through the date of disposition in income as
ordinary income (i.e., interest or, possibly, OID), and to add such amount to
its adjusted tax basis in its share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid
interest), a holder generally will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes. See "Certain Federal Income Tax
Considerations -- Interest Income and Original Issue Discount" and "-- Sales of
Capital Securities."
Consequences of a Failure to Exchange Old Capital Securities
Continued Restrictions on Transferability. The Old Capital Securities
have not been registered under the Securities Act or any state securities laws
and therefore may not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities Act and any
other applicable securities laws, or pursuant to an exemption therefrom or in a
transaction not subject thereto, and in each case in compliance with certain
other conditions and restrictions. Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will continue to bear a
legend reflecting such restrictions on transfer. In addition, upon consummation
of the Exchange Offer, holders of Old Capital Securities which remain
outstanding will not be entitled to any rights to have such Old Capital
Securities registered under the Securities Act or to any similar rights under
the Registration Rights Agreement. The Corporation and the Trust do not intend
to register under the Securities Act any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer. To the extent that Old
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Old Capital Securities could be adversely affected.
Continued Voting Rights of Old Capital Securities. The New Capital
Securities and any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Declaration. See "Description of New Securities --
Description of New Capital Securities --Voting Rights; Amendment of the
Declaration."
Expiration of Rights to Increased Distribution Rate and Registration.
The Old Capital Securities provide, among other things, that, if a registration
statement relating to the Exchange Offer has not been filed by June 30, 1997 and
declared effective by July 30, 1997, the Distribution rate borne by the Old
Capital Securities commencing on July 1,
23
<PAGE>
1997, if no filing is made by June 30, 1997, or July 31, 1997, if such filing is
not declared effective by July 30, 1997, will increase by 0.25% per annum until
the Exchange Offer is consummated. Upon consummation of the Exchange Offer,
holders of Old Capital Securities will not be entitled to any increase in the
Distribution rate thereon or any further registration rights under the
Registration Rights Agreement. See "Description of Old Securities."
Lack of Liquidity and Accurate Market Price Due to Absence of Public Market
The Old Capital Securities were issued to, and the Corporation
believes such securities are currently owned by, a relatively small number of
beneficial owners. The Old Capital Securities have not been registered under
the Securities Act and will be subject to restrictions on the transferability if
they are not exchanged for the New Capital Securities. Although the New Capital
Securities may be resold or otherwise transferred by the holders (who are not
affiliates of the Corporation or the Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. Both Old Capital
Securities and New Capital Securities may be transferred by the holders thereof
only in blocks having a Liquidation Amount of not less than $100,000 (100
Capital Securities). The Corporation and the Trust have been advised by the
Initial Purchaser that the Initial Purchaser presently intends to make a market
in the New Capital Securities. However, the Initial Purchaser is not obligated
to do so and any market-making activity with respect to the New Capital
Securities may be imposed by the Securities Act and the Exchange Act and may be
limited during the Exchange Offer. Accordingly, no assurance can be given that
an active public or other market will develop for the New Capital Securities or
the Old Capital Securities as to the liquidity of or the trading market for the
New Capital Securities or the Old Capital Securities. If an active public
market does not develop, the market price and liquidity of the New Capital
Securities may be adversely affected.
Potential that New Capital Securities will Trade at a Discount and Potential
Volatility of Market Price If a Public Trading Market Develops
If a public trading market develops for the New Capital Securities,
future trading prices will depend on many factors, including among other things,
prevailing interest rates, the Corporation's results and the market for similar
securities. Depending on prevailing interest rates, the market for similar
securities and other factors, including the financial condition of the
Corporation, the New Capital Securities may trade at a discount.
Risk of Noncompliance with Exchange Offer Procedures; Neither the Corporation
nor the Trust Required to Accept Defective Tenders or to Give Notice of Defects
or Irregularities
Issuance of New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal or Agent's Message in lieu thereof and all
other required documents. Therefore, holders of the Old Capital Securities
desiring to tender such Old Capital Securities in exchange for New Capital
Securities should allow sufficient time to ensure timely delivery. Neither the
Corporation nor the Trust is under any duty to give notification of defects or
irregularities with respect to the tenders of Old Capital Securities for
exchange. See "The Exchange Offer -- Procedures for Tendering Old Capital
Securities."
Transferability Restrictions on New Capital Securities
24
<PAGE>
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Corporation or the Trust may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of Rule
144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. See
"Plan of Distribution."
25
<PAGE>
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. In
consideration for issuing the New Capital Securities in exchange for Old Capital
Securities as described in this Prospectus, the Trust will receive Old Capital
Securities in identical Liquidation Amount. The Old Capital Securities
surrendered in exchange for the New Capital Securities will be retired and
cancelled.
The proceeds to the Trust (without giving effect to expenses of the
offering payable by the Corporation) from the offering of the Old Capital
Securities was $25,000,000. All of the proceeds from the sale of Old Capital
Securities were invested by the Trust in the Old Junior Subordinated Debentures.
The Corporation intends that the net proceeds from the sale of the Old Junior
Subordinated Debentures will be used to support the Corporation's balance sheet
growth resulting from deposits expected to be obtained from asset administration
clients.
The Capital Securities are expected to be eligible to qualify as Tier
1 capital under the capital guidelines of the Federal Reserve. Under current
Federal Reserve guidelines no more than 25% of the Corporation's Tier 1 Capital
may comprise Capital Securities and other capital securities and cumulative
preferred stock of the Corporation.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Corporation's unaudited
consolidated ratios of earnings to fixed charges for the respective periods
indicated.
<TABLE>
<CAPTION>
Two Three
Months Year Months
Ended Ended Ended
Year Ended October 31, December December March
---------------------------- 31, 31, 31,
1992 1993 1994 1995 1995 1996 1997
---- ---- ---- ---- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding interest on deposits... 4.36 5.05 5.28 5.85 5.98 2.17 1.98
Including interest on deposits... 2.48 3.31 3.52 4.24 3.59 1.63 1.51
</TABLE>
For purposes of computing the ratios of earnings to fixed charges,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except interest on deposits), capitalized interest, and the interest factor
included in rents. Fixed charges, including interest on deposits, represent all
interest expense, capitalized interest, and the interest factor included in
rents.
26
<PAGE>
CAPITALIZATION
The following table sets forth the actual unaudited consolidated
capitalization of the Corporation and its subsidiaries at March 31, 1997. The
table should be read in conjunction with the financial information included in
the Corporation's 1996 Annual Report on Form 10-K and its Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 which are incorporated by
reference herein. See "Incorporation of Certain Documents by Reference." The
issuance of the New Securities in the Exchange Offer will have no effect on the
capitalization of the Corporation.
<TABLE>
<CAPTION>
March 31, 1997
--------------
(Dollars in thousands)
<S> <C>
Corporation obligated, mandatorily redeemable preferred securities of
subsidiary trust holding solely subordinated debentures of the
Corporation(1).......................................................... $24,245
Stockholders' equity:
Preferred stock, $.01 par value, authorized, 1,000,000 shares
actual and as adjusted; issued and outstanding, no shares actual
and as adjusted....................................................... -
Class A Common Stock, $.01 par value, authorized, 650,000 shares
actual and as adjusted; issued and outstanding, 420,181 shares
actual and as adjusted................................................ 3
Common stock, $.01 par value, authorized, 20,000,000 shares actual
and as adjusted; issued and outstanding, 6,024,131 actual and as
adjusted.............................................................. 61
Surplus................................................................. 54,370
Deferred compensation................................................... (1,578)
Net unrealized gain on securities available for sale.................... 695
Retained earnings....................................................... 11,173
Total stockholders' equity............................................ 64,724
-------
Total capitalization...................................................... 88,969
=======
</TABLE>
- -------------------
(1) Reflects the issuance of the Old Capital Securities. The Trust is a
subsidiary of the Corporation and will hold the Junior Subordinated
Debentures as its sole asset.
27
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The summary below should be read in connection with and is qualified in
its entirety by reference to management's discussion and analysis of the
Corporation's results of operations and the financial information included in
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1996, and the Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 and incorporated herein by reference. Interim unaudited data for
the three months ended March 31, 1997 and 1996 reflect, in the opinion of
management of the Corporation, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data. Results
for the year ended December 31, 1996, and the three months ended March 31, 1997
are not necessarily indicative of results which may be expected for any other
interim period or for the year as a whole.
<TABLE>
<CAPTION>
Two Months Three Months Ended
Ended Year Ended March 31,
Year Ended October 31, December 31, December 31,
-------------------------------------------------- -------------------------
1992 1993 1994 1995(1) 1995 1996 1996 1997
----------- ----------- ----------- ----------- ----------- ------------ ----------- ------------
(Dollars in thousands, except per share data) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Net interest income....... $ 3,659 $ 4,494 $ 4,778 $ 5,870 $ 1,966 $ 17,944 $ 3,921 $ 6,456
Noninterest income........ 29,664 32,967 43,049 51,562 8,085 56,632 12,944 17,760
Gain on sale of investment
securities............. -- 48 -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ------------ ----------- ------------
Net operating revenues.... 33,323 37,509 47,827 57,432 10,051 74,576 16,865 24,216
Operating expenses........ 30,589 33,939 42,503 50,224 8,481 61,935 14,517 19,314
----------- ----------- ----------- ----------- ----------- ------------ ----------- ------------
Income before income
taxes.................. 2,734 3,570 5,324 7,208 1,570 12,641 2,348 4,902
Income taxes.............. 1,163 1,211 1,863 2,800 670 4,867 928 1,822
Minority Interest/Trust
Preferred Securities... -- -- -- -- -- -- -- 258
----------- ----------- ----------- ----------- ----------- ------------ ----------- ------------
Net Income................ $ 1,571 $ 2,359 $ 3,461 $ 4,408 $ 900 $ 7,774 $ 1,420 $ 2,822
=========== =========== =========== =========== =========== ============ =========== ============
Per Share Data:
Common dividends per
share.................. $ -- $ .03 $ -- $ .02
Average number of shares
outstanding............ 6,467 6,504 6,494 6,558
=========== ============ =========== ============
Average Balance Sheet Data:
Interest earnings assets.. $ 81,148 $ 87,965 $ 94,351 $ 106,130 $ 219,775 $ 575,662 $ 361,655 $ 954,368
Total assets.............. 99,609 109,477 116,810 128,174 249,064 628,893 404,505 1,015,055
Total deposits............ 88,684 99,523 102,664 106,446 197,013 377,219 261,880 583,365
Stockholders' equity...... 7,053 9,022 11,779 16,119 34,000 56,137 51,587 63,238
Selected Financial Ratios:
Return on equity(2)....... 22.27% 26.15% 29.38% 27.35% 15.11% 13.85% 11.01% 17.85%
Return on assets(2)....... 1.58 2.15 2.96 3.44 2.12 1.24 1.40 1.11
Equity as % of total
assets................. 6.52 8.24 10.08 12.58 16.57 6.41 9.94 5.91
Dividend payout ratio(3).. 3.82 2.54 1.73 1.36 0.00 2.49 0.00 4.57
Tier 1 capital ratio(4)... 37.78 37.08 42.53 37.62 62.10 24.67 40.91 31.26
Noninterest income as % of
net operating income... 89.02 87.89 90.01 89.78 80.44 75.94 76.75 73.33
Nonperforming assets as %
of total assets........ -- -- -- -- -- -- -- --
Allowance for loan losses
as % of total loans.... 0.59 0.34 0.26 0.26 0.15 0.15 0.15 0.13
Other Statistical Data:
Assets processed at end
of period(5)........... $43,348,597 $61,239,242 $72,418,449 $91,099,976 $94,208,228 $122,563,401 $99,497,322 $131,423,191
Employees at end of
period................. 460 522 678 671 674 792 683 878
</TABLE>
- -------------------
(1) Noninterest income for the year ended October 31, 1995 includes the
recognition of net proceeds of $2,572,000 from the assignment to a third
party of asset administration rights associated with $5 billion of unit
investment trust assets. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in the
Corporation's Annual Report on Form 10-K for the year ended December 31,
1996, incorporated herein by reference.
30
<PAGE>
(2) Ratios for the two months ended December 31, 1995 and the three months
ended March 31, 1996 and 1997 have been annualized. The ratios for the year
ended October 31, 1995 include the effect of the unit investment trust
transaction described in (1) above. Without the earnings associated with
this transaction, return on equity and return on assets for the year ended
October 31, 1995 would have been 18.10% and 2.28%, respectively.
(3) The Corporation intends to retain the majority of future earnings to fund
development and growth of its business but anticipates paying future cash
dividends, currently estimated to be $.08 per share annually, subject to
receipt of dividends from the Bank and further subject to regulatory
requirements.
(4) Tier I capital consists of the sum of common stockholders' equity and non-
cumulative perpetual preferred stock minus all intangible assets (other
than certain qualifying goodwill) and excess deferred tax assets.
(5) Assets processed is the total dollar value of financial assets on the
reported date for which the Corporation provides one or more of the
following services: custody, multicurrency accounting, institutional
transfer agency, performance measurement, foreign exchange, securities
lending and mutual fund administration.
29
<PAGE>
INVESTORS CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law
pursuant to (i) a declaration of trust, dated as of January 17, 1997, executed
by the Corporation, as Sponsor, the Delaware Trustee and the Administrative
Trustees named therein (the "Initial Declaration"), and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
January 17, 1997. The Initial Declaration was replaced by an amended and
restated declaration of trust dated as of January 31, 1997 among the
Corporation, as Sponsor, the Issuer Trustees (as defined herein) and the
holders, from time to time, of the Trust Securities (the "Declaration"). The
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, which represent undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds from the sale of the Trust Securities
in the Junior Subordinated Debentures and (iii) engaging in only those other
activities necessary, advisable or incidental thereto. Accordingly, the Junior
Subordinated Debentures are the sole assets of the Trust and payments under the
Junior Subordinated Debentures are the sole revenue of the Trust. All of the
Common Securities are owned directly by the Corporation. The Common Securities
rank pari passu, and payments will be made thereon pro rata, with the Capital
Securities, except that upon the occurrence and during the continuance of an
Event of Default, (as defined herein) the rights of the Corporation as holder of
the Common Securities to payments in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated and rank junior to the
rights of the holders of the Capital Securities. See "Description of the New
Securities -- Description of the New Capital Securities -- Subordination of
Common Securities." The Corporation has acquired Common Securities in a
Liquidation Amount equal to at least 3% of the total capital of the Trust. The
Trust has a term of 31 years, but may terminate earlier as provided in the
Declaration. The Trust's business and affairs are conducted by trustees (the
"Issuer Trustees") appointed by the Corporation as the direct holder of the
Common Securities. The Issuer Trustees are The Bank of New York as the Property
Trustee (the "Property Trustee"), The Bank of New York (Delaware) as the
Delaware Trustee (the "Delaware Trustee"), and three individual trustees (the
"Administrative Trustees"). The Bank of New York, as Property Trustee, acts as
sole indenture trustee under the Declaration. The Bank of New York also acts as
indenture trustee under the Guarantee and the Indenture. See "Description of the
New Securities -- Description of the New Guarantee" and "-- Description of New
Junior Subordinated Debentures." The holder of the Common Securities or, if an
Event of Default under the Declaration has occurred and is continuing, the
holders of a majority in Liquidation Amount of the Capital Securities, will be
entitled to appoint, remove or replace the Property Trustee and/or the Delaware
Trustee. In no event will the holders of the Capital Securities have the right
to vote to appoint, remove or replace the Administrative Trustees; such voting
rights are vested exclusively in the holder of the Common Securities. The duties
and obligations of each Issuer Trustee are governed by the Declaration. The
Corporation will pay directly all fees, expenses, debts and obligations (other
than the Trust Securities) related to the Trust and the Exchange Offer. The
principal executive office of the Trust is Investors Capital Trust I, c/o
Investors Financial Services Corp., 89 South Street, Boston, Massachusetts
02111, Attention: Chief Financial Officer.
INVESTORS FINANCIAL SERVICES CORP.
Investors Financial Services Corp. (the "Corporation"), based in
Boston, Massachusetts, provides asset administration services for the financial
services industry through its wholly-owned subsidiary, Investors Bank & Trust
Company(R). The Corporation provides domestic and global custody, multicurrency
accounting, institutional transfer agency, performance measurement, foreign
exchange, securities lending, mutual fund administration and investment advisory
services to a variety of financial asset managers, including mutual fund
complexes, investment advisors, banks and insurance companies. The Corporation
provides financial asset administration services for assets that totaled
approximately $131 billion at March 31, 1997, including assets managed by 54
mutual fund complexes and insurance companies and approximately $10 billion of
foreign assets. The Corporation also engages in private banking transactions,
including secured lending and deposit accounts.
The Corporation operated as a subsidiary of Eaton Vance Corp. ("Eaton
Vance"), an investment management firm conducting business through subsidiaries,
from its formation in 1969 through November 1995. In 1995, the boards of
directors of the Corporation and Eaton Vance determined to separate the business
operations of the Corporation from those of Eaton Vance by means of a tax free,
pro rata distribution of Eaton Vance's ownership interest in the Corporation to
the Eaton Vance stockholders (the "Spin-Off Transaction"). The principal reasons
for the Spin-Off Transaction were to eliminate certain regulatory restrictions
to which the Corporation was subject
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under the Competitive Equality Banking Act of 1987 ("CEBA"), and to enable the
Corporation to pursue its business goals independent of Eaton Vance. In order to
avoid being regulated as a bank holding company under the Bank Holding Company
Act of 1956, Eaton Vance had operated Investors Bank & Trust Company under
certain growth and activity restrictions. The elimination of the CEBA growth and
activity restrictions enabled the Corporation to expand its current business
activities and participate in certain additional business activities. The Spin-
Off Transaction was completed on November 10, 1995, prior to the completion of
an initial public offering of 2,300,000 shares of the Corporation's Common
Stock, $.01 par value, (the "Common Stock") on November 14, 1995 (the
"Offering"). As used herein, the defined term "Corporation" shall mean Investors
Financial Services Corp. from and after June 29, 1995, the date of organization
of Investors Financial Services Corp., and shall mean Investors Bank & Trust
Company prior to that date, unless the context otherwise indicates. Investors
Bank & Trust Company is sometimes referred to herein as the "Bank."
THE EXCHANGE OFFER
Purpose of the Exchange Offer
In connection with the sale of the Old Capital Securities, the
Corporation and the Trust entered into the Registration Rights Agreement with
the Initial Purchaser, pursuant to which the Corporation and the Trust agreed to
file and to use their reasonable efforts to cause to become effective with the
Commission a registration statement with respect to the exchange of the Old
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Old Capital Securities. A copy of the Registration
Rights Agreement has been filed as an Exhibit to the Corporation's Annual Report
on Form 10-K for the year ended December 31, 1996, which is incorporated by
reference herein.
The Exchange Offer is being made to satisfy the contractual
obligations of the Corporation and the Trust under the Registration Rights
Agreement. The form and terms of the New Capital Securities are the same as the
form and terms of the Old Capital Securities except that the New Capital
Securities have been registered under the Securities Act and will not be subject
to certain restrictions on transfer applicable to the Old Capital Securities and
will not provide for any increase in the Distribution rate thereon. In that
regard, the Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by June
30, 1997 and declared effective by July 30, 1997, the Distribution rate borne by
the Old Capital Securities commencing on July 1, 1997, if no filing is made by
June 30, 1997, or July 31, 1997, if such filing is not declared effective by
July 30, 1997, will increase by 0.25% per annum until the Exchange Offer is
consummated. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the Distribution rate thereon
or any further registration rights under the Registration Rights Agreement,
except under limited circumstances. See "Risk Factors -- Consequences of a
Failure to Exchange Old Capital Securities" and "Description of Old Capital
Securities."
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Old Capital Securities in any jurisdiction
in which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect
to the Exchange Offer means any person in whose name the Old Capital Securities
are registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company
("DTC") who desires to deliver such Old Capital Securities by book-entry
transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon
as practicable after the date hereof, the Old Guarantee for the New Guarantee
and the Old Junior Subordinated Debentures, in an amount corresponding to the
Old Capital Securities accepted for exchange, for an identical aggregate
principal amount of the New Junior Subordinated Debentures. The New Guarantee
and New Junior Subordinated Debentures will have been registered under the
Securities Act.
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Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $25,000,000 aggregate Liquidation Amount of New Capital
Securities for an identical aggregate Liquidation Amount of Old Capital
Securities properly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the procedures described below. The Trust will
issue, promptly after the Expiration Date, an aggregate Liquidation Amount of up
to $25,000,000 of New Capital Securities in exchange for an identical principal
amount of outstanding Old Capital Securities tendered and accepted in connection
with the Exchange Offer. Holders may tender their Old Capital Securities in
whole or in part in a Liquidation Amount of not less than $100,000 (100 Old
Capital Securities) provided that if any Old Capital Securities are tendered for
exchange in part, the untendered principal amount thereof must be no less than
$100,000 (100 Capital Securities).
The Exchange Offer is not conditioned upon any minimum Liquidation
Amount of Old Capital Securities being tendered. As of the date of this
Prospectus, $25,000,000 aggregate Liquidation Amount of the Old Capital
Securities are outstanding.
Holders of Old Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Old Capital Securities
which are not tendered for or are tendered but not accepted in connection with
the Exchange Offer will remain outstanding and be entitled to the benefits of
the Declaration, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"
and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
under "--Conditions to the Exchange Offer" or otherwise, certificates for any
such unaccepted Old Capital Securities will be returned, without expense, to the
tendering holder thereof promptly after the Expiration Date.
Holders who tender Old Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Old Capital Securities in connection with the
Exchange Offer. The Corporation will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See " -- Fees and Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION,
NOR ANY ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD
CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY
PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
OLD CAPITAL SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT
TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES
TO TENDER BASED ON SUCH HOLDERS' OWN FINANCIAL POSITION AND REQUIREMENTS.
The term "Expiration Date" means 5:00 p.m. Boston time, on August 29,
1997 unless the Exchange Offer is extended by the Corporation or the Trust (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their
sole and absolute discretion, subject to applicable law, at any time and from
time to time, (i) to delay the acceptance of the Old Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Old Capital
Securities have theretofore been
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accepted for exchange) if the Trust determines, in its sole and absolute
discretion, that any of the events or conditions referred to under "--
Conditions to the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and retain
all Old Capital Securities tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Capital Securities to withdraw their
tendered Old Capital Securities as described under " -- Withdrawal Rights," and
(iv) to waive any condition or otherwise amend the terms of the Exchange Offer
in any respect. If the Exchange Offer is amended in a manner determined by the
Corporation and the Trust to constitute a material change, or if the Corporation
and the Trust waive a material condition of the Exchange Offer, the Corporation
and the Trust will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the holders of the Old Capital
Securities, and the Corporation and the Trust will extend the Exchange Offer to
the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will
be followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., Boston time, on the next
Business Day (as defined herein) after the previously scheduled Expiration Date.
Without limiting the manner in which the Corporation and the Trust may choose to
make any public announcement and subject to applicable law, the Corporation and
the Trust shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to an
appropriate news agency.
Acceptance for Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer,
the Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation, which includes an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal to the
Exchange Agent, of a book-entry transfer of Old Capital Securities into the
Exchange Agent's account at DTC, (ii) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or (solely in the case of book-entry transfers) an Agent's Message in
lieu thereof, and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC.
The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Trust and the
Corporation may enforce such Letter of Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the Trust
will be deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital
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Securities tendered pursuant to the Exchange Offer is delayed (whether before or
after the Trust's acceptance for exchange of Old Capital Securities) or the
Trust extends the Exchange Offer or is unable to accept for exchange or exchange
Old Capital Securities tendered pursuant to the Exchange Offer, then, without
prejudice to the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalf of the Trust and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Old Capital Securities and such Old Capital
Securities may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "-- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital
Securities will warrant and agree in the Letter of Transmittal that it has full
power and authority to tender, exchange, sell, assign and transfer Old Capital
Securities, that the Trust will acquire good, marketable and unencumbered title
to the tendered Old Capital Securities, free and clear of all liens,
restrictions, charges and encumbrances, and the Old Capital Securities tendered
for exchange are not subject to any adverse claims or proxies. The holder also
will warrant and agree that it will, upon request, execute and deliver any
additional documents deemed by the Trust or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment, and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
Procedures for Tendering Old Capital Securities
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees or (solely in the case of book-entry
transfers) an Agent's Message in lieu thereof and any other required documents,
must be received by the Exchange Agent at one of its addresses set forth under
" -- Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation, which includes an Agent's Message if the tendering
holder has not delivered a Letter of Transmittal to the Exchange Agent, must be
received by the Exchange Agent, in each case on or prior to the Expiration Date,
or (iii) the guaranteed delivery procedures set forth below must be complied
with.
If less than all of the Old Capital Securities are tendered, a
tendering holder should fill in the amount of Old Capital Securities being
tendered in the appropriate box on the Letter of Transmittal or so indicate in
the Agent's Message, as the case may be. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an account
with respect to the Old Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. A tendering holder making a
book-entry delivery may also cause an Agent's Message to be delivered on its
behalf in lieu of delivering the Letter of Transmittal. If no Agent's Message is
delivered in connection with delivery of Old Capital Securities through book-
entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must be
delivered to and received by the Exchange Agent at its address set forth under
"-- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
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DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities
need not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for Old Capital Securities must be duly endorsed
or accompanied by a properly executed bond power, with the endorsement or
signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Old Capital Securities may nevertheless be tendered, provided that
all of the following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying the Letter
of Transmittal, is received by the Exchange Agent, as provided below,
on or prior to the Expiration Date; and
(iii) the certificates (or a book-entry confirmation)
representing all tendered Old Capital Securities, in proper form for
transfer, together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature
guarantees and any other documents required by the Letter of
Transmittal, are received by the Exchange Agent within three New York
Stock Exchange trading days after the date of execution of such Notice
of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New
Capital Securities in exchange for Old Capital Securities tendered and accepted
for exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
entry confirmation with respect to such Old Capital Securities, and a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees or an Agent's Message in lieu
thereof and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of New Capital Securities might not be made to all
tendering holders at the same time, and will depend upon when Old Capital
Securities, book-entry confirmations with respect to Old Capital Securities and
other required documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and subject
to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties.
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The Corporation and the Trust reserve the absolute right, in their sole and
absolute discretion, to reject any and all tenders determined by them not to be
in proper form or the acceptance of which, or exchange for, may, in the opinion
of counsel to the Corporation and the Trust, be unlawful. The Corporation and
the Trust also reserve the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under " -- Conditions
to the Exchange Offer" or any condition or irregularity in any tender of Old
Capital Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the
Corporation and the Trust, proper evidence satisfactory to the Corporation and
the Trust, in their sole discretion, of such person's authority to so act must
be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
Resales of New Capital Securities
The Corporation and the Trust are making the Exchange Offer of the New
Capital Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Corporation nor the Trust has sought an opinion of its legal counsel or its own
interpretive letter from the Division of Corporate Finance of the Commission and
there can be no assurance that the staff of the Division of Corporation Finance
of the Commission would make a similar determination with respect to the
Exchange Offer as it has in such interpretive letters to third parties. Based
on these interpretations by the staff of the Division of Corporation Finance of
the Commission, and subject to the two immediately following sentences, the
Corporation and the Trust believe that New Capital Securities issued pursuant to
this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Corporation or the
Trust or who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Trust to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of market-
making or other trading activities and exchanges such Old Capital Securities for
New Capital Securities, then such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales of
such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Corporation or
the
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Trust, (ii) any New Capital Securities to be received by it are being acquired
in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if such
holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such New Capital Securities. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility to participate
in the Exchange Offer, to furnish to the Corporation and the Trust (or an agent
thereof), in writing, information as to the number of "beneficial owners"
(within the meaning of Rule 13d-3 under the Exchange Act) on behalf of whom such
holder holds the Old Capital Securities to be exchanged in the Exchange Offer.
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Corporation
and the Trust believe that Participating Broker-Dealers who acquired Old Capital
Securities for their own accounts as a result of market-making activities or
other trading activities may fulfill their prospectus delivery requirements with
respect to the New Capital Securities received upon exchange of such Old Capital
Securities (other than Old Capital Securities which represent an unsold
allotment from the original sale of the Old Capital Securities) with a
prospectus meeting the requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it contains a description
of the plan of distribution with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer during the
period referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities where such Old Capital
Securities were acquired by such Participating Broker-Dealer for its own account
as a result of market-making or other trading activities. Subject to certain
provisions set forth in the Registration Rights Agreement, the Corporation and
the Trust have agreed that this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer in connection
with resales of such New Capital Securities for a period ending 90 days after
the Expiration Date (subject to extension under certain limited circumstances
described below) or, if earlier, when all such New Capital Securities have been
disposed of by such Participating Broker-Dealer. See "Plan of Distribution."
However, a Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of New Capital Securities received in exchange for
Old Capital Securities pursuant to the Exchange Offer must notify the
Corporation or the Trust, or cause the Corporation or the Trust to be notified,
on or prior to the Expiration Date, that it is a Participating Broker-Dealer.
Such notice may be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at one of the addresses
set forth herein under " -- Exchange Agent." Any Participating Broker-Dealer who
is an "affiliate" of the Corporation or the Trust may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal or delivery of an Agent's Message,
that, upon receipt of notice from the Corporation or the Trust of the occurrence
of any event or the discovery of any fact which makes any statement contained or
incorporated by reference in this Prospectus untrue in any material respect or
which causes this Prospectus to omit to state a material fact necessary in order
to make the statements contained or incorporated by reference herein, in light
of the circumstances under which they were made, not misleading or of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) pursuant to this Prospectus until the Corporation or the Trust has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer or the Corporation or the Trust has given notice
that the sale of the New Capital Securities (or the New Guarantee or the New
Junior Subordinated Debentures, as applicable) may be resumed, as the case may
be. The Corporation and the Trust may delay the filing of any amendment or
supplement in good faith and for a valid corporate purpose for a period not to
exceed 120 days, such right to delay to be exercisable by the Corporation and
the Trust only once in any 365 day period. If the
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Corporation or the Trust gives such notice to suspend the sale of the New
Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable), it shall extend the 90 day period referred to above
during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Capital Securities by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the New Capital Securities or to and including the date on which the Corporation
or the Trust has given notice that the sale of New Capital Securities (or the
New Guarantee or the New Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth under " -- Exchange Agent" on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
certificates for such Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Old Capital
Securities, if different from that of the person who tendered such Old Capital
Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in " -- Procedures for Tendering
Old Capital Securities," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, or facsimile transmission. Withdrawals of
tenders of Old Capital Securities may not be rescinded. Old Capital Securities
properly withdrawn will not be deemed validly tendered for purposes of the
Exchange Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described above under " --
Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Trust, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Corporation, the Trust, any affiliates or assigns of the Corporation
or the Trust, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or incur
any liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned to
the holder thereof promptly after withdrawal.
Distributions on New Capital Securities
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive Distributions on such Old Capital
Securities and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after January
31, 1997. Accordingly, holders of New Capital Securities as of the record date
for the payment of Distributions on August 1, 1997 will be entitled to receive
Distributions accumulated from and after January 31, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any New Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old
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Capital Securities have theretofore been accepted for exchange) or may waive any
conditions to or amend the Exchange Offer, if any of the following conditions
have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretations by the
staff of the Commission which permits the New Capital Securities issued pursuant
to the Exchange Offer in exchange for Old Capital Securities to be offered for
resale, resold and otherwise transferred by holders thereof (other than broker-
dealers and any such holder which is an "affiliate" of the Corporation or the
Trust within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New Capital Securities are acquired in the
ordinary course of such holders' business and such holders have no arrangement
or understanding with any person to participate in the distribution of such New
Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Corporation or the Trust, would reasonably
be expected to impair its ability to proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission or any
state securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of the
Corporation or the Trust, threatened for that purpose or any governmental
approval has not been obtained, which approval the Corporation or the Trust
shall, in its sole discretion, deem necessary for the consummation of the
Exchange Offer as contemplated hereby.
If the Corporation or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any such condition or otherwise amend the
terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Corporation or the
Trust will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities and will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
<TABLE>
<CAPTION>
By Registered or Certified Mail: By Hand or Overnight Delivery:
- ------------------------------------ ----------------------------------
<S> <C>
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Section, Ground Level
Arwen Gibbons New York, New York 10286
Attention: Reorganization Section,
Arwen Gibbons
</TABLE>
Confirm By Telephone:
(212) 815-5920
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-6339
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Delivery to other than the above addresses or facsimile number will
not constitute a valid delivery.
Fees and Expenses
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-of-
pocket expenses in connection therewith. The Corporation will also pay brokerage
houses and other custodians, nominees and fiduciaries the reasonable out-of-
pocket expenses incurred by them in forwarding copies of this Prospectus and
related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Corporation nor the Trust will make any payment to
brokers, dealers or other nominees soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Trust has issued the Old
Capital Securities and the Common Securities and will issue the New Capital
Securities. The New Capital Securities will represent preferred undivided
beneficial interests in the assets of the Trust and the holders of Capital
Securities will be entitled to a preference over the Common Securities in
certain circumstances with respect to Distributions and amounts payable on
redemption of the Trust Securities or liquidation of the Trust. See "--
Subordination of Common Securities" below. The Declaration has been qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
The following provides a description of the material features of the New Capital
Securities and the rights of the holders of the New Capital Securities under the
Declaration but does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the
Declaration (which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part and is incorporated by reference herein; see
"Available Information"), including the definitions therein of certain terms,
and the Trust Indenture Act.
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General
The Capital Securities are limited to $25,000,000 aggregate
Liquidation Amount at any one time outstanding, including any New Capital
Securities that may be issued from time to time in exchange for Old Capital
Securities. The New Capital Securities will rank pari passu, and payments will
be made thereon pro rata, with the Old Capital Securities and the Common
Securities except as described under "-- Subordination of Common Securities"
below. Legal title to the Junior Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the Capital
Securities and the Common Securities. The New Guarantee will be a guarantee on a
subordinated basis but will not guarantee payment of Distributions or amounts
payable on redemption of the New Capital Securities -- or liquidation of the
Trust when the Trust does not have funds on hand legally available for such
payments. See "Description of New Guarantee."
Distributions
Distributions on the New Capital Securities will be cumulative, will
accumulate from January 31, 1997 and will be payable semi-annually in arrears on
February 1 and August 1 of each year, commencing August 1, 1997, at the annual
rate of 9.77% of the Liquidation Amount to the holders of the New Capital
Securities on the relevant record dates. The record dates will be the dates
fifteen days prior to the relevant Distribution Date (as defined herein). The
amount of Distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months and, for any period of less than a full
calendar month, the number of days elapsed in such month. In the event that any
date on which Distributions are payable on the New Capital Securities is not a
Business Day (as defined herein), payment of the Distributions 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), with the same force
and effect as if made on the date such payment was originally payable (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 New York, New York or
Boston, Massachusetts are authorized or required by law or executive order to
close.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to elect to
defer the payment of interest on the New Junior Subordinated Debentures at any
time and from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity Date. Upon any such election, semi-annual
Distributions on the New Capital Securities will be deferred by the Trust during
any such Extension Period. Distributions to which holders of the New Capital
Securities are entitled during any such Extension Period will accumulate
additional Distributions thereon at the rate per annum of 9.77% 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 extend such
Extension Period, provided that such extension does not cause such Extension
Period to exceed 10 consecutive semi-annual periods or to extend beyond the
Stated Maturity Date. Upon the termination of any such Extension Period and the
payment of all amounts then due, and subject to the foregoing limitations, the
Corporation may elect to begin a new Extension Period. The Corporation must give
the Property Trustee, the Administrative Trustees and the Debenture Trustee
notice of its election of any Extension Period or any extension thereof at least
five Business Days prior to the earlier of (i) the date the Distributions on the
New Capital Securities would have been payable except for the election to begin
or extend such Extension Period and (ii) the date the Administrative Trustees
are required to give notice to any securities exchange or to holders of the New
Capital Securities of the record date or the date such Distributions are
payable, but in any event not less than five Business Days prior to such record
date. There is no limitation on the number of times that the Corporation may
elect to begin an Extension Period. See "Description of New Junior Subordinated
Debentures -- Option to Extend Interest Payment Period" and "Certain Federal
Income Tax Considerations -- Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the
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Corporation's capital stock (which includes common and preferred stock) or (ii)
make any payment of principal of or premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the New
Junior Subordinated Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of any securities of any subsidiary of the
Corporation (including all other guarantees issued by the Corporation with
respect to other capital securities (if any) and issued by other trusts
established by the Corporation (if any), in each case similar to the Trust, the
"Other Guarantees") if such guarantee ranks pari passu with or junior in right
of payment to the New Junior Subordinated Debentures (other than (a) dividends
or distributions in shares of, or options, warrants or rights to subscribe for
or purchase shares of, common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a direct result of, and only to the extent required in order
to avoid the issuance of fractional shares of capital stock following a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class, or series of the Corporation's capital stock for
another class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
Although the Corporation may in the future exercise its option to
defer payments of interest on the New Junior Subordinated Debentures, the
Corporation has no such current intention.
The revenue of the Trust available for distribution to holders of the
New Capital Securities will be limited to payments under the Junior Subordinated
Debentures purchased by the Trust with the proceeds from the issuance and sale
of the Trust Securities. See "Description of New Junior Subordinated
Debentures--General." If the Corporation does not make interest payments on the
New Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the New Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) will be guaranteed by the
Corporation on a limited basis as set forth herein under " -- Description of New
Guarantee."
Conditional Right to Advance Maturity and Special Event Redemption
If a Tax Event (as defined under "Description of New Junior
Subordinated Debentures -- Conditional Right to Advance Maturity and Special
Event Redemption") occurs, then the Corporation will have the right, in lieu of
terminating the Trust, to advance the Stated Maturity Date of the New Junior
Subordinated Debentures to the minimum extent required in order to allow for
payments of interest in respect of the New Junior Subordinated Debentures to
continue to be deductible by the Corporation for U.S. federal income tax
purposes, but in no event shall the resulting maturity of the New Junior
Subordinated Debentures be less than 20 years from the date of original issuance
thereof (any such advancement of the Stated Maturity Date being a "Tax Event
Maturity Advancement"). Such maturity date shall be advanced only (i) if, in the
opinion of counsel to the Corporation experienced in such matters, after
advancing the maturity date, interest payable on the New Junior Subordinated
Debentures will be deductible for United States federal income tax purposes and
(ii) upon receipt of prior approval of the Federal Reserve, if then so required
under applicable capital guidelines or policies of the Federal Reserve.
If a Tax Event occurs and in the opinion of counsel to the Corporation
experienced in such matters, there would in all cases, after effecting a Tax
Event Maturity Advancement, be more than an insubstantial risk that an Adverse
Tax Consequence (as defined herein) would continue to exist, or, if a Regulatory
Capital Event (as defined herein) occurs, then the Corporation will have the
right, within 90 days following the occurrence of such Tax Event or Regulatory
Capital Event, as the case may be, to redeem the New Junior Subordinated
Debentures in whole (but not in part) in the manner set forth under "Description
of New Junior Subordinated Debentures -- Conditional Right to Advance Maturity
and Special Event Prepayment," and therefore to cause a mandatory redemption of
the New Capital Securities prior to the Stated Maturity Date (the circumstances
under which the Corporation has the right to so redeem the New Junior
Subordinated Debentures in connection with a Tax Event being referred to herein
as a "Conditional Tax Redemption Event"). Each of a Conditional Tax Redemption
Event or a Regulatory Capital Event are sometimes referred to herein as "Special
Event."
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Redemption
Upon the repayment on the Stated Maturity Date or prepayment prior to
the Stated Maturity Date of the New Junior Subordinated Debentures, the proceeds
from such repayment or prepayment shall be applied by the Property Trustee to
redeem a Like Amount (as defined below) of the Trust Securities, upon not less
than 30 nor more than 60 days' notice of a date of redemption (the "Redemption
Date") at the applicable Redemption Price, which shall be equal to (i) in the
case of the repayment of the New Junior Subordinated Debentures on the Stated
Maturity Date, the Maturity Redemption Price (equal to the principal of and
accrued and unpaid interest on the New Junior Subordinated Debentures), (ii) in
the case of the optional prepayment of the New Junior Subordinated Debentures
before the Initial Optional Prepayment Date upon the occurrence and continuation
of a Special Event, the Special Event Redemption Price (equal to the Special
Event Prepayment Price in respect of the New Junior Subordinated Debentures) and
(iii) in the case of the optional prepayment of the New Junior Subordinated
Debentures other than as contemplated in clause (ii) above, the Optional
Redemption Price (equal to the Optional Prepayment Price in respect of the New
Junior Subordinated Debentures). See "Description of New Junior Subordinated
Debentures -- Optional Prepayment" and "-- Conditional Right to Advance Maturity
and Special Event Prepayment."
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Junior Subordinated Debentures to be paid in accordance with their
terms and (ii) with respect to a distribution of Junior Subordinated Debentures
upon the liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Junior Subordinated Debentures are distributed.
The Corporation will have the option to prepay the New Junior
Subordinated Debentures, (i) in whole or in part, on or after the Initial
Optional Prepayment Date, at the applicable Optional Prepayment Price and (ii)
in whole but not in part, at any time before the Initial Optional Prepayment
Date, upon the occurrence of a Special Event, at the Special Event Prepayment
Price, in each case subject to receipt of prior approval by the Federal Reserve
if then required under applicable capital guidelines or policies of the Federal
Reserve.
Liquidation of the Trust and Distribution of New Junior Subordinated Debentures
The Corporation will have the right at any time to terminate the Trust
and, after satisfaction of liabilities to creditors of the Trust as required by
applicable law, cause the New Junior Subordinated Debentures to be distributed
to the holders of the Trust Securities in liquidation of the Trust. Such right
is subject to (i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Capital
Securities and (ii) the prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve.
The Trust shall automatically terminate upon the first to occur of:
(i) certain events of bankruptcy, dissolution or liquidation of the Corporation
or the Trust; (ii) the distribution of a Like Amount of the Junior Subordinated
Debentures to the holders of the Trust Securities, if the Corporation, as
sponsor (the "Sponsor"), has given written direction to the Property Trustee to
terminate the Trust (which direction is optional and, except as described above,
wholly within the discretion of the Corporation, as Sponsor); (iii) redemption
of all of the Trust Securities as described under "-- Redemption" above; (iv)
expiration of the term of the Trust; and (v) the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv), or (v)
of the preceding paragraph, the Trust shall be liquidated by the Administrative
Trustees as expeditiously as the Administrative Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to the holders of the Trust Securities a
Like Amount of the Junior Subordinated Debentures, in which event such holders
will be entitled to receive out of the assets of the Trust legally available for
distribution to holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to the aggregate of the
Liquidation Amount plus accumulated and unpaid Distributions thereon to the date
of payment (such amount being
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the "Liquidation Distribution"). If the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets on hand legally available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Capital Securities and the Common Securities shall
be paid on a pro rata basis, except that if a Debenture Event of Default has
occurred and is continuing, the Capital Securities shall have a priority over
the Common Securities. See "--Subordination of Common Securities" below.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities, (i) the Trust
Securities will no longer be deemed to be outstanding, (ii) each registered
global certificate, if any, representing Trust Securities and held by DTC or its
nominee will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution and (iii) any certificates representing Trust Securities not held
by DTC or its nominee will be deemed to represent Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of such Trust
Securities, and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on such Trust Securities until such
certificates are presented to the Administrative Trustees or their agent for
cancellation, whereupon the Corporation will issue to such holder, and the
Debenture Trustee will authenticate, a certificate representing such Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the New Capital
Securities or the New Junior Subordinated Debentures that may be distributed in
exchange for the New Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the New Capital Securities that an investor
may purchase, or the New Junior Subordinated Debentures that the investor may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the New Capital Securities offered
hereby.
Redemption Procedures
If applicable, Trust Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Junior Subordinated Debentures. Any redemption of Trust
Securities shall be made and the applicable Redemption Price shall be payable on
the Redemption Date only to the extent that the Trust has funds legally
available for the payment of such applicable Redemption Price. See also "--
Subordination of Common Securities" below.
If the Trust gives a notice of redemption in respect of the New
Capital Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are legally available, with respect to the New Capital
Securities held by DTC or its nominees, the Property Trustee will pay or cause
the Paying Agent to pay the Redemption Price to DTC. See "-- Form, Denomination,
Book-Entry Procedures and Transfer" below. With respect to the New Capital
Securities held in certificated form, the Property Trustee, to the extent funds
are legally available, will give irrevocable instructions and authority to the
Paying Agent and will irrevocably deposit with the Paying Agent for the New
Capital Securities funds sufficient to pay or cause the Paying Agent to pay the
applicable Redemption Price to the holders thereof upon surrender of their
certificates evidencing the New Capital Securities. See "-- Payment and Paying
Agency" below. Distributions payable on or prior to the Redemption Date shall be
payable to the holders of such New Capital Securities on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited with the Property Trustee to pay the Redemption
Price for the New Capital Securities called for redemption, then all rights of
the holders of such New Capital Securities will cease, except the right of the
holders of such New Capital Securities to receive the applicable Redemption
Price, but without interest on such Redemption Price, and such New Capital
Securities will cease to be outstanding. In the event that any Redemption Date
is not a Business Day, then the applicable Redemption Price payable on such date
will be paid on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), in each case with the
same force and effect as if made on such date. In the event that payment of the
applicable Redemption Price is improperly withheld or refused and not paid
either by the Trust or by the Corporation pursuant to the New Guarantee as
described under " -- Description of New Guarantee," (i) Distributions on New
Capital Securities called for redemption will accumulate on the Redemption Price
at the then applicable rate, from the Redemption Date originally established by
the Trust to the date such applicable Redemption Price is actually paid, and
(ii) the actual payment date will be the Redemption Date for purposes of
calculating the applicable Redemption Price.
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Subject to applicable law (including, without limitation, United
States federal securities law and the regulations of the Federal Reserve) the
Corporation or its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by private
agreement.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days prior to the Redemption Date to each holder of Trust Securities at
its registered address. Unless the Corporation defaults in payment of the
applicable Prepayment Price on, or in the repayment of, the Junior Subordinated
Debentures, on and after the Redemption Date Distributions will cease to accrue
on the Trust Securities called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the Liquidation Amount of the Capital Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default shall have occurred and be continuing, no payment of
any Distribution on, or applicable Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of the Common Securities, shall be made unless payment in full
in cash of all accumulated and unpaid Distributions on all of the outstanding
Capital Securities for all Distribution periods terminating on or prior thereto
or, in the case of Capital Securities called for redemption on a Redemption Date
on or prior thereto, the full amount of the Redemption Price therefor, shall
have been made or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all Distributions on,
or Redemption Price of, the Capital Securities then due and payable.
In the case of any Event of Default, the Corporation as holder of the
Common Securities will be deemed to have waived any right to act with respect to
such Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Capital Securities and not on behalf of the
Corporation as holder of the Common Securities, and only the holders of the
Capital Securities will have the right to direct the Property Trustee to act on
their behalf.
Events of Default; Notice
The occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures -- Debenture Events of Default") constitutes an
"Event of Default" under the Declaration.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Sponsor, unless such Event of
Default shall have been cured or waived. The Corporation, as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If a Debenture Event of Default has occurred and is continuing, the
Capital Securities shall have a preference over the Common Securities as
described under "-- Liquidation of the Trust and Distribution of New Junior
Subordinated Debentures" and "-- Subordination of Common Securities" above.
Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by the holder of the
Common Securities. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed at such
time by the holders of a majority in Liquidation Amount of the outstanding
Capital Securities. In no event will the holders of the Capital Securities have
the right to vote to appoint, remove or replace the Administrative Trustees,
which voting rights are
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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 Declaration.
Merger or Consolidation of Issuer Trustees
Any legal person, including any individual, corporation, estate,
partnership, joint venture, association or any other entity of whatever nature
(a "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 Issuer Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Declaration, provided such Person shall be otherwise qualified and
eligible.
Mergers, Conversions, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge or convert with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any corporation or
other Person, except as described below. The Trust may, at the request of the
Corporation, as Sponsor, with the consent of the Administrative Trustees but
without the consent of the holders of the Capital Securities, merge or convert
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to a trust organized as such under the laws of any State; provided, that (i)
such successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Capital Securities or (b) substitutes for the Capital
Securities other securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Capital Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Corporation expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee with respect to the Junior
Subordinated Debentures, (iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Capital
Securities are then listed or quoted, if any, (iv) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, if then
so rated, (v) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect (other than any dilution of such holders'
interests in the new entity), (vi) such successor entity has a purpose identical
to that of the Trust, (vii) prior to such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Corporation has
received an opinion from independent counsel to the Trust experienced in such
matters to the effect that (a) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Capital
Securities (including any Successor Securities) in any material respect (other
than any dilution of such holders' interests in the new entity), and (b)
following such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), and (viii) the
Corporation or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge or convert with or into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge or convert with or into, or replace it
if such consolidation, amalgamation, merger, conversion, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity not
to be classified as a grantor trust for United States federal income tax
purposes.
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Voting Rights; Amendment of the Declaration
Except as provided below and under "-- Mergers, Conversions,
Consolidations, Amalgamations or Replacements of the Trust" above and
"Description of New Guarantee -- Amendments and Assignment" and as otherwise
required by law and the Declaration, the holders of the New Capital Securities
will have no voting rights.
The Declaration may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities (i) to cure any ambiguity, correct or supplement
any provisions in the Declaration that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Declaration, which shall not be inconsistent with the other
provisions of the Declaration, or (ii) to modify, eliminate or add to any
provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in each case,
such action shall not adversely affect in any material respect the interests of
the holders of the Trust Securities and any amendments of the Declaration shall
become effective when notice thereof is given to the holders of the Trust
Securities. The Declaration may be amended by the Issuer Trustees and the
Corporation (i) with the consent of holders representing a majority (based upon
Liquidation Amount) of the outstanding Trust Securities, and (ii) upon receipt
by the Issuer Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's exemption
from status as an "investment company" under the Investment Company Act,
provided that, without the consent of each holder of Trust Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution or other payment on the Trust Securities or otherwise adversely
affect the amount of any Distribution or other payment 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; it being understood that the New Capital
Securities and any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Declaration.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
the Junior Subordinated Debentures, (ii) waive certain past defaults under the
Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior approval
of each holder of the Capital Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of default
with respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for U.S. federal income
tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at
a meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in the
Declaration.
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No vote or consent of the holders of Capital Securities will be
required for the Trust to redeem and cancel the Capital Securities in accordance
with the Declaration.
Notwithstanding that holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Corporation or any affiliate of the
Corporation shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
Form, Denomination, Book-Entry Procedures and Transfer
The Capital Securities will be in blocks having a Liquidation Amount
of not less than $100,000 (100 Capital Securities) and may be transferred or
exchanged only in such blocks in the manner and at the offices described below.
New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global New
Capital Securities" and together with the Old Capital Securities in registered
global form, the "Global Capital Securities"). The Global New Capital Securities
will be deposited upon issuance with the Property Trustee as custodian for DTC,
in New York, New York, and registered in the name of DTC or its nominee, in each
case for credit to an account of a direct or indirect participant in DTC as
described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below.
DTC has advised the Trust and the Corporation that DTC is a limited-
purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchaser), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global New Capital
Securities, DTC will credit the accounts of Participants with portions of the
Liquidation Amount of the Global New Capital Securities and (ii) ownership of
such interests in the Global New Capital Securities will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the Participants) or by the Participants and the
Indirect Participants (with respect to other owners of beneficial interests in
the Global Capital Securities).
The laws of some states require that certain persons take physical
delivery in certificated form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Capital Security to such
persons will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a Global Capital
Security to pledge such interests to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such interests, may
be affected by the lack of a physical certificate evidencing such interests.
Except as described below, owners of beneficial interests in the
Global Capital Securities will not have Capital Securities registered in their
name, will not receive physical delivery of Capital Securities in certificated
form and will not be considered the registered owners or holders thereof under
the Declaration for any purpose.
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Payments in respect of the Global Capital Security registered in the
name of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Declaration. Under the terms of the
Declaration, the Property Trustee will treat the persons in whose names the
Capital Securities, including the Global Capital Securities, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Capital Securities, or for maintaining, supervising or reviewing any of
DTC's records or any Participant's or Indirect Participant's records relating to
the beneficial ownership interests in the Global Capital Securities or (ii) any
other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised the Trust and the
Corporation that its current practice, upon receipt of any payment in respect of
securities such as the Global Capital Securities, is to credit the accounts of
the relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in Liquidation Amount of beneficial
interests in the relevant security as shown on the records of DTC unless DTC has
reason to believe it will not receive payment on such payment date. Payments by
the Participants and the Indirect Participants to the beneficial owners of New
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Trust or the Corporation. Neither the Trust nor the Corporation or the
Property Trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the New Capital Securities, and the
Trust, the Corporation and the Property Trustee may conclusively rely on and
will be protected in relying on instructions from DTC or its nominee for all
purposes.
Beneficial interests in the Global Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds, subject in
all cases to the rules and procedures of DTC and its participants.
DTC has advised the Trust and the Corporation that it will take any
action permitted to be taken by a holder of New Capital Securities only at the
direction of one or more Participants to whose account with DTC interests in the
Global Capital Securities are credited and only in respect of such portion of
the Liquidation Amount of the New Capital Securities as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Declaration, DTC reserves the right to exchange
the Global New Capital Securities for New Capital Securities in certificated
form and to distribute such New Capital Securities to its Participants.
The information in this section concerning DTC and its book-entry
system has been obtained from sources that the Trust and the Corporation believe
to be reliable, but neither the Trust nor the Corporation takes responsibility
for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interests in the Global Capital Securities among participants in
DTC it is under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trust nor the Corporation or the Property Trustee will have any responsibility
for the performance by DTC or its respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
A Global New Capital Security is exchangeable for New Capital
Securities in registered certificated form if (i) DTC (x) notifies the Trust
that it is unwilling or unable to continue as depositary designated by the
Corporation pursuant to the Indenture (the "Depositary") for the Global New
Capital Security and the Trust thereupon fails to appoint a successor Depositary
within 90 days or (y) has ceased to be a clearing agency registered under the
Exchange Act, (ii) the Corporation in its sole discretion elects to cause the
issuance of the New Capital Securities in certificated form or (iii) there shall
have occurred and be continuing an Event of Default or any event which after
notice or lapse of time or both would be an Event of Default under the
Declaration. In addition, beneficial interests in a Global New Capital Security
may be exchanged for certificated New Capital Securities upon request but only
upon at least 20 days' prior written notice given to the Property Trustee by or
on behalf of DTC in accordance with customary procedures. In all cases,
certificated New Capital Securities delivered in exchange for any Global New
Capital Security or beneficial interests therein will be
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registered in the names, and issued in any approved denominations, requested by
or on behalf of the Depositary (in accordance with its customary procedures)
unless the Property Trustee determines otherwise in compliance with applicable
law.
Payment and Paying Agency
Payments in respect of the New Capital Securities held in global form
shall be made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates or in respect of the New Capital
Securities that are not held by the Depositary, such payments shall be made by
check mailed to the address of the holder entitled thereto as such address shall
appear on the register. The paying agent (the "Paying Agent") shall initially be
the Property Trustee and any co-paying agent chosen by the Property Trustee and
acceptable to the Administrative Trustees and the Corporation. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' 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.
Restrictions on Transfer
The New Capital Securities will be issued and may be transferred only
in blocks having a Liquidation Amount of not less than $100,000 (100 New Capital
Securities). Any such transfer of New Capital Securities in a block having a
Liquidation Amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such New Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such New Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such New Capital
Securities.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
New Capital Securities.
Registration of transfers of the New Capital Securities will be
effected without charge by or on behalf of the Trust but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of any New Capital Securities after they have been
called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the powers vested in
it by the Declaration at the request of any holder of Trust Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. The Property Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if repayment or adequate indemnity is not reasonably
assured to the Property Trustee.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for U.S. federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Corporation for U.S. federal
income tax purposes. In this connection, the Corporation and the Administrative
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of the Trust or the Declaration, that the
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Corporation and the Administrative Trustees determine in their discretion to be
necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the Trust
Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or
pledge any of its assets.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures will be issued as a separate series under the Indenture
(the "Indenture") between the Corporation and The Bank of New York, as trustee
(the "Debenture Trustee"). The Indenture has been qualified under the Trust
Indenture Act. The following provides a description of the material features of
the New Junior Subordinated Debentures and the Indenture and the rights of the
holders of the New Junior Subordinated Debentures under the Indenture but does
not purport to be complete and, is subject to, and qualified in its entirety by
reference to, all of the provisions of the Indenture (a form of which has been
filed as an exhibit to the Registration Statement of which is Prospectus forms a
part and is incorporated by reference herein; see "Available Information"),
including the definitions therein of certain terms, and the Trust Indenture Act.
General
Concurrently with the issuance of the Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in Old Junior Subordinated Debentures
issued by the Corporation. Pursuant to the Exchange Offer, the Corporation will
exchange the Old Junior Subordinated Debentures, in an amount corresponding to
the Old Capital Securities accepted for exchange, for an identical aggregate
principal amount of the New Junior Subordinated Debentures promptly after the
Expiration Date.
The New Junior Subordinated Debentures will bear interest at the
annual rate of 9.77% of the principal amount thereof, payable semi-annually in
arrears on February 1 and August 1 of each year (each, an "Interest Payment
Date"), commencing August 1, 1997, to the person in whose name each New Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the date fifteen days prior to the relevant Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Trust, each New Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the New Capital
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and, for any period of less
than a full calendar month, the number of days elapsed in such month. In the
event that any date on which interest is payable on the New Junior Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), with the same force
and effect as if made on the date such payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of 9.77% thereof, compounded semi-annually. The term
"interest", as used herein, shall include semi-annual interest payments,
interest on semi-annual interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined herein), as applicable.
The New Junior Subordinated Debentures will be issued in minimum
denominations of $100,000. The New Junior Subordinated Debentures will mature on
February 1, 2027 (the "Stated Maturity Date"), except as described below. The
Corporation will not be required to establish a sinking fund or other
accumulation of money invested or segregated for the purpose of repaying the
principal amount of the Junior Subordinated Debentures.
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The New Junior Subordinated Debentures will rank pari passu with the
Old Junior Subordinated Debentures and with all Other Debentures and will be
unsecured and subordinate and rank junior in right of payment to the extent and
in the manner set forth in the Indenture to all Senior Indebtedness of the
Corporation. See "-- Subordination" below. 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.
The Corporation is a legal entity separate and distinct from its banking and
non-banking affiliates. The principal source of the Corporation's income is
dividends from its banking affiliate. The Bank is subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the Bank unless the
loans are secured by various types of collateral. Further, such secured loans,
other transactions and investments by the Bank are generally limited in amount
as to the Corporation and as to each of such other affiliates to 10% of such
Bank's capital and surplus and as to the Corporation and all of such other
affiliates to an aggregate of 20% of such Bank's capital and surplus. In
addition, payment of dividends to the Corporation by the Bank is subject to
ongoing review by banking regulators and is subject to various statutory
limitations and in certain circumstances requires approval by banking regulatory
authorities. 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 New Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of New Junior Subordinated Debentures should look only
to the assets of the Corporation for payments on the New Junior Subordinated
Debentures. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Indebtedness. See
"--Subordination" below.
Form, Registration and Transfer
If the New Junior Subordinated Debentures are distributed to the
holders of the New Capital Securities, the New Junior Subordinated Debentures
may be represented by one or more global certificates registered in the name of
Cede & Co. as the nominee of DTC. The depositary arrangements for such New
Junior Subordinated Debentures are expected to be substantially similar to those
in effect for the Capital Securities. For a description of DTC and the terms of
the depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Description of New Capital
Securities -- Form, Denomination, Book-Entry Procedures and Transfer."
Payment and Paying Agents
Payment of principal of, premium, if any, and any interest on New
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) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the register for New Junior Subordinated Debentures or (ii) by
transfer to an account maintained by the Person entitled thereto as specified in
such register, provided that proper transfer instructions have been received by
the relevant Record Date. Payment of any interest on any New Junior Subordinated
Debenture will be made to the Person in whose name such New Junior Subordinated
Debenture is registered at the close of business on the Record Date for such
interest, except in the case of defaulted interest. The Corporation may at any
time designate additional paying agents or rescind the designation of any paying
agent; however the Corporation will at all times be required to maintain a
paying agent in each place of payment for the New 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 New 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 New
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Junior Subordinated Debenture shall thereafter look, as a general unsecured
creditor, only to the Corporation for payment thereof.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is
continuing, the Corporation will have the right under the Indenture at any time
during the term of the New Junior Subordinated Debentures to defer the payment
of interest at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period may extend beyond the Stated Maturity Date. At the end
of an Extension Period, the Corporation must pay all interest then accrued and
unpaid (together with interest thereon accrued at the annual rate of 9.77%,
compounded semi-annually, to the extent permitted by applicable law). During an
Extension Period, interest will continue to accrue and, if the New Junior
Subordinated Debentures have been distributed to holders of the New Capital
Securities, holders of New Junior Subordinated Debentures (or holders of the New
Capital Securities while such New Capital Securities are outstanding) will be
required to accrue interest income for U.S. federal income tax purposes prior to
the receipt of cash attributable to such income. See "Certain Federal Income Tax
Considerations -- Interest Income and Original Issue Discount."
During any Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including any Other Debentures) that rank pari
passu with or junior in right of payment to the Junior Subordinated Debentures
or (iii) make any guarantee payments with respect to any guarantee by the
Corporation of any securities of any subsidiary of the Corporation (including
Other Guarantees) if such guarantee ranks pari passu with or junior in right of
payment to the Junior Subordinated Debentures (other than (a) dividends or
distributions in shares of or options, warrants or rights to subscribe for or
purchase shares of, common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a direct result of, and only to the extent required in order
to avoid the issuance of fractional shares of capital stock following, a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Corporation may elect to begin a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Corporation must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee written notice of
its election of any Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the Distributions on the
Trust Securities would have been payable except for the election to begin or
extend such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or to holders of Capital
Securities of the record date or the date such Distributions are payable, but in
any event not less than five Business Days prior to such record date. The
Debenture Trustee shall give notice of the Corporation's election to begin or
extend a new Extension Period to the holders of the Capital Securities. There is
no limitation on the number of times that the Corporation may elect to begin an
Extension Period.
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Optional Prepayment
The Junior Subordinated Debentures will be prepayable, in whole or in
part, at the option of the Corporation, on or after the Initial Optional
Prepayment Date, subject to the Corporation having received prior approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve, at a prepayment price (the "Optional Prepayment
Price") equal to the percentage of the outstanding principal amount of the
Junior Subordinated Debentures specified below, plus, in each case, accrued
interest thereon to the date of prepayment if redeemed during the 12-month
period beginning February 1, of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2007.......................................... 104.8850%
2008.......................................... 104.3965%
2009.......................................... 103.9080%
2010.......................................... 103.4195%
2011.......................................... 102.9310%
2012.......................................... 102.4425%
2013.......................................... 101.9540%
2014.......................................... 101.4655%
2015.......................................... 100.9770%
2016.......................................... 100.4885%
2017 and thereafter........................... 100.0000%
</TABLE>
Conditional Right to Advance Maturity and Special Event Prepayment
If a Tax Event occurs, then the Corporation will have the right, in
lieu of terminating the Trust, to advance the Stated Maturity Date of the Junior
Subordinated Debentures to the minimum extent required in order to allow for the
payments of interest in respect of the Junior Subordinated Debentures to
continue to be deductible by the Corporation for U.S. federal income tax
purposes, but in no event shall the resulting maturity of the Junior
Subordinated Debentures be less than 20 years from the date of original issuance
thereof. Such maturity date shall be advanced only (i) if, in the opinion of
counsel to the Corporation experienced in such matters, after advancing the
maturity date, interest payable on the Junior Subordinated Debentures will be
deductible for United States federal income tax purposes and (ii) upon receipt
of prior approval of the Federal Reserve, if then so required under applicable
capital guidelines or policies of the Federal Reserve.
If a Special Event shall occur and be continuing, the Corporation may,
at any time prior to the Initial Optional Prepayment Date, within 90 days after
the occurrence of the Special Event, at its option and subject to receipt of
prior approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, prepay the Junior Subordinated
Debentures in whole (but not in part), at a prepayment price (the "Special Event
Prepayment Price") equal to the greater of (i) 100% of the principal amount of
such Junior Subordinated Debentures or (ii) the sum, as determined by a
Quotation Agent, of the present values of the principal amount and premium
payable as part of the Optional Prepayment Price with respect to an optional
redemption of such Junior Subordinated Debentures on the Initial Optional
Prepayment Date, together with scheduled payments of interest from the
prepayment date to the Initial Optional Prepayment Date, in each case discounted
to the prepayment date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in
either case, accrued and unpaid interest thereon to the date of prepayment.
"Special Event" means a Conditional Tax Redemption Event (as defined
under "Description of the New Capital Securities -- Conditional Right to Advance
Maturity and Special Event Redemption") or a Regulatory Capital Event, as the
case may be.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of a nationally recognized tax counsel experienced in such matters to
the effect that, as a result of any amendment to, or change (including any
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<PAGE>
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 (a) amendment
or change is effective or (b) such pronouncement or decision is announced, on or
after January 31, 1997, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received or accrued on
the Junior Subordinated Debentures, (ii) interest payable by the Corporation on
the Junior Subordinated Debentures is not, or within 90 days of the date of such
opinion will not be, deductible by the Corporation, in whole or in part, for
United States federal income tax purposes, or (iii) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges (each of the
circumstances referred to in clauses (i), (ii) and (iii) being an "Adverse Tax
Consequence").
A "Regulatory Capital Event" means that the Corporation shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which (i) amendment
or change is effective or (ii) such pronouncement or decision is announced, on
or after January 31, 1997, the Capital Securities do not constitute, or within
90 days of the date of such opinion, will not constitute, Tier 1 Capital (or its
then equivalent); provided, however, that a Regulatory Capital Event shall not
occur by reason of the Corporation's use of the proceeds of the issuance of the
Old Junior Subordinated Debentures.
"Adjusted Treasury Rate" means, with respect to any prepayment date,
the rate per annum equal to (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
established yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity date corresponding to the Initial Optional Prepayment Date (if no
maturity date is within three months before or after the Initial Optional
Prepayment Date, yields for the two published maturities most closely
corresponding to the Initial Optional Prepayment Date shall be interpolated and
the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month) or (ii) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, the rate per annum equal
to the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such prepayment date plus, in either case (A) 1.90% if such prepayment date
occurs on or prior to February 1, 1998 and (B) 1.50% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity date corresponding to the
Initial Optional Prepayment Date that would be utilized at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities with a maturity date corresponding to the Initial
Optional Prepayment Date. If no United States Treasury security has a maturity
date which is within three months before or after the Initial Optional
Prepayment Date, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the calculation
of the Adjusted Treasury Rate pursuant to clause (ii) of the definition thereof
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation.
"Reference Treasury Dealer" means: (i) Goldman, Sachs & Co. and its
successors; provided, however, that if the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Corporation shall substitute therefor another Primary Treasury
Dealer, and (ii) any other Primary Treasury Dealer selected by the Corporation.
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<PAGE>
"Comparable Treasury Price" means, with respect to any prepayment
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of five Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
"Additional Sums" means such additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties or other governmental charges to which
the Trust has become subject as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each holder of Junior Subordinated
Debentures to be prepaid at its registered address. Unless the Corporation
defaults in payment of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Junior Subordinated Debentures called for
prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums.
Certain Covenants of the Corporation
The Corporation will also covenant that it will not, (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock) or (ii) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities of the Corporation (including Other Debentures) that rank pari
passu with or junior in right of payment to the Junior Subordinated Debentures
or (iii) make any guarantee payments with respect to any guarantee by the
Corporation of any securities of any subsidiary of the Corporation (including
Other Guarantees) if such guarantee ranks pari passu or junior in right of
payment to the Junior Subordinated Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholder's rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a direct result of, and only to the extent required in order
to avoid the issuance of fractional shares of capital stock following a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans) if at such time (1) a Debenture Event of Default occurs, (2)
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 be, a Debenture Event of Default and (b) in respect of which the
Corporation shall not have taken reasonable steps to cure, (3) the Corporation
shall be in default with respect to its payment of any obligations under the
Guarantee or (4) the Corporation shall have given notice of its
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<PAGE>
election of an Extension Period, or any extension thereof, as provided in the
Indenture and shall not have rescinded such notice, and such Extension Period,
or any extension thereof, shall have commenced.
The Corporation will also covenant (i) to maintain 100 percent
ownership of the Common Securities; provided, however, that any permitted
successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of the Common Securities, (ii) to use its reasonable
efforts to cause the Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (b) to continue not to
be classified as an association taxable as a corporation or a partnership for
United States federal income tax purposes and (iii) to use its reasonable
efforts to cause each holder of Trust Securities to be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) failure for 30 days to pay any interest on the Junior
Subordinated Debentures or any Other Debentures, when due (subject to
the deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the
Junior Subordinated Debentures or any Other Debentures when due
whether at maturity, upon redemption, by declaration of acceleration
of maturity or otherwise; or
(iii) failure to observe or perform in any material respect
certain other covenants contained in the Indenture for 90 days after
written notice to the Corporation from the Debenture Trustee or the
holders of at least 25% in aggregate outstanding principal amount of
Junior Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or
reorganization of the Corporation.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the nonpayment of the principal of the Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Junior Subordinated Debentures, waive any past default except
a default in the payment of principal of or premium, if any, on or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and premium, if any, and principal due otherwise than
by acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Junior
Subordinated Debenture.
The Indenture requires the annual filing by the Corporation with the
Debenture Trustee of a certificate as to the absence of certain defaults under
the Indenture.
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<PAGE>
The Indenture provides that the Debenture Trustee may withhold notice
of a Debenture Event of Default from the holders of the Junior Subordinated
Debentures (except a Debenture Event of Default in payment of principal of, or
of interest or premium on, the Junior Subordinated Debentures) if the Debenture
Trustee considers it in the interest of such holders to do so.
Enforcement of Certain Rights by Holders of New Capital Securities
If a Debenture Event of Default shall have occurred and be continuing
and shall be attributable to the failure of the Corporation to pay interest or
premium, if any, on or principal of the New Junior Subordinated Debentures on
the due date, a holder of New Capital Securities may institute a Direct Action.
The Corporation may not amend the Indenture to remove the foregoing right to
bring a Direct Action without the prior written consent of the holders of all of
the Capital Securities. Notwithstanding any payments made to a holder of New
Capital Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of or premium, if any,
or interest on the New Junior Subordinated Debentures, and the Corporation shall
be subrogated to the rights of the holder of such New Capital Securities with
respect to payments on the New Capital Securities to the extent of any payments
made by the Corporation to such holder in any Direct Action.
The holders of the New Capital Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the New Junior Subordinated Debentures. See
"Description of Capital 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 as an entirety or substantially as an entirety to any Person, and no
Person shall consolidate with or merge into the Corporation or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to the Corporation, unless: (i) in case the Corporation consolidates
with or merges into another Person or conveys or transfers its properties and
assets substantially as an entirety to any Person, the successor Person is
organized under the laws of the United States or any State or the District of
Columbia, and such successor Person expressly assumes the Corporation's
obligations on the Junior Subordinated Debentures; (ii) immediately after giving
effect thereto, no Debenture Event of Default, and no event which, after notice
or lapse of time or both, would become a Debenture Event of Default, shall have
occurred and be continuing; and (iii) the consolidation, transfer or sale will
not cause the Capital Securities to be downgraded by a nationally recognized
statistical rating organization. The Capital Securities are not currently rated
by any statistical rating organization.
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.
Modification of the Indenture
From time to time the Corporation and the Debenture Trustee may,
without the consent of the holders of Junior Subordinated Debentures, amend,
waive or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of
Junior Subordinated Debentures). The Indenture contains provisions permitting
the Corporation and the Debenture Trustee, with the consent of the holders of a
majority in principal amount of the Junior Subordinated Debentures, to modify
the Indenture in a manner affecting the rights of the holders of Junior
Subordinated Debentures; provided that no such modification may, without the
consent of the holders of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity Date, reduce the principal amount of
the Junior Subordinated Debentures or reduce the rate or extend the time of
payment of interest thereon or (ii) reduce the percentage of principal amount of
Junior Subordinated Debentures the holders of which are required to consent to
any such modification of the Indenture.
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<PAGE>
Satisfaction and Discharge
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity within one year or are to be called for redemption within one year
under arrangements satisfactory to the Debenture Trustee for giving of notice of
redemption, and the Corporation deposits or causes to be deposited with the
Debenture Trustee funds, in trust, for the purpose and in an amount sufficient
to pay and discharge the entire indebtedness on the Junior Subordinated
Debentures not previously delivered to the Debenture Trustee for cancellation,
for the principal and premium, if any, and interest to the date of redemption or
to the Stated Maturity Date, as the case may be, then the Indenture will cease
to be of further effect (except as to the Corporation's obligations to pay all
other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Corporation
will be deemed to have satisfied and discharged the Indenture.
Subordination
In the Indenture, the Corporation has covenanted and agreed that any
Junior Subordinated Debentures will be subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided in the Indenture. Upon
any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Indebtedness
will first be entitled to receive payment in full of all Senior Indebtedness
before the holders of Junior Subordinated Debentures will be entitled to receive
or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior
Subordinated Debentures, the holders of all Senior Indebtedness outstanding at
the time of such acceleration will first be entitled to receive payment in full
of all such Senior Indebtedness before the holders of Junior Subordinated
Debentures will be entitled to receive or retain any payment in respect of the
Junior Subordinated Debentures.
No payments on account of principal or premium, if any, or interest,
if any, in respect of the Junior Subordinated Debentures may be made if there
shall have occurred and be continuing a default in any payment with respect to
Senior Indebtedness, or an event of default with respect to any Senior
Indebtedness resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any such default.
"Indebtedness" shall mean (i) any obligation of, or any obligation
guaranteed by, the Corporation for the repayment of borrowed money, whether or
not evidenced by bonds, debentures, notes or other written instruments and any
deferred obligation for the payment of the purchase price of property or assets
acquired other than in the ordinary course of business and (ii) all indebtedness
of the Corporation for claims in respect of derivative products such as interest
and foreign exchange rate contracts, commodity contracts and similar
arrangements, whether outstanding on the date of execution of the Indenture or
thereafter created, assumed or incurred. For purposes of this definition "claim"
shall have the meaning assigned in Section 101(5) of the Bankruptcy Code of
1978, as amended and in effect on the date of the execution of the Indenture.
"Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures" shall mean Indebtedness, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, which
specifically by its terms ranks equally with and not prior to the Junior
Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation.
The securing of any Indebtedness, otherwise constituting Indebtedness Ranking on
a Parity with the Junior Subordinated Debentures, shall not be deemed to prevent
such Indebtedness from constituting Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures"
shall mean any Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, which
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<PAGE>
specifically by its terms ranks junior to and not equally with or prior to the
Junior Subordinated Debentures (and any other Indebtedness Ranking on a Parity
with the Junior Subordinated Debentures) in right of payment upon the happening
of the dissolution or winding-up or liquidation or reorganization of the
Corporation. The securing of any Indebtedness, otherwise constituting
Indebtedness Ranking Junior to the Junior Subordinated Debentures, shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated Debentures,
and any deferrals, renewals or extensions of such Senior Indebtedness.
The Corporation is a non-operating holding company and almost all of
the operating assets of the Corporation are owned by the Corporation's
subsidiary, Investors Bank & Trust Company (the "Bank"). The Corporation relies
primarily on dividends from the Bank to meet its expenses and obligations. The
Corporation is a legal entity separate and distinct from its banking and non-
banking affiliates. The principal sources of the Corporation's income are
dividends from the Bank. The Bank is subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions with,
the Corporation and certain other affiliates, and on investments in stock or
other securities thereof. Such restrictions prevent the Corporation and such
other affiliates from borrowing from the Bank unless the loans are secured by
various types of collateral. Further, such secured loans, other transactions and
investments by the Bank are generally limited in amount as to the Corporation
and as to each of such other affiliates to 10% of the Bank's capital and surplus
and as to the Corporation and all of such other affiliates to an aggregate of
20% of the Bank's capital and surplus. In addition, payment of dividends to the
Corporation by the Bank is subject to ongoing review by banking regulators and
is subject to various statutory limitations and in certain circumstances
requires approval by banking regulatory authorities. Accordingly, the New Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries. Holders of New Junior
Subordinated Debentures should look only to the assets of the Corporation for
payments of interest, principal and premium, if any.
The Indenture places no limitation on the amount of Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur indebtedness constituting Senior Indebtedness.
Restrictions on Transfer
The New Junior Subordinated Debentures will be issued and may be
transferred only in blocks having an aggregate principal amount of not less than
$100,000. Any such transfer of New Junior Subordinated Debentures in a block
having an aggregate principal amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed not
to be holder of such New Junior Subordinated Debentures for any purpose,
including but not limited to the receipt of payments on such Junior Subordinated
Debentures, and such transferee shall be deemed to have no interest whatsoever
in such New Junior Subordinated Debentures.
Governing Law
The Indenture, the Old Junior Subordinated Debentures and the New
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
Following the Exchange Offer and the qualification of the Indenture
under the Trust Indenture Act, the Debenture Trustee shall have and be subject
to all the duties and responsibilities specified with respect to an indenture
trustee under the Trust Indenture Act. Subject to such provisions, the Debenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of New Junior Subordinated Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and
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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.
DESCRIPTION OF THE NEW GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Old Capital Securities for
the benefit of the holders from time to time of the Old Capital Securities.
Promptly after the Expiration Date, the New Guarantee will be issued by the
Corporation for the benefit of the holders from time to time of the New Capital
Securities. The Bank of New York will act as indenture trustee ("Guarantee
Trustee") under the New Guarantee. The New Guarantee has been qualified under
the Trust Indenture Act. The following provides a description of the material
features of the New Guarantee and the rights of the holders of the New Capital
Securities under the New Guarantee but does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of the New Guarantee (a form of which has been filed as on exhibit to the
Registration Statement of which this Prospectus forms a part and is incorporated
by reference herein; see "Available Information"), including the definitions
therein of certain terms, and the Trust Indenture Act. The Guarantee Trustee
will hold the New Guarantee for the benefit of the holders of the New Capital
Securities.
General
The Corporation will irrevocably and unconditionally 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 New Capital Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert other than the defense of payment. The following
payments with respect to the New Capital Securities, to the extent not paid by
or on behalf of the Trust (the "Guarantee Payments"), will be subject to the New
Guarantee: (i) any accumulated and unpaid Distributions required to be paid on
New Capital Securities, to the extent the Trust has funds on hand legally
available therefor, (ii) the Redemption Price with respect to any New Capital
Securities called for redemption, to the extent that the Trust has funds on hand
legally available therefor, or (iii) upon a voluntary or involuntary termination
and liquidation of the Trust (unless the New Junior Subordinated Debentures are
distributed to holders of the New Capital Securities), the lesser of (a) the
Liquidation Distribution, to the extent the Trust has funds on hand legally
available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to holders of New Capital Securities. The
Corporation's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Corporation to the holders of the New
Capital Securities or by causing the Trust to pay such amounts to such holders.
The New Guarantee will rank subordinate and junior in right of payment
to all Senior Indebtedness to the extent provided therein. See "-- Status"
below. Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise is subject to the
prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the New Guarantee 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 "Description of New Junior Subordinated
Debentures -- General." The New Guarantee does not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including Senior
Indebtedness, whether under the Indenture, any other indenture that the
Corporation may enter into in the future or otherwise.
The Corporation will, through the New Guarantee, the Declaration, the
New Junior Subordinated Debentures and the Indenture, taken together, fully,
irrevocably and unconditionally guarantee all of the Trust's obligations under
the New Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and new unconditional guarantee of the
Trust's
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obligations under the New Capital Securities. See "Relationship Among
the New Capital Securities, the New Junior Subordinated Debentures and the New
Guarantee."
Status
The New Guarantee will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in right of payment to all
Senior Indebtedness in the same manner as the New Junior Subordinated
Debentures.
The New Guarantee will rank pari passu with the Junior Subordinated
Debentures, the Old Guarantee and with all other guarantees (if any) issued by
the Corporation after the Expiration Date with respect to capital securities (if
any) issued by Other Trusts. The New 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 New
Guarantee without first instituting a legal proceeding against any other person
or entity). The New Guarantee will be held for the benefit of the holders of the
New Capital Securities. The New Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Trust or
upon distribution to the holders of the New Capital Securities of the New Junior
Subordinated Debentures. The New Guarantee does not place a limitation on the
amount of Senior Indebtedness that may be incurred by the Corporation. The
Corporation expects from time to time to incur indebtedness constituting Senior
Indebtedness.
Events of Default
An event of default under the New Guarantee will occur upon the
failure of the Corporation to perform any of its payment or other obligations
thereunder. The holders of a majority in Liquidation Amount of the New Capital
Securities will have the right to (i) waive any past event of default under the
New Guarantee and its consequences, whereby such event of default shall cease to
exist and any event of default under the New Guarantee arising therefrom shall
be deemed to have been cured for every purpose of the New Guarantee, and
(ii) direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the New Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the New Guarantee.
Any holder of the New Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the New
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, will be required to file annually with
the Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the New
Guarantee.
Certain Covenants of the Corporation
In the New Guarantee, the Corporation will covenant that, so long as
any New Capital Securities remain outstanding, if there shall have occurred any
event that is or would constitute an event of default under the New Guarantee,
that is continuing, or the Declaration, then the Corporation will not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Corporation's capital
stock (which includes common and preferred stock), (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including any Other Debentures) that rank
pari passu with or junior in right of payment to the New Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Corporation of any securities of any subsidiary of the Corporation
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the New Junior Subordinated Debentures (other than
(a) dividends or distributions in shares of, or options, warrants, or rights to
subscribe for or purchase shares of, common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
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payments under the New Guarantee, (d) as a direct result of, and only to the
extent required in order to avoid the issuance of fractional shares of capital
stock following a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
for another class or series of the Corporation's capital stock, (e) the purchase
of fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
Amendments and Assignment
Except with respect to any changes that do not materially adversely
affect the rights of holders of the New Capital Securities (in which case no
approval will be required), the New Guarantee may not be amended without the
prior approval of the holders of a majority of the Liquidation Amount of such
outstanding New Capital Securities. The manner of obtaining any such approval
will be as set forth under "Description of New Capital Securities -- Voting
Rights; Amendment of the Declaration." All guarantees and agreements contained
in the New Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the New Capital Securities then outstanding.
Termination
The New Guarantee will terminate and be of no further force and effect
upon full payment of the applicable Redemption Price of the New Capital
Securities, upon full payment of the Liquidation Amount payable upon liquidation
of the Trust or upon distribution of the New Junior Subordinated Debentures to
the holders of the New Capital Securities. The New Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the New Capital Securities must restore payment of any sums paid under the
New Capital Securities or the New Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee may be appointed or removed by the Corporation
without cause at any time, except during an event of default under the New
Guarantee. The Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the New Guarantee at the request of any holder of New
Capital Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby. The Guarantee Trustee
is not required to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if it reasonably believes
that repayment or adequate indemnity is not reasonably assured to it.
The Corporation or its affiliates maintain certain business
relationships with the Guarantee Trustee and its affiliates in the ordinary
course of business.
Governing Law
The New Guarantee will be governed by, and construed in accordance
with, the internal laws of the State of New York.
DESCRIPTION OF COMMON SECURITIES
All of the Common Securities are owned directly by the Corporation.
The Common Securities rank pari passu, and payments will be made thereon pro
rata, with the Capital Securities, except that upon the occurrence and during
the continuance of an Event of Default, the rights of the Corporation as holder
of the Common Securities to payments in respect of Distributions and payments
upon liquidation, redemption or otherwise will be subordinated and rank junior
to the rights of the holders of the Capital Securities. See "Description of New
Securities -- Description of New Capital Securities -- Subordination of Common
Securities." The Corporation has acquired
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Common Securities in a Liquidation Amount equal to 3% of the total capital of
the Trust. The Trust has a term of 31 years, but may terminate earlier as
provided in the Declaration. The Trust's business and affairs will be conducted
by trustees appointed by the Corporation as the direct holder of the Common
Securities. The holder of the Common Securities or, if an Event of Default under
the Declaration has occurred and is continuing, the holders of a majority in
Liquidation Amount of the Capital Securities, will be entitled to appoint,
remove or replace the Property Trustee and/or the Delaware Trustee. In no event
will the holders of the Capital Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights will be vested
exclusively in the holder of the Common Securities.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities and the New Securities are identical
in all material respects except that: (i) the Old Securities have not been
registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the applicable Registration
Rights Agreement (which rights will terminate upon consummation of the Exchange
Offer), (ii) the New Capital Securities will not contain certain restrictions on
transfer applicable to Old Capital Securities, (iii) the New Capital Securities
will not provide for any increase in the Distribution rate thereon, and (iv) the
New Junior Subordinated Debentures will not provide for any increase in the
interest rate thereon. The Old Securities provide that, in the event that a
registration statement relating to the Exchange Offer has not been filed by June
30, 1997 and been declared effective by July 30, 1997, or, in certain limited
circumstances, in the event a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Old Capital
Securities is not declared effective by July 30, 1997, then interest will accrue
(in addition to the stated interest rate on the Old Junior Subordinated
Debentures) at the rate of 0.25% per annum on the principal amount of the Old
Junior Subordinated Debentures and Distributions will accrue (in addition to the
stated Distribution rate on the Old Capital Securities) at the rate of 0.25% per
annum on the Liquidation Amount of the Old Capital Securities, for the period
from July 1, 1997, in the case of untimely filing or July 31, 1997 in the case
of failure to achieve timely effectiveness, as the case may be, until such time
as such required filing or effectiveness is achieved. The New Securities are
not, and upon consummation of the Exchange Offer the Old Securities will not be,
entitled to any such additional interest or Distributions. Accordingly, holders
of Old Capital Securities should review the information set forth under "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities" and
"Description of New Securities."
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES, THE
NEW JUNIOR SUBORDINATED DEBENTURES AND THE NEW GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the New Capital
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by the Corporation
as and to the extent set forth under "Description of the New Guarantee." Taken
together, the Corporation's obligations under the New Junior Subordinated
Debentures, the Indenture, the Declaration and the New Guarantee will provide,
in the aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the New Capital Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the New Capital
Securities. If and to the extent that the Corporation does not make the required
payments on the New Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including Distributions, on the
New Capital Securities. The New Guarantee will not cover any such payment when
the Trust does not have sufficient funds on hand legally available therefor. In
such event, the remedy of a holder of New Capital Securities is to institute a
Direct Action. The obligations of the Corporation under the New Guarantee will
be subordinate and junior in right of payment to all Senior Indebtedness.
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Obligation to Make Payments/Sufficiency of Payments
Pursuant and subject to the terms of the New Junior Subordinated
Debentures and the Indenture, including the Corporation's right to defer
interest payments, the Corporation is unconditionally obligated to make interest
payments on the New Junior Subordinated Debentures, and such interest payments
and payments made on the maturity or earlier redemption of the New Junior
Subordinated Debentures will be sufficient to make corresponding Distributions
and Redemption Payments on the Trust Securities, generally, and the New Capital
Securities, specifically, for the following reasons: (i) the aggregate principal
amount or Prepayment Price of the New Junior Subordinated Debentures will be
equal to the sum of the Liquidation Amount or Redemption Price, as applicable,
of the New Capital Securities; (ii) the interest rate and interest and other
payment dates on the New Junior Subordinated Debentures will match the
Distribution rate and Distribution and other payment dates for the New Capital
Securities; (iii) the Corporation shall pay for all and any costs, expenses and
liabilities of the Trust except the Trust's obligations to holders of Trust
Securities under such Trust Securities; and (iv) the Declaration will provide
that the Trust is not authorized to engage in any activity that is not
consistent with the limited purposes thereof.
The liquidation of the Trust could occur in two different situations.
First, liquidation could take place on the maturity or earlier redemption of the
New Junior Subordinated Debentures. As discussed in the preceding paragraph, the
amount paid by the Corporation to the Trust to effect the redemption of the New
Junior Subordinated Debentures will be sufficient to enable the Trust to make
corresponding Redemption Payments on the Trust Securities. Second, if the Trust
is liquidated while the New Junior Subordinated Debentures are still
outstanding, the Declaration provides, after satisfaction of liabilities to
creditors of the Trust as required by applicable law, that the New Junior
Subordinated Debentures will be distributed pro rata to holders of the Trust
Securities.
Enforcement of Rights of Holders of New Capital Securities
A holder of any New Capital Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Trust or any other person or entity.
In addition, pursuant to the Declaration, the Property Trustee has
legal title to the New Junior Subordinated Debentures and holds the New Junior
Subordinated Debentures in trust for the benefit of the holders of the Trust
Securities. The Property Trustee has the authority under the Declaration to
exercise all rights as the holder of the New Junior Subordinated Debentures
under the Indenture for the benefit of the holders of the Trust Securities,
including the right to enforce the Corporation's obligations under the Indenture
upon the occurrence of an Event of Default. The holders of the New Capital
Securities, in turn, have the authority under the Declaration to direct the
Property Trustee as to the enforcement of those rights. If the Property Trustee
fails to enforce its rights under the New Junior Subordinated Debentures, any
holder of New Capital Securities may, pursuant to the terms of the Declaration,
institute a legal proceeding directly against the Corporation to enforce the
Property Trustee's rights under the New Junior Subordinated Debentures without
first instituting any legal proceeding against the Property Trustee or any other
person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing and such event is attributable to the failure of the Corporation
to pay interest or principal on the New Junior Subordinated Debentures on the
date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of New Capital Securities may
also directly institute a proceeding against the Corporation for enforcement of
payment to such holder of the principal of or interest on the New Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the New Capital Securities of such holder. Such proceeding
may be directly instituted against the Corporation without first (i) directing
the Property Trustee to enforce the terms of the New Junior Subordinated
Debentures or (ii) instituting a legal proceeding against the Corporation to
enforce the Property Trustee's rights under the New Junior Subordinated
Debentures.
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A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Declaration. However, in the
event of payment defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Indenture will provide that no payments may be
made in respect of the New Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on New Junior Subordinated
Debentures would constitute an Event of Default under the Declaration.
Limited Purpose of the Trust
The New Capital Securities will represent preferred undivided
beneficial interests in the assets of the Trust, and the Trust exists for the
sole purpose of issuing and selling the Trust Securities, using the proceeds
from the sale of the Trust Securities to acquire the Junior Subordinated
Debentures and engaging in only those other activities necessary, advisable or
incidental thereto.
Rights Upon Termination
Unless the Junior Subordinated Debentures are distributed to holders
of the Trust Securities, upon any voluntary or involuntary termination and
liquidation of the Trust, the holders of the Trust Securities will be entitled
to receive, out of assets held by the Trust, after satisfaction of liabilities
to creditors of the Trust as required by applicable law, the Liquidation
Distribution in cash. See "Description of New Securities -- Description of New
Capital Securities -- Liquidation of the Trust and Distribution of New Junior
Subordinated Debentures." Upon any voluntary or involuntary liquidation or
bankruptcy of the Corporation, the Property Trustee, as holder of the New Junior
Subordinated Debentures, would be a subordinated creditor of the Corporation,
subordinated in right of payment to all Senior Indebtedness as set forth in the
Indenture, but entitled to receive payment in full of principal (and premium, if
any) and interest, before any stockholders of the Corporation receive payments
or distributions. Since the Corporation will be the guarantor under the New
Guarantee and will agree to pay for all costs, expenses and liabilities of the
Trust (other than the Trust's obligations to the holders of its Trust
Securities), the positions of a holder of New Capital Securities and a holder of
New 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.
FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of Testa, Hurwitz & Thibeault, LLP, counsel to the
Corporation and the Trust ("Tax Counsel"), the following is a summary of the
material United States federal income tax consequences of the acquisition
by exchange, ownership and disposition of New Capital Securities held as capital
assets by a holder that acquired the Old Capital Securities upon initial
issuance at their original offering price. It does not deal with special classes
of holders such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, or persons that will hold the Capital Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Capital
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Capital Securities. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder, and the administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis.
Exchange of Capital Securities
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Under current law, it is more likely than not that the exchange of Old
Capital Securities for New Capital Securities will not be a taxable event to
holders for United States federal income tax purposes. Under current law, it is
more likely than not that the exchange of Old Capital Securities for New Capital
Securities pursuant to the Exchange Offer will not be treated as an "exchange"
for United States federal income tax purposes because it is more likely than not
that the New Capital Securities will not be considered to differ materially in
kind or extent from the Old Capital Securities and because the exchange will
occur by operation of the terms of the Old Capital Securities. If, however, the
exchange of the Old Capital Securities for the New Capital Securities were
treated as an exchange for United States federal income tax purposes, under
current law it is more likely than not that such exchange will constitute a
recapitalization for United States federal income tax purposes. Assuming that
for United States federal income tax purposes, the exchange of Old Capital
Securities for New Capital Securities were either not treated as an exchange, or
treated as an exchange and recapitalization, the holder will not recognize any
gain or loss on such exchange, the New Capital Securities will have the same
issue price as the Old Capital Securities, and a holder will have the same
adjusted tax basis and holding period in the New Capital Securities as the
holder had in the Old Capital Securities immediately before the exchange.
If the exchange for Old Capital Securities for New Capital Securities
were treated as an exchange, but not as a recapitalization, that exchange would
be treated, for United States federal income tax purposes, as a taxable
disposition of the Old Capital Securities. See "--Sales of Capital Securities."
Although the Treasury Department has released guidance regarding the United
States federal income tax consequences of certain modifications to, and
transfers of, debt instruments, that guidance does not directly address the tax
consequences of instruments such as the Capital Securities, and neither the IRS
nor the courts have interpreted such guidance as applied to exchanges of
instruments such as the Capital Securities. Accordingly, United States federal
income tax consequences of such exchanges cannot be definitively stated.
Classification of the Junior Subordinated Debentures
In connection with the issuance of the Old Junior Subordinated
Debentures, Tax Counsel has rendered its opinion generally to the effect that,
under current law and assuming full compliance with the terms of the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Old Junior Subordinated Debentures
are classified for United States federal income tax purposes as indebtedness of
the Corporation. An opinion of Tax Counsel, however, is not binding on the IRS
or the courts. Prospective investors should note that no rulings have been or
are expected to be sought from the IRS with respect to any of these issues and
no assurance can be given that the IRS will not take contrary positions.
Moreover, no assurance can be given that any of the opinions expressed herein
will not be challenged by the IRS or, if challenged, that such a challenge would
not be successful.
Classification of the Trust
In connection with the issuance of the Old Capital Securities, Tax
Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Declaration and
the Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust is classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures, and each holder will
be required to include in its gross income any interest (or OID accrued) with
respect to its allocable share of those Junior Subordinated Debentures.
Interest Income and Original Issue Discount
Under recently issued Treasury regulations (the "Regulations")
applicable to debt instruments issued on or after August 13, 1996, a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The Corporation
believes that the likelihood of its exercising its option to defer payments of
interest is "remote" since exercising that option would prevent the Corporation
from declaring dividends on any class of its equity securities. Accordingly, the
Corporation intends to take the position, based on the advice of Tax Counsel,
that the Junior Subordinated Debentures will not be considered to be issued with
OID and, accordingly, stated interest on the Junior Subordinated Debentures
generally will be taxable to a holder as ordinary income at the time it is paid
or accrued in accordance with such holder's method of accounting.
Under the Regulations, if the Corporation were to exercise its option
to defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though the
Corporation would
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not make actual cash payments during an Extension Period. Moreover, under the
Regulations, if the option to defer the payment of interest was determined not
to be "remote," the Junior Subordinated Debentures would be treated as having
been originally issued with OID. In such event, all of a holder's taxable
interest income with respect to the Junior Subordinated Debentures would be
accounted for on an economic accrual basis regardless of such holder's method of
tax accounting, and actual distributions of stated interest would not be
reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or
OID, corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust
The Corporation will have the right at any time to liquidate the Trust
and, after satisfaction of liabilities to creditors of the Trust as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities. Under current law, such a distribution, for
United States federal income tax purposes, would be treated as a nontaxable
event to each holder, and each holder would have an aggregate tax basis in the
Junior Subordinated Debentures equal to such holder's aggregate tax basis in its
Capital Securities. A holder's holding period in the Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder. If, however, the
Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of its dissolution, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities. If the distribution were taxable to
holders of Capital Securities, a holder would recognize gain or loss as if the
holder had exchanged its Capital Securities for the Junior Subordinated
Debentures it received upon the liquidation of the Trust, and a holder's holding
period in Junior Subordinated Debentures would begin on the date such Junior
Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of New
Securities -- Description of New Capital Securities"), the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Capital Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Capital Securities, and a
holder could recognize gain or loss as if the holder sold its proportionate
interest in the redeemed Junior Subordinated Debentures for an amount of cash
equal to the proceeds received upon redemption. See "-- Sales of Capital
Securities" below.
Sales of Capital Securities
A holder that sells Capital Securities (including a redemption of the
Capital Securities either on the Stated Maturity Date or upon an optional
redemption of the Junior Subordinated Debentures by the Corporation) will
recognize capital gain or loss equal to the difference between its adjusted tax
basis in the Capital Securities and the amount realized on the sale of such
Capital Securities (other than with respect to accrued and unpaid interest which
has not yet been included in income, which will be treated as ordinary income).
Such capital gain or loss will be long-term capital gain or loss if the holding
period of the Capital Securities exceeds one year. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
A holder's adjusted tax basis in the Capital Securities generally will
be its initial purchase price increased by OID (if any) previously includable in
such holder's gross income to the date of disposition and decreased by payments
(if any) received on the Capital Securities in respect of OID. A holder who uses
the accrual method of accounting for tax purposes (and a cash method holder, if
the Junior Subordinated Debentures are deemed to have been issued with OID) who
disposes of such holder's Capital Securities between record dates for payments
of distributions thereon will be required to include accrued but unpaid interest
on the Junior Subordinated Debentures
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through the date of disposition in income as ordinary income (i.e., interest or,
possibly, OID), and to add such amount to such holder's adjusted tax basis in
such holder's pro rata share of the underlying Junior Subordinated Debentures
deemed disposed of.
Proposed Tax Legislation
On February 6, 1997, as part of the Clinton Administration's Fiscal
1998 Budget Proposal, the Treasury Department proposed legislation (the
"Proposed Legislation") which would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the New Junior Subordinated Debentures, if such debt
obligations had a maximum term in excess of 15 years and are not shown as
indebtedness on the issuer's applicable consolidated balance sheet. The Proposed
Legislation applies to debt obligations issued on or after the date of "first
committee action." The United States House of Representative and Senate tax-
writing committees have released their respective proposals for the 1997 budget
reconciliation bill. The Proposed Legislation was not in such proposals, and, as
of the date of this Prospectus, the House and Senate bills are awaiting action
by the conference committee. If the Proposed Legislation or other legislation is
enacted by Congress and if it gives rise to a Tax Event, the Trust would be
permitted to cause a redemption of the Trust Securities at the Special Event
Redemption Price by electing to prepay the Junior Subordinated Debentures at the
Special Event Redemption Price. See "Description of New Securities --
Description of New Capital Securities -- Special Redemption" and "-- Description
of New Junior Subordinated Debentures -- Conditional Right to Advance Maturity
and Special Event Prepayment."
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
For taxable years beginning after December 31, 1996, a "U.S. Holder"
is a holder of Capital Securities who or which is a citizen or individual
resident (or is treated as a citizen or individual resident) of the United
States for federal income tax purposes, a corporation or partnership created or
organized (or treated as created or organized for federal income tax purposes)
in or under the laws of the United States or any political subdivision thereof,
an estate the income of which is includable in its gross income for federal
income tax purposes without regard to its source or a trust if, and only if,
(i) a court within the United States is able to exercise primary supervision
over the administration of the trust and (ii) one or more United States trustees
have the authority to control all substantial decisions of the trust.
Under present United States federal income tax laws: (i) payments by
the Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the Capital
Security does not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of the Corporation entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Corporation through stock ownership,
and (c) either (A) the beneficial owner of the Capital Security certifies to the
Trust or its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Capital Security in such capacity, certifies to the
Trust or its agent, under penalties of perjury, that such statement has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and furnishes the Trust or its agent with a copy
thereof; and (ii) a United States Alien Holder of a Capital Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Capital Security.
As discussed above, changes in legislation affecting the United States
federal income tax treatment of the Junior Subordinated Debentures are possible,
and could adversely affect the ability of the Corporation to deduct the interest
payable on the Junior Subordinated Debentures. Moreover, any such legislation
could adversely affect United States Alien Holders by characterizing income
derived from the Junior Subordinated Debentures as
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dividends, generally subject to a 30% income tax (on a withholding basis) when
paid to a United States Alien Holder, rather than as interest which, as
discussed above, is generally exempt from income tax in the hands of a United
States Alien Holder.
A United States Alien Holder that holds Capital Securities in
connection with the active conduct of a United States trade or business will be
subject to income tax on all income and gains recognized with respect to its
proportionate share of the Junior Subordinated Debentures.
Information Reporting to Holders
Generally, income on the Capital Securities will be reported to
holders on Forms 1099, which forms should be mailed to holders of Capital
Securities by January 31 following each calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the Capital
Securities may be subject to a "backup" withholding tax of 31 percent unless the
holder complies with certain identification requirements. Any withheld amounts
will be allowed as a credit against the holder's United States federal income
tax, provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND DOES NOT TAKE INTO ACCOUNT EVERY
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL AND FOREIGN TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL TAX LAWS.
ERISA CONSIDERATIONS
The Corporation, the obligor with respect to the New Junior
Subordinated Debentures held by the Trust, and its affiliates and the Property
Trustee may be considered a "party in interest" (within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA. Any
purchaser proposing to acquire New Capital Securities with assets of any Plan
should consult with its counsel. The purchase and/or holding of New Capital
Securities by a Plan that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975 of the Code
(including individual retirement arrangements and other plans described in
Section 4975(e)(1) of the Code) and with respect to which the Corporation, the
Property Trustee or any affiliate is a service provider (or otherwise is a party
in interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such New Capital
Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), PTCE 95-60
(an exemption for transactions involving certain insurance company general
accounts) or PTCE 96-23 (an exemption for certain transactions determined by an
in-house asset manager). In addition, a Plan fiduciary considering the
acquisition of New Capital Securities should be aware that the assets of the
Trust may be considered "plan assets" for ERISA purposes. Therefore, a plan
fiduciary should consider whether the acquisition of New Capital Securities
could result in a delegation of fiduciary authority to the Property Trustee,
and, if so, whether such a delegation of authority is permissible under the
Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of section 3(38) of ERISA).
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Under the U.S. Department of Labor regulations defining "plan assets"
for ERISA purposes (the "Plan Assets Regulations"), the assets of the Trust will
be considered plan assets of Plans owning New Capital Securities unless the
aggregate investment in New Capital Securities by "benefit plan investors" is
not deemed "significant" or the New Capital Securities qualify as "publicly
offered securities" as defined in such Regulations. For this purpose, equity
participation by benefit plan investors will not be considered "significant" on
any date only if, immediately after the most recent acquisition of Capital
Securities, the aggregate interest in the New Capital Securities held by benefit
plan investors will be less than 25% of the value of the New Capital Securities.
Although it is possible that the equity participation by benefit plan investors
in New Capital Securities on any date will not be "significant" for purposes of
the Plan Assets Regulations, such result cannot be assured.
The New Capital Securities may qualify as "publicly offered
securities" under the Plan Assets Regulations if at the time of the Exchange
Offer they are also "widely held" and "freely transferable." Under the
Regulations, a class of securities is "widely held" only if it is a class of
securities that is owned by 100 or more investors independent of the issuer and
of one another. Although it is possible that at the time of the Exchange Offer
the New Capital Securities will be "widely held," such result cannot be assured.
Whether a security is "freely transferable" for purposes of the Regulations is a
factual question to be determined on the basis of all relevant facts and
circumstances. If at the time of the Exchange Offer the New Capital Securities
qualify as "publicly offered securities," the assets of the Trust should not be
"plan assets" with respect to Plans acquiring New Capital Securities. If at the
time of the Exchange Offer the New Capital Securities do not qualify as
"publicly offered securities," the "Plan asset" considerations discussed in the
preceding paragraphs could be applicable in connection with the investment by
Plans in the New Capital Securities.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers during the period referred to
below in connection with resales of New Capital Securities received in exchange
for Old Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such New Capital Securities for a period ending 90 days after the Expiration
Date (subject to extension under certain limited circumstances described herein)
or, if earlier, when all such New Capital Securities have been disposed of by
such Participating Broker-Dealer. However, a Participating Broker-Dealer who
intends to use this Prospectus in connection with the resale of New Capital
Securities received in exchange for Old Capital Securities pursuant to the
Exchange Offer must notify the Corporation or the Trust, or cause the
Corporation or the Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be given in the space
provided for that purpose in the Letter of Transmittal or may be delivered to
the Exchange Agent at one of the addresses set forth herein under "The Exchange
Offer -- Exchange Agent." See "The Exchange Offer -- Resales of New Capital
Securities."
The Corporation or the Trust will not receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. New Capital
Securities received by broker-dealers for their own accounts in connection with
the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such New Capital Securities.
Any broker-dealer that resells New Capital Securities that were
received by it for its own account in connection with the Exchange Offer and any
broker or dealer that participates in a distribution of such New Capital
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Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Capital Securities and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
The validity of the New Junior Subordinated Debentures and the New
Guarantee and certain matters relating thereto will be passed upon for the
Corporation by Testa, Hurwitz & Thibeault, LLP and Brown & Wood LLP. Testa,
Hurwitz & Thibeault, LLP will rely on the opinion of Brown & Wood LLP with
respect to matters of New York law. Certain matters relating to United States
Federal income tax considerations will also be passed upon for the Corporation
by Testa, Hurwitz & Thibeault, LLP. Certain matters of Delaware law relating to
the validity of the New Capital Securities will be passed upon on behalf of the
Corporation by Richards, Layton & Finger, P.A., special Delaware counsel to the
Corporation and the Trust.
INDEPENDENT AUDITORS
The consolidated financial statements of the Corporation incorporated
herein by reference from the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996 have been audited by Deloitte & Touche, LLP,
independent auditors, as stated in their reports included therein, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm, given on their authority as experts in accounting and
auditing.
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<TABLE>
<CAPTION>
Terms As Defined In: Page:
----- -------------- -----
<S> <C> <C>
Adjusted Treasury Rate Description Of New Securities -- Description of New 53
Junior Subordinated Debentures -- Conditional Right
to Advance Maturity and Special Event Prepayment
Administrative Trustees Investors Capital Trust I 28
Adverse Tax Consequence Description Of New Securities -- Description of 52
New Junior Subordinated Debentures -- Conditional
Right to Advance Maturity and Special Event
Prepayment
Agent's Message The Exchange Offer -- Acceptance for Exchange and 31
Issuance of New Capital Securities
Bank Risk Factors -- Risk of Non-Payment of Obligations 17
Under the Guarantee and the Junior Subordination
Debentures Due to Subordinate Ranking
book-entry confirmation The Exchange Offer -- Acceptance for Exchange and 31
Issuance of New Capital Securities
Business Day Description of New Securities -- Description of New 39
Capital Securities -- Distribution
Capital Securities Cover Page 3
CEBA Investors Financial Services Corp. 29
Code Federal Income Tax Consequences -- General 64
Commission Available Information 6
Common Guarantee Cover Page 5
Common Securities Cover Page 1
Common Stock Investors Financial Services Corp. 29
Comparable Treasury Issue Description of New Securities -- Description of New 53
Junior Subordinated Debentures -- Conditional Right
to Advance Maturity and Special Event Prepayment
Comparable Treasury Price Description of New Securities -- Description of New 53
Junior Subordinated Debentures -- Condition Right
to Advance Maturity and Special Event Prepayment
Conditional Tax Redemption Event Description of New Securities -- Description of 40
New Capital Securities -- Conditional Right to
Advance Maturity and Special Event Redemption
Corporation Cover Page 1
</TABLE>
73
<PAGE>
<TABLE>
<S> <C> <C>
Debenture Event of Default Description of New Securities -- Description of New 54
Junior Subordinated Debentures -- Debenture Events
of Default
Debenture Trustee Cover Page 4
Declaration Cover Page 4
Delaware Trustee Cover Page 5
Depositary Description of New Securities -- Description of 47
New Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfer
Direct Action Risk Factors -- Limit on Holders' Enforcement of 21
Rights Under the Guarantee
Distribution Date Summary -- Distribution Dates 13
Distributions Cover Page 3
DTC The Exchange Offer -- Purpose of the Exchange Offer 29
Eaton Vance Investors Financial Services Corp. 28
Eligible Institution The Exchange Offer -- Procedures for Tendering Old 33
Capital Securities -- Signature Guarantees
ERISA ERISA Considerations 68
Event of Default Description of New Securities -- Description of New 43
Capital Securities -- Events of Default, Notice
Exchange Act Available Information 6
Exchange Agent Summary -- The Exchange Offer -- Exchange Agent 12
Exchange Offer Summary -- The Exchange Offer -- Exchange Offer 8
Expiration Date Cover Page 4
Extension Period Cover Page 3
Financial Institution Federal Income Tax Consequences -- United States 67
Alien Holders
Global Capital Securities Description of New Securities -- Description of 46
New Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfer
Global New Capital Securities Description of New Securities -- Description of 46
New Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfer
Guarantee Cover Page 5
Guarantee Payments Description of New Securities -- Description of 59
the New Guarantee -- General
</TABLE>
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<TABLE>
<S> <C> <C>
Guarantee Trustee Description of New Securities -- Description of 58
the New Guarantee
Indebtedness Description of New Securities -- Description of 57
New Junior Subordinated Debentures -- Subordination
Indebtedness Ranking Junior to the Junior Description of New Securities -- Description of 57
Subordinated Debenture New Junior Subordinated Debentures -- Subordination
Indebtedness Ranking on a Parity with the Junior Description of New Securities -- Description of 57
Subordinated Debentures New Junior Subordinated Debentures -- Subordination
Indenture Cover Page 4
Indirect Participants Description of New Securities -- Description of 47
New Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfer
Initial Declaration Investors Capital Trust I 28
Initial Optional Prepayment Date Summary -- The New Capital Securities -- Redemption 14
Initial Purchaser Summary -- The New Capital Securities -- Absence 15
of Market for the New Capital Securities
Interest Payment Date Description of New Securities -- Description of 49
New Junior Subordinated Debentures -- General
Investment Company Act Description of New Securities -- Description of 44
New Capital Securities -- Mergers, Conversions,
Consolidations, Amalgamations or Replacements of
the Trust
IRS Risk Factors -- Potential Treatment of the Exchange 18
of Old Capital Securities for New Capital Securities
as a Taxable Disposition
Issuer Trustees Cover Page 5
Junior Subordinated Debentures Cover Page 5
Like Amount Description of New Securities -- Description of 41
New Capital Securities -- Redemption
Liquidation Distribution Description of New Securities -- Description of 41
New Capital Securities -- Liquidation of the Trust
and Distribution of New Junior Subordinated
Debentures
Maturity Redemption Price Summary -- The New Capital Securities -- Redemption 14
NASDAQ Summary -- The New Capital Securities -- Absence 16
of Market for the New Capital Securities
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
New Capital Securities Cover Page 1
New Guarantee Cover Page 1
New Junior Subordinated Debentures Cover Page 1
New Securities Cover Page 1
Offering Investors Financial Services Corp. 29
OID Risk Factors -- Requirement to Accrue Income in 18
Advance of Receipt of Cash Due to Extension of
Interest Payment Period
Old Capital Securities Cover Page 1
Old Guarantee Cover Page 1
Old Junior Subordinated Debentures Cover Page 1
Old Securities Cover Page 1
Optional Prepayment Price Summary -- The New Capital Securities -- 14
Conditional Right to Advance Maturity
Optional Redemption Price Summary -- The New Capital Securities -- Redemption 14
Other Debentures Summary -- The New Capital Securities -- Ranking 13
Other Guarantees Description of New Securities -- Description of 39
New Capital Securities -- Distributions
Other Trusts Summary -- The New Capital Securities -- Ranking 13
pari-passu Cover Page 3
Participants Description of New Securities -- Description of 46
New Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfer
Participating Broker-Dealers Summary -- The Exchange Offer -- Resales of New 11
Capital Securities
Paying Agent Description of New Securities -- Description of 47
New Capital Securities -- Payment and Paying Agency
Person Description of New Securities -- Description of 43
New Capital Securities -- Merger or Consolidation of
Issuer Trustees
Plan Assets Regulations ERISA Considerations 68
Plans ERISA Considerations 68
Prepayment Price Summary -- The New Capital Securities -- 15
Conditional Right to Advance Maturity
Primary Treasury Dealer Description of New Securities -- Description of 53
New Junior Subordinated Debentures -- Conditional
Right to Advance Maturity and Special event
Prepayment
</TABLE>
76
<PAGE>
<TABLE>
<S> <C> <C>
Property Trustee Cover Page 5
Proposed Legislation Risk Factors -- Potential Early Redemption Due to 20
Possible Tax Law Changes Affecting the Capital Securities
Prospectus Cover Page 1
PTCE ERISA Considerations 68
Quotation Agent Description of New Securities -- Description of 53
New Junior Subordinated Debentures -- Conditional
Right to Advance Maturity and Special Event
Prepayment
Redemption Date Description of New Securities -- Description of 40
New Capital Securities -- Redemption
Redemption Price Summary -- The New Capital Securities -- Redemption 14
Reference Treasury Dealer Description of New Securities -- Description of 53
Junior Subordinated Debentures -- Conditional
Right to Advance Maturity and Special Event
Prepayment
Reference Treasury Dealer Quotations Description of New Securities -- Description of 53
Junior Subordinated Debentures -- Conditional
Right to Advance Maturity and Special Event
Prepayment
Registration Rights Agreement Summary -- The Exchange Offer -- Exchange Offer 8
Registration Statement Available Information 6
Regulations Federal Income Tax Consequences -- Interest Income 65
and Original Issue Discount
Regulatory Capital Event Description of New Securities -- Description of 52
the New Junior Subordinated Debentures --
Conditional Right to Advance Maturity and Special
Event Prepayment
Rule 144A Summary -- The Exchange Offer -- Resales of New 10
Capital Securities
Senior Indebtedness Description of New Securities --Description of New 57
Junior Subordinated Debentures -- Subordination
Special Event Description of New Securities --Description of New 40
Capital Securities -- Conditional Right to Advance
Maturity and Special Event Redemption
Special Event Prepayment Price Summary -- The New Capital Securities -- 14
Conditional Right to Advance Maturity
Special Event Redemption Price Summary -- The New Capital Securities -- Redemption 14
Spin-Off Transaction Investors Financial Services Corp. 28
</TABLE>
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<TABLE>
<S> <C> <C>
Sponsor Description of New Securities -- Description of New 41
Capital Securities -- Liquidation of the Trust and
Distribution of the New Junior Subordinated Debentures
Stated Maturity Date Cover Page 3
Successor Securities Description of New Securities -- Description of 44
New Capital Securities -- Mergers, Conversions,
Consolidations, Amalgamations or Replacements of
the Trust
Tax Counsel Federal Income Tax Consequences -- General 64
Tax Event Description of New Securities -- Description of 52
the New Junior Subordinated Debentures --
Conditional Right to Advance Maturity and Special
Event Prepayment
Tax Event Maturity Advancement Risk Factors -- Potential Exercise of Conditional 20
Right to Advance Maturity and Earlier Return to
Holders of Capital Invested
Trust Cover Page 1
Trust Indenture Act Description of New Securities -- Description of 38
New Capital Securities
Trust Securities Cover Page 3
United States Alien Holder Federal Income Tax Consequences --United States 67
Alien Holders
U.S. Holder Federal Income Tax Considerations -- United States 67
Alien Holders
</TABLE>
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Corporation's Certificate of Incorporation and the Delaware General
Corporation Law provides for indemnification of the Corporation's directors and
officers for liabilities and expenses that they may incur in such capacity for
damages for breach of fiduciary duty as a director other than liability for
(i) any breach of the director's duty of loyalty to the Corporation, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) acts covered by Section 174 of the General
Corporation Law of Delaware or (iv) for any transaction from which such director
derived an improper personal benefit. In general, under the Company's By-Laws
directors and officers are indemnified for liabilities and expenses they may
incur with respect to actions taken in their capacities as a director or
officer, so long as such actions are taken good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
and, with respect to any criminal action or proceeding, actions that such
director or officer had no reasonable cause to believe were unlawful.
The Corporation maintains directors and officers liability insurance
for the benefit of its directors and certain officers.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT
<TABLE>
<S> <C>
4.1(1) Indenture of Investors Financial Services Corp. relating to the Junior
Subordinated Debentures
4.2** Form of Certificate of New Junior Subordinated Debenture (included as
Exhibit A to Exhibit 4.1)
4.3** Certificate of Trust of Investors Capital Trust I
4.4** Declaration of Trust of Investors Capital Trust I
4.5(1) Amended and Restated Declaration of Trust for Investors Capital Trust I
4.6** Form of New Capital Security Certificate for Investors Capital Trust I
(included as Exhibit D to Exhibit 4.5)
4.7** Form of New Guarantee of Investors Financial Services Corp. relating to
the New Capital Securities
4.8(1) Registration Rights Agreement
5.1* Opinion and consent of Testa, Hurwitz & Thibeault, LLP to Investors
Financial Services Corp. as to legality of the New Junior
Subordinated Debentures and the New Guarantee to be issued by
Investors Financial Services Corp.
5.2(2)* Opinion of Richards, Layton & Finger, special Delaware counsel, as to
validity of the New Capital Securities to be issued by
Investors Capital Trust I
5.3* Opinion of Brown & Wood LLP to Investors Financial Services Corp. as to
the legality of the New Junior Subordinated Debentures and the
New Guarantee to be issued by Investors Financial Services
Corp.
8* Opinion of Testa, Hurwitz & Thibeault, LLP, special tax counsel, as to
certain federal income tax matters
12.1** Computation of ratio of earnings to fixed charges (excluding interest
on deposits)
12.2** Computation of ratio of earnings to fixed charges (including interest
on deposits)
23.1* Consent of Deloitte & Touche L.L.P.
23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
23.4 Consent of Brown & Wood LLP (included in Exhibit 5.3)
24** Power of Attorney of certain officers and directors of Investors
Financial Services Corp.
25.1** Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Indenture
25.2** Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Declaration of Trust of
Investors Capital Trust I
25.3** Form T-1 Statement of Eligibility of The Bank of New York under the New
Guarantee for the benefit of the holders of New Capital
Securities of Investors Capital Trust I
99.1(2)* Form of Letter of Transmittal
99.2** Form of Notice of Guaranteed Delivery
99.3** Form of Exchange Agent Agreement
</TABLE>
--------
*filed herewith
** Previously filed.
(1) Filed as an exhibit to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1996 (file no. 0-26996).
(2) Superceding Exhibit.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
as amended, each filing of a Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating
to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of each undersigned Registrant pursuant to the provisions, or otherwise,
each Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by each
undersigned Registrant of expenses incurred or paid by a director, officer of
controlling person of each Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, each Registrant will, unless
in the opinion of its counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrants hereby undertake to respond to requests
for information that is incorporated by reference into the Prospectus pursuant
to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Investors Financial Services Corp. has duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, State of
Massachusetts, on the 28th day of July, 1997.
INVESTORS FINANCIAL SERVICES
CORP.
By: /s/ Kevin J. Sheehan
---------------------------------
Kevin J. Sheehan, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on
behalf of Investors Financial Services Corp. and in the capacities and on
the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------- ----------------------------------- ------------------------
<S> <C> <C>
* President, Chief Executive Officer July 28, 1997
- --------------------------- and Chairman of the Board
Kevin J. Sheehan (Principal Executive Officer) and
Director
* Executive Vice President July 28, 1997
- ---------------------------
Michael F. Rogers
* Chief Financial Officer (Principal July 28, 1997
- --------------------------- Financial Officer and Principal
Karen C. Keenan Accounting Officer)
* Director July 28, 1997
- ---------------------------
Robert B. Fraser
* Director July 28, 1997
- ---------------------------
Donald G. Friedl
* Director July 28, 1997
- ---------------------------
James M. Oates
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------- ----------------------------- ------------------------
<S> <C> <C>
* Director July 28, 1997
- ---------------------------
Phyllis S. Swersky
* Director July 28, 1997
- ---------------------------
Thomas P. McDermott
* Director July 28, 1997
- ---------------------------
Frank B. Condon, Jr.
*By: /s/ Kevin J. Sheehan
----------------------
Kevin J. Sheehan
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Investors Capital Trust I has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, State of Massachusetts,
on the 28th day of July, 1997.
INVESTORS CAPITAL TRUST I
By: /s/ Kevin J. Sheehan
----------------------------------
Kevin J. Sheehan, Administrative
Trustee
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on
behalf of Investors Capital Trust I and in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
----------------------------- ------------------------ -----------------
<S> <C> <C>
/s/ Kevin J. Sheehan Administrative Trustee July 28, 1997
-----------------------------
Kevin J. Sheehan
/s/ Karen C. Keenan Administrative Trustee July 28, 1997
-----------------------------
Karen C. Keenan
/s/ Earl W. Zimmerman, Jr. Administrative Trustee July 28, 1997
-----------------------------
Earl W. Zimmerman, Jr.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
<S> <C>
4.1(1) Indenture of Investors Financial Services Corp. relating to the
Junior Subordinated Debentures
4.2** Form of Certificate of New Junior Subordinated Debenture (included as
Exhibit A to Exhibit 4.1)
4.3** Certificate of Trust of Investors Capital Trust I
4.4** Declaration of Trust of Investors Capital Trust I
4.5(1) Amended and Restated Declaration of Trust for Investors Capital
Trust I
4.6** Form of New Capital Security Certificate for Investors Capital Trust I
(included as Exhibit D to Exhibit 4.5)
4.7** Form of New Guarantee of Investors Financial Services Corp. relating
to the New Capital Securities
4.8(1) Registration Rights Agreement
5.1* Opinion and consent of Testa, Hurwitz & Thibeault, LLP to Investors
Financial Services Corp. as to legality of the New Junior
Subordinated Debentures and the New Guarantee to be issued by
Investors Financial Services Corp.
5.2(2)* Opinion of Richards, Layton & Finger, special Delaware counsel, as to
validity of the New Capital Securities to be issued by
Investors Capital Trust I
5.3* Opinion of Brown & Wood LLP to Investors Financial Services Corp. as
to the legality of the New Junior Subordinated Debentures and
the New Guarantee to be issued by Investors Financial Services
Corp.
8* Opinion of Testa, Hurwitz & Thibeault, LLP, special tax counsel, as
to certain federal income tax matters
12.1** Computation of ratio of earnings to fixed charges (excluding interest
on deposits)
12.2** Computation of ratio of earnings to fixed charges (including interest
on deposits)
23.1* Consent of Deloitte & Touche L.L.P.
23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
23.4 Consent of Brown & Wood LLP (included in Exhibit 5.3)
24** Power of Attorney of certain officers and directors of Investors
Financial Services Corp.
25.1** Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Indenture
25.2** Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Declaration of Trust of
Investors Capital Trust I
25.3** Form T-1 Statement of Eligibility of The Bank of New York under the
New Guarantee for the benefit of the holders of New Capital
Securities of Investors Capital Trust I
99.1(2)* Form of Letter of Transmittal
99.2(*) Form of Notice of Guaranteed Delivery
99.3(*) Form of Exchange Agent Agreement
</TABLE>
--------
*filed herewith
**previously filed
(1) Filed as an exhibit to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1996 (file no. 0-26996).
(2) Superceding Exhibit.
II-7
<PAGE>
EXHIBIT 5.1
July 29, 1997
Investors Financial Services Corp.
200 Clarendon Street
P.O. Box 9130
Boston, Massachusetts 02117-9130
RE: Investors Financial Services Corp. and Investors Capital Trust I
Registration Statement on Form S-4 File Nos. 333-27847 and 333-27847-
01
Ladies and Gentlemen:
We have acted as counsel to Investors Financial Services Corp., a Delaware
corporation (the "Corporation") and Sponsor of Investors Capital Trust I, a
Delaware statutory business trust (the "Trust"), in connection with a
Registration Statement on Form S-4, as amended (the "Registration Statement"),
relating to: (i) the proposed issuance by the Trust of up to $25,000,000
aggregate Liquidation Amount of the Trust's 9.77% Series B Capital Securities
(the "New Capital Securities") registered under the Securities Act of 1933, as
amended (the "Securities Act"), in exchange for up to $25,000,000 aggregate
Liquidation Amount of the Trust's outstanding 9.77% Series A Capital Securities
(the "Old Capital Securities"); (ii) the proposed issuance by the Corporation to
the Trust, in an aggregate principal amount corresponding to the aggregate
Liquidation Amount of the New Capital Securities, of the Corporation's 9.77%
Series B Junior Subordinated Deferrable Interest Debentures due February 1, 2027
(the "New Junior Subordinated Debentures") registered under the Securities Act
in exchange for a comparable aggregate principal amount of the Company's
outstanding 9.77% Series A Junior Subordinated Deferrable Interest Debentures
due February 1, 2027 (the "Old Junior Subordinated Debentures"); and (iii) the
Corporation's guarantee of the New Capital Securities (the "New Guarantee")
registered under the Securities Act in exchange for the Corporation's guarantee
of the Old Capital Securities (the "Old Guarantee"). The New Capital Securities
will be issued under an Amended and Restated Declaration of Trust for the Trust,
dated January 31, 1997 (the "Amended Declaration"), among the Corporation, as
Sponsor, The Bank of New York, as property trustee, The Bank of New York
(Delaware), as Delaware trustee, and the Administrative Trustees named therein,
while the New Junior Subordinated Debentures will be issued under an Indenture,
dated as of January 31, 1997 (the "Indenture"), between the Corporation and The
Bank of New York, as debenture trustee.
We have reviewed the corporate proceedings taken by the Board of Directors of
the Corporation with respect to the authorization and issuance of the New Junior
Subordinated Debentures and the authorization and delivery of the New Guarantee.
We have also examined and relied upon originals or copies, certified or
otherwise authenticated to our satisfaction, of all
<PAGE>
Investors Financial Services Corp.
July 29, 1997
Page 2
corporate records, documents, agreements or other instruments of the Corporation
and have made all investigations of law and have discussed with the
Corporation's officers and the Administrative Trustees of the Trust all
questions of fact that we have deemed necessary or appropriate.
In the course of our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Corporation or the
Trust, we have assumed that such parties had the power, corporate or other, to
enter into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and the validity and binding effect
thereof on such parties.
The opinions expressed in paragraphs (1) and (2) below are subject to the
qualifications that: (i) enforcement of any rights or remedies under the
documents described therein is subject to (a) bankruptcy, insolvency,
reorganization, moratorium, receivership, liquidation, fraudulent conveyance or
transfer, equitable subordination or similar laws relating to or affecting the
rights or remedies of creditors generally; and (b) general principles of equity,
including applicable law relating to fiduciary duties (whether considered in a
proceeding in equity or at law), (ii) we express no opinion as to the effect of
applicable public policy on the enforceability of provisions relating to
indemnification or contribution, and (iii) we express no opinion as to the
availability of any equitable remedy (including without limitation the remedy of
specific performance) upon breach of the documents described therein.
Based upon the foregoing, we are of the opinion that:
(1) The New Junior Subordinated Debentures have been duly authorized by all
requisite corporate action of the Corporation and, when executed and
authenticated in the manner provided for in the Indenture and delivered against
surrender and cancellation of a like aggregate principal amount of Old Junior
Subordinated Debentures as contemplated in the Registration Rights Agreement
dated as of January 31, 1997 among the Trust, the Corporation and the Initial
Purchaser named therein (the "Registration Rights Agreement"), the New Junior
Subordinated Debentures will constitute valid and binding obligations of the
Corporation entitled to the benefits of the Indenture and enforceable against
the Corporation in accordance with their terms.
(2) The New Guarantee has been duly authorized by all requisite corporate
action of the Corporation and, when executed and delivered to The Bank of New
York, as guarantee trustee, as contemplated in the Registration Rights
Agreement, the New Guarantee will constitute
<PAGE>
Investors Financial Services Corp.
July 29, 1997
Page 3
a valid and binding agreement of the Corporation, enforceable against the
Corporation in accordance with its terms.
We are members only of the bar of the Commonwealth of Massachusetts and we
express no opinion as to the laws of any jurisdiction other than the laws of the
Commonwealth of Massachusetts, the General Corporation Law of the State of
Delaware and the Federal laws of the United States of America. We note that the
Indenture, the New Junior Subordinated Debentures, the Registration Rights
Agreement and the New Guarantee each provides that it is governed by the laws of
the State of New York. Accordingly, with respect to the opinions set forth in
paragraphs (1) and (2) hereof as to the valid and binding nature and
enforceability of the Corporation's obligations, we have relied (with your
consent) solely upon the opinion of Brown & Wood LLP filed as Exhibit 5.3 to the
Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" contained in the Prospectus included therein.
Very truly yours,
Testa, Hurwitz & Thibeault, LLP
<PAGE>
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger]
July 29, 1997
Investors Capital Trust I
c/o Investors Financial Services Corp.
89 South Street
Boston, Massachusetts 02111-1537
Re: Investors Capital Trust I
-------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Investors Financial
Services Corp., a Delaware corporation (the "Company"), and Investors Capital
Trust I, a Delaware business trust (the "Trust"), in connection with the matters
set forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of January 17,
1997 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on January 17, 1997;
(b) The Declaration of Trust of the Trust, dated as of January 17,
1997, among the Company and the trustees of the Trust named therein;
(c) The Amended and Restated Declaration of Trust of the Trust, dated
as of January 31, 1997, including Annex I and Exhibits A-1 and A-2 thereto (the
"Declaration"), among the Company, as Sponsor, the trustees of the Trust named
therein, and the holders, from time to time, of undivided beneficial interests
in the assets of the Trust;
(d) Amendment No. 2 to the Registration Statement on Form S-4 (the
"Registration Statement"), including a preliminary prospectus (the
"Prospectus"), relating to the 9.77% Series B Capital Securities of the Trust
representing undivided beneficial interests in the assets of the Trust (each, a
"Capital Security" and collectively, the "Capital Securities"), as proposed to
be filed by the Company and the Trust with the Securities and Exchange
Commission on or about July 29, 1997; and
<PAGE>
Investors Capital Trust I
July 17, 1997
Page 2
(e) A Certificate of Good Standing for the Trust, dated July 29, 1997,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due creation or due organization or due
formation, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its creation, organization or formation, (iii) the legal capacity of
natural persons who are parties to the documents examined by us, (iv) that each
of the parties to the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such documents, (v)
the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom a Capital
Security is to be issued by the Trust (collectively, the "Capital Security
Holders") of a certificate (substantially in the form attached as Exhibit A-1 to
the Declaration) evidencing the Capital Security and the payment for the
Capital Security acquired by it, in accordance with the Declaration and the
Registration Statement, and (vii) that the Capital Securities are issued and
sold to the Capital Security Holders in accordance with the Declaration and the
Registration Statement. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any
<PAGE>
Investors Capital Trust I
July 17, 1997
Page 3
other jurisdiction, including federal laws and rules and regulations relating
thereto. Our opinions are rendered only with respect to Delaware laws and rules,
regulations and orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Capital Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust and will entitle the
Capital Security Holders to the benefits of the Declaration (subject to the
terms of the Declaration).
3. The Capital Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Capital Security
Holders may be obligated pursuant to the Declaration, (A) to provide indemnity
and/or security in connection with and pay taxes, governmental charges or other
expenses arising from transfers or exchanges of Capital Security certificates
and the issuance of replacement Capital Security certificates, and (B) to
provide security or indemnity in connection with requests of or directions to
the Property Trustee to exercise its rights and powers under the
Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Legal Matters" in
the Prospectus. We also consent to the Capital Security Holders' relying as to
Delaware law upon this opinion in connection with their owning Capital
Securities. In giving the foregoing consents, we do not thereby admit that
we come within the category of Persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Richards, Layton & Finger
<PAGE>
[BROWN & WOOD LLP LOGO APPEARS HERE]
EXHIBIT 5.3
July 29, 1997
Investors Financial Services Corp.
200 Clarendon Street
Boston, Massachusetts 02117-9130
Re: Investors Financial Services Corp.
Investors Capital Trust I
Registration Statement on Form S-4
File Nos. 333-27847 and 333-27847-01
------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Investors Financial
Services Corp., a Delaware corporation (the "Corporation"), and Sponsor of
Investors Capital Trust I, a Delaware statutory business trust (the "Trust"), in
connection with a Registration Statement on Form S-4 (the "Registration
Statement") relating to (i) the proposed issuance by the Trust of $25,000,000
aggregate Liquidation Amount of the Trust's 9.77% Series B Capital Securities
(the "New Capital Securities") registered under the Securities Act of 1933, as
amended (the "Securities Act"), in exchange for up to $25,000,000 aggregate
Liquidation Amount of the Trust's outstanding 9.77% Series A Capital Securities
(the "Old Capital Securities"), (ii) the proposed issuance by the Corporation to
the Trust, in an aggregate principal amount corresponding to the aggregate
Liquidation Amount of the New Capital Securities, of the Corporation's 9.77%
Series B Junior Subordinated Deferrable Interest Debentures due February 1, 2027
(the "New Junior Subordinated Debentures") registered under the Securities Act
in exchange for a comparable aggregate principal amount of the Company's
outstanding 9.77% Series A Junior Subordinated Deferrable Interest Debentures
due February 1, 2027 (the "Old Junior Subordinated Debentures"), and (iii) the
Corporation's guarantee of the New Capital Securities (the "New Guarantee")
registered under the Securities Act in exchange for the Corporation's guarantee
of the Old Capital Securities (the "Old Guarantee"). The New Capital Securities
will be issued under an Amended and Restated Declaration of Trust for the Trust,
dated January 31, 1997 (the "Amended Declaration"), among the Corporation, as
Sponsor, The Bank of New York, as property trustee, The Bank of New York
(Delaware), as Delaware trustee, and the Administrative Trustees named therein,
while the New Junior Subordinated Debentures will be issued under an Indenture,
dated as of January 31, 1997, (the "Indenture"), between the Corporation and The
Bank of New York, as debenture trustee.
We have examined such documents and records as we deemed appropriate,
including the following:
(i) Copy of the Certificate of Incorporation of the Corporation,
certified as of a recent date by the Secretary of the Corporation to be a
true and complete copy.
(ii) Copy of the By-Laws of the Corporation certified as of a
recent date by the Secretary of the Corporation to be a true and complete
copy.
(iii) Copy, certified as of a recent date by the Secretary of the
Corporation to be a true and complete copy, of the resolutions adopted by
the Board of Directors of the Corporation on January 14, 1997 and the
Special Committee of the Board of Directors on January 30, 1997 authorizing
the filing of the Registration Statement and the exchange of the New
Capital Securities, the New Junior Subordinated Debentures and the New
Guarantee under the circumstances referred to above.
(iv) Executed counterparts of the Amended Declaration.
(v) Form of the New Capital Security.
(vi) Executed counterparts of the Indenture.
(vii) Form of the New Junior Subordinated Debenture
(viii) Form of the New Guarantee.
(ix) Executed counterparts of the Registration Rights Agreement,
dated as of January 31, 1997 (the "Registration Rights Agreement"), among
the Trust, the Corporation and the Initial Purchasers named therein.
In addition, as to questions of fact material to our opinion, we have
relied upon certificates of officers of the Corporation, the Administrative
Trustees of the Trust and public officials.
In the course of our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents
<PAGE>
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents. In making our examination of the documents,
instruments and agreements referred to in the first two paragraphs of this
opinion, we have assumed that all parties signing the same had the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents, instruments
and agreements and, except in the case of the Corporation or the Trust, the
validity and binding effect thereof on such parties.
Based upon the foregoing, we are of the opinion that:
(1) The New Junior Subordinated Debentures have been duly authorized by all
requisite corporate action of the Corporation and, when executed and
authenticated in the manner provided for in the Indenture and delivered against
surrender and cancellation of a like aggregate principal amount of Old Junior
Subordinated Debentures as contemplated in the Registration Rights Agreement,
the New Junior Subordinated Debentures will constitute valid and binding
obligations of the Corporation entitled to the benefits of the Indenture and
enforceable against the Corporation in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether considered
in a proceeding in equity or at law).
(2) The New Guarantee has been duly authorized by all requisite corporate
action of the Corporation and, when executed and delivered to The Bank of New
York, as guarantee trustee, as contemplated in the Registration Rights
Agreement, the New Guarantee will constitute a valid and binding agreement of
the Corporation, enforceable against the Corporation in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles (regardless of
whether considered in a proceeding in equity or at law) and except as the
enforceability of the indemnification provision thereof may be limited by
considerations of public policy.
We are members of the Bar of the State of New York and we express no
opinion as to the laws of any jurisdiction other than the laws of the State of
New York, the General Corporation Law of the State of Delaware and the federal
laws of the United States of America. Testa, Hurwitz & Thibeault, LLP may rely
on this opinion insofar as the laws of the State of New York are applicable to
the opinion, dated the date hereof, given by it to you.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" contained in the Prospectus included therein.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
EXHIBIT 8
July 29, 1997
Investors Financial Services Corp.
200 Clarendon Street
P.O. Box 9130
Boston, Massachusetts 02117-9130
Re: Investors Financial Services Corp. and Investors Capital Trust I
Registration Statement on Form S-4 File Nos. 333-27847 and 333-27847-01
Ladies and Gentlemen:
We have acted as counsel to Investors Capital Trust I, a Delaware
statutory business trust (the "Trust"), and Investors Financial Services Corp.,
a Delaware corporation (the "Corporation"), in connection with the issuance and
sale by the Trust to Keefe, Bruyette & Woods, Inc. of 25,000 9.77% Series A
Capital Securities (liquidation amount $1,000 per security) of the Trust (the
"Old Capital Securities"), representing preferred undivided beneficial interests
in the assets of the Trust, under the Amended and Restated Declaration of Trust
for the Trust, dated as of January 31, 1997 (the "Declaration"), among the
Corporation, The Bank of New York, as property trustee, The Bank of New York
(Delaware), as Delaware trustee, and the Administrative Trustees named therein.
Pursuant to the Prospectus that is part of the Registration Statement on Form S-
4 filed by the Corporation and the Trust with the Securities and Exchange
Commission on May 27, 1997, as amended (the "Prospectus"), the Trust will offer
to exchange (the "Exchange Offer") up to $25,000,000 aggregate Liquidation
Amount of its 9.77% Series B Capital Securities (the "New Capital Securities")
for a like Liquidation Amount of Old Capital Securities. Unless otherwise
defined, capitalized terms referred to herein have the meanings set forth in the
Prospectus.
You have requested our opinion regarding certain federal income tax
consequences associated with the Exchange Offer and the ownership and
disposition of New Capital Securities received pursuant to the Exchange Offer.
In rendering our opinion, we have examined such documents and records as we have
deemed necessary or appropriate, including, but not limited to, the following:
(i) the Prospectus;
(ii) the Declaration;
<PAGE>
Investors Financial Services Corp.
July 29, 1997
Page 2
(iii) a specimen of the Old Capital Securities;
(iv) a specimen of the New Capital Securities;
(v) a specimen of the Common Securities;
(vi) the Old Guarantee;
(vii) the New Guarantee;
(viii) the Indenture;
(ix) a specimen of the Old Junior Subordinated Debentures;
(x) a specimen of the New Junior Subordinated Debentures;
(xi) the Registration Rights Agreement; and
(xii) a representation letter from the Corporation setting forth certain
factual matters.
In connection with rendering this opinion, we have also assumed (without
any independent investigation) that:
A. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has been
(or will be by the date hereof) due execution and delivery of all documents
where due execution and delivery are prerequisites to effectiveness thereof.
B. Any statement or representation made "to the best of knowledge" or
similarly qualified is correct without such qualification.
C. All statements, descriptions and representations contained in any of
the documents referred to herein or otherwise made to us are true and correct in
all material respects and no actions have been (or will be) taken which are
inconsistent with such statements, descriptions and representations, and there
has been (and will be) full compliance with all documents referred to herein.
Based upon the foregoing and subject to the assumptions, exceptions,
limitations and qualifications set forth herein, we are of the opinion that:
1. Under current law, the New Junior Subordinated Debentures are
classified for United States federal income tax purposes as indebtedness of the
Corporation.
2. Under current law, the Trust is classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation.
3. The discussion set forth in the Prospectus under the heading "Federal
Income Tax Consequences" represents (subject to the limitations set forth
therein), to the extent that it constitutes matters of federal law or legal
conclusions with respect thereto, in all material
<PAGE>
Investors Financial Services Corp.
July 29, 1997
Page 3
respects, a fair summary of the material United States federal income tax
consequences under current law of the acquisition of New Capital Securities
pursuant to the Exchange Offer, and the ownership and disposition of the New
Capital Securities so acquired.
Although there are no definite legal standards for the opinion set forth in
paragraph 1 above, the opinions set forth herein (including the opinion set
forth in paragraph 1) are based upon our best judgment regarding the application
of existing provisions of the Internal Revenue Code of 1986, as amended, and
Treasury regulations issued or proposed thereunder, published Revenue Rulings
and releases of the Internal Revenue Service ("IRS") and existing case law, any
of which could be changed at any time. No assurance can be given that the IRS
will not take contrary positions. Moreover, no assurance can be given that any
of the opinions expressed herein will not be challenged by the IRS or, if
challenged, that such a challenge would not be successful. In addition, no
assurance can be given that future legislative, judicial or administrative
changes, on either a prospective or retroactive basis, would not adversely
affect the accuracy of the conclusions stated herein. Nevertheless, this
opinion will not be updated for subsequent changes or modifications to the law
and regulations or to the judicial and administrative interpretations thereof,
unless we are specifically engaged to do so.
The opinions expressed herein are limited as described above, and we do not
express an opinion on any other transaction. In addition, if any of the
statements, representations, warranties or assumptions upon which we have relied
to issue this opinion is incorrect, our opinion might be adversely affected and
may not be relied upon.
In rendering the foregoing opinions, we express no opinion as to the laws
of any jurisdiction other than the federal income tax laws of the United States.
This opinion may not be relied on in connection with any transactions other than
the transactions contemplated herein.
We hereby consent to the use of our name under the caption "Federal Income
Tax Consequences" in the Prospectus. The issuance of such a consent does not
concede that we are an "Expert" for purposes of the Securities Act.
Very truly yours,
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement Nos. 333-27847 and 333-27847-01 of Investors Financial
Services Corp. and Investors Capital Trust I on Form S-4 of our report dated
February 14, 1997, appearing in the Annual Report on Form 10-K of Investors
Financial Services Corp. for the year ended December 31, 1996 and to the
reference to us under the heading "Independent Auditors" in the Prospectus,
which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
July 28, 1997
<PAGE>
EXHIBIT 99.1
INVESTORS CAPITAL TRUST I
Offer to Exchange its
9.77% Series B Capital Securities
(Liquidation Amount $1,000 per Capital
Security) which have been registered under the
Securities Act of 1933
for any and all of its outstanding
9.77% Series A Capital Securities
(Liquidation Amount $1,000 per Capital Security)
Pursuant to the Prospectus
dated _______ __, 1997
--------------
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
BOSTON TIME, ON____ , 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
--------------
The Exchange Agent for the Exchange Offer is:
The Bank of New York
By Registered or Certified Mail: By Hand or Overnight Delivery:
------------------------------- -----------------------------
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Section Ground Level
Arwen Gibbons New York, New York 10286
Attention: Reorganization Section
Arwen Gibbons
Confirm by Telephone:
(212) 815-5920
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-6339
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received the
Prospectus, dated ______ __, 1997 (the "Prospectus"), of Investors Financial
Services Corp., a Delaware corporation (the "Corporation"), and Investors
Capital Trust I, a Delaware business trust (the "Trust"), and this Letter of
Transmittal, which together constitute the Corporation's and the Trust's offer
(the "Exchange Offer") to exchange an aggregate Liquidation Amount of up to
$25,000,000 9.77% Series B Capital Securities, which have been registered under
the Securities Act of 1933, as amended (the "Securities Act") of the Trust for a
like Liquidation Amount of the issued and outstanding 9.77% Series A Capital
Securities of the Trust from the holders thereof.
<PAGE>
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same
meaning given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Old Capital
Securities (as defined below) either if Old Capital Securities are to be
forwarded herewith or if tenders of Old Capital Securities are to be made by
book-entry transfer to an account maintained by The Bank of New York (the
"Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus and an Agent's Message (as defined herein)
will not be delivered.
Holders of Old Capital Securities whose certificates (the
"Certificates") for such Old Capital Securities are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus)
or who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Old Capital Securities according to the guaranteed delivery
procedures set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
- ---------------------------------------------- ---------------------------------------------------------------------
If blank, please print name and address of Old Capital Securities tendered
registered holder. (Attach additional list if necessary)
- ---------------------------------------------- ----------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Certificate Aggregate Principal Principal Amount of Old
Number(s)* Amount of Old Capital Securities Tendered
Capital Securities (if less than all)**
----------------- ---------------------- ----------------------------
----------------- ---------------------- ----------------------------
----------------- ---------------------- ----------------------------
----------------- ---------------------- ----------------------------
TOTAL AMOUNT ****************
TENDERED: ****************
- --------------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Old Capital Securities may be tendered in whole or in part in a Liquidation Amount of not less than $100,000, provided that if
any Old Capital Securities are tendered for exchange in part, the untendered principal amount thereof must be no less than
$100,000. Old Capital Securities held shall be deemed tendered unless a lesser number is specified in this column.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[_] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
---------------------------------------------
DTC Account Number
--------------------------------------------------------
Transaction Code Number
---------------------------------------------------
[_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s)
----------------------------------------------
Window Ticket Number (if any)
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------
Name of Institution which Guaranteed Delivery
-----------------------------
If Guaranteed Delivered is to be made By Book-Entry Transfer:
Name of Tendering Institution
--------------------------------
DTC Account Number
-------------------------------------------
Transaction Code Number
--------------------------------------
[_] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD CAPITAL
SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER
TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
------------------------------------------------------------------
5
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Investors Capital Trust I, a trust formed under
the laws of Delaware (the "Trust") and Investors Financial Services Corp., a
Delaware corporation, (the "Corporation"), the above described aggregate
Liquidation Amount of the Trust's 9.77% Series A Capital Securities (the "Old
Capital Securities") in exchange for a like aggregate Liquidation Amount of the
Trust's 9.77% Series B Capital Securities (the "New Capital Securities") which
have been registered under the Securities Act of 1933 (the "Securities Act"),
upon the terms and subject to the conditions set forth in the Prospectus dated
________ __, 1997, (as the same may be amended or supplemented from time to
time, the "Prospectus"), receipt of which is acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Capital Securities tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Corporation and the Trust in connection with the Exchange Offer) with respect to
the tendered Old Capital Securities, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver Certificates for Old Capital Securities to the Corporation or the Trust
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Trust, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Capital Securities to be issued in exchange for
such Old Capital Securities, (ii) present Certificates for such Old Capital
Securities for transfer, and to transfer the Old Capital Securities on the books
of the Trust, and (iii) receive for the account of the Trust all benefits and
otherwise exercise all rights of beneficial ownership of such Old Capital
Securities, all in accordance with the terms and conditions of the Exchange
Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the Old
Capital Securities tendered hereby and that, when the same are accepted for
exchange, the Trust will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that the Old Capital Securities tendered hereby are not subject to any
adverse claims or proxies. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Corporation, the Trust or the
Exchange Agent to be necessary or desirable to complete the exchange, assignment
and transfer of the Old Capital Securities tendered hereby, and the undersigned
will comply with its obligations under the Registration Rights Agreement. The
undersigned has read and agrees to all of the terms of the Exchange Offer.
The name(s) and address(es) of the registered holder(s) of the Old
Capital Securities tendered hereby should be printed above, if they are not
already set forth above, as they appear on the Certificates representing such
Old Capital Securities. The Certificate number(s) and the Old Capital Securities
that the undersigned wishes to tender should be indicated in the appropriate
boxes above.
If any tendered Old Capital Securities are not exchanged pursuant to
the Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Old Capital Securities will be returned (or, in
the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
<PAGE>
The undersigned understands that tenders of Old Capital Securities
pursuant to any one of the procedures described in "The Exchange Offer --
Procedures for Tendering Old Capital Securities" in the Prospectus and in the
instruction will, upon the Corporation's and the Trust's acceptance for exchange
of such tendered Old Capital Securities, constitute a binding agreement between
the undersigned, the Corporation and the Trust upon the terms and subject to the
conditions of the Exchange Offer. The undersigned recognizes that, under certain
circumstances set forth in the Prospectus, the Corporation and the Trust may not
be required to accept for exchange any of the Old Capital Securities tendered
hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Capital
Securities be issued in the name(s) of the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, that such New Capital Securities
be credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please deliver New Capital Securities to the
undersigned at the address shown below the undersigned's signature.
By tendering Old Capital Securities and executing this Letter of
Transmittal, the undersigned hereby represents and agrees that (i) the
undersigned is not an "affiliate" of the Corporation or the Trust, (ii) any New
Capital Securities to be received by the undersigned are being acquired in the
ordinary course of its business, (iii) the undersigned has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of New Capital Securities to be received in the
Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the
undersigned is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such New Capital Securities. By
tendering Old Capital Securities pursuant to the Exchange Offer and executing
this Letter of Transmittal, a holder of Old Capital Securities which is a
broker-dealer represents and agrees, consistent with certain interpretive
letters issued by the staff of the Division of Corporation Finance of the
Securities and Exchange Commission to third parties, that (a) such Old Capital
Securities held by the broker-dealer are held only as a nominee, or (b) such Old
Capital Securities were acquired by such broker-dealer for its own account as a
result of market-making activities or other trading activities and it will
deliver the Prospectus (as amended or supplemented from time to time) meeting
the requirements of the Securities Act in connection with any resale of such New
Capital Securities (provided that, by so acknowledging and by delivering a
Prospectus, such broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act).
The Corporation and the Trust have agreed that, subject to the
provisions of the Registration Rights Agreement, the Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer (as defined below) in connection with resales of New Capital
Securities received in exchange for Old Capital Securities, where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making activities or other trading activities, for
a period ending 90 days after the Expiration Date (subject to extension under
certain limited circumstances described in the Prospectus) or, if earlier, when
all such New Capital Securities have been disposed of by such Participating
Broker-Dealer. In that regard, each broker-dealer who acquired Old Capital
Securities for its own account and as a result of market-making or other trading
activities (a "Participating Broker-Dealer"), by tendering such Old Capital
Securities and executing this Letter of Transmittal, agrees that, upon receipt
of notice from the Corporation or the Trust of the occurrence of any event or
the discovery of any fact which makes any statement contained or incorporated by
reference in the Prospectus untrue in any material respect or which causes the
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference therein, in light of the
circumstances under which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of New Capital Securities
pursuant to the Prospectus until the Corporation and the Trust have amended or
supplemented the Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to the Participating
Broker-Dealer or the Corporation or the Trust has given notice that the sale of
the New Capital Securities may be resumed, as the case may be. If the
Corporation or the Trust gives such Notice to suspend the sale of the New
7
<PAGE>
Capital Securities, they shall extend the 90-day period referred to above during
which Participating Broker-Dealers are entitled to use the Prospectus in
connection with the resale of New Capital Securities by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the supplemented or amended Prospectus necessary to permit resales of
the New Capital Securities or to and including the date on which the Corporation
or the Trust has given notice that the sale of New Capital Securities may be
resumed, as the case may be.
As a result, a Participating Broker-Dealer who intends to use the
Prospectus in connection with resales of New Capital Securities received in
exchange for Old Capital Securities pursuant to the Exchange Offer must notify
the Corporation and the Trust, or cause the Corporation and the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided above or may be
delivered to the Exchange Agent at the address set forth in the Prospectus under
"The Exchange Offer -- Exchange Agent."
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive Distributions on such Old Capital
Securities and the undersigned waives the right to receive any Distribution on
such Old Capital Securities accumulated from and after January 31, 1997.
Accordingly, holders of New Capital Securities as of the record date for the
payment of Distributions on August 1, 1997 will be entitled to Distributions
accumulated from and after January 31, 1997.
All authority herein conferred or agreed to be conferred in this Letter
of Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
8
<PAGE>
HOLDER(S) SIGN HERE
(See Instructions 2, 5 and 6)
(Please Complete Substitute Form W-9 Below)
(Note: Signature(s) must be guaranteed if required by Instruction 2)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificates(s) for the Old Capital Securities hereby tendered or on a security
position listing, or by any person(s) authorized to become the registered
holder(s) by endorsements and documents transmitted herewith (including such
opinions of counsel, certificates and other information as may be required by
the Trust or the Trustee for the Old Capital Securities to comply with the
restrictions on transfer applicable to the Old Capital Securities). If signature
is by an attorney-in-fact, executor, administrator, trustee, guardian, officer
of a corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.
- ------------------------------------ -------------------------------------
(Signature(s) of Holder(s))
- ------------------------------------ --------------------------------------
(Name(s))
(Please Print)
Date , 1997
-------------------
- ----------------------- ---------------------------
(Area Code(s) and Telephone Number)
- ----------------------- ---------------------------
(Tax Identification or Social
Security Number(s))
GUARANTEE OF SIGNATURE(S)
(See Instructions 2 and 5)
Authorized Signature
----------------------------
Name
------------------------
(Please Print)
Date , 1997
-------------------
Capacity or Title
------------------------------------------
Name of Firm
------------------------------------------
Address
------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
------------------
9
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5 and 6)
To be completed ONLY if New Capital Securities are to be issued in the name of
someone other than the registered holder of the Old Capital Securities whose
name(s) appear(s) above.
Issue:
[_] New Capital Securities to:
[_] Old Capital Securities not tendered to:
Name
--------------------------------------------------
(Please Print)
Address
-----------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
(Include Zip Code)
- ------------------------------------------------------
(Taxpayer Identification or Social Security No.)
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5 and 6)
To be completed ONLY if New Capital Securities are to be sent to someone other
than the registered holder of the Old Capital Securities whose name(s) appear(s)
above, or to the registered holder(s) at an address other than that shown above.
Mail:
[_] New Capital Securities to:
[_] Old Capital Securities not tendered to:
Name
--------------------------------------------------
(Please Print)
Address
-----------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
(Include Zip Code)
- ------------------------------------------------------
(Taxpayer Identification or Social Security No.)
- --------------------------------------------------------------------------------
10
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures. This Letter of Transmittal is to be completed either if (a)
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus and an Agent's Message will not be
delivered or (b) Certificates are to be forwarded herewith. Timely confirmation
of a book-entry transfer of such Old Capital Securities into the Exchange
Agent's account at DTC, or Certificates as well as this Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its addresses set forth
herein on or prior to the Expiration Date. Tender by book-entry transfer may
also be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a confirmation of
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by this Letter of Transmittal (including the representations
contained herein) and that the Trust and the Corporation may enforce this Letter
of Transmittal against such participant. Old Capital Securities may be tendered
in whole or in part in the principal amount of $100,000 (100 Capital
Securities), provided that, if any Old Capital Securities are tended for
exchange in part, the untendered principal amount thereof must be $100,000 (100
Capital Securities).
Holders of Old Capital Securities (i) who cannot complete the
procedures for delivery by book-entry transfer on a timely basis or (ii) who
cannot deliver their Old Capital Securities, this Letter of Transmittal and all
other required documents to the Exchange Agent on or prior to the Expiration
Date or (iii) whose Old Capital Securities are not immediately available, may
tender their Old Capital Securities by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Procedures for Tendering Old Capital Securities"
in the Prospectus. Pursuant to such procedures: (a) such tender must be made by
or through an Eligible Institution (as defined below); (b) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Company, must be received by the Exchange Agent on or prior to
the Expiration Date; and (c) the Certificates (or a book-entry confirmation (as
defined in the Prospectus) representing tendered Old Capital Securities, in
proper form for transfer, together with a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent within three New York Stock Exchange, Inc.
trading days after the date of execution of such Notice of Guaranteed Delivery,
all as provided in "The Exchange Offer -- Procedures for Tendering Old Capital
Securities" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Old Capital Securities to be properly tendered pursuant to the guaranteed
delivery procedure, the Exchange Agent must receive a Notice of Guaranteed
Delivery on or prior to the Expiration Date. As used herein and in the
Prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS
11
<PAGE>
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Neither the Corporation nor the Trust will accept any alternative,
conditional or contingent tenders. Each tendering holder, by execution of a
Letter of Transmittal (or facsimile thereof), waives any right to receive any
notice of the acceptance of such tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the owner of the Old
Capital Securities) of Old Capital Securities tendered herewith, unless such
holder(s) has completed either the box entitled "Special Issuance Instructions"
or the box entitled "Special Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the account of a firm
that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. Inadequate Space. If the space provided in the box captioned
"Description of Old Capital Securities" is inadequate, the Certificate number(s)
and/or the principal amount of Old Capital Securities and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of Old Capital
Securities will be accepted only in a Liquidation Amount of not less than
$100,000 (100 Capital Securities), provided that if any Old Capital Securities
are tendered for exchange in part, the untendered principal amount thereof must
be no less than $100,000 (100 Capital Securities). If less than all the Old
Capital Securities evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Old Capital Securities which are to be tendered
in the box entitled "Principal Amount of Old Capital Securities Tendered." In
such case, new Certificate(s) for the remainder of the Old Capital Securities
that were evidenced by your Old Certificate(s) will only be sent to the holder
of the Old Capital Security, promptly after the Expiration Date. All Old Capital
Securities represented by Certificates delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth above or in the Prospectus on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
Certificates for Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Certificate
for the Old Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Certificates for the Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Certificates for the Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been tendered
pursuant to the procedures for book-entry transfer set forth in "The Exchange
Offer -- Procedures for Tendering Old Capital Securities," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Old Capital Securities, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent by written or
facsimile transmission. Withdrawals of tenders of Old Capital Securities may not
be rescinded. Old Capital Securities properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described in the Prospectus under "The Exchange Offer -- Procedures
for Tendering Old Capital Securities."
12
<PAGE>
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Corporation, the Trust, any affiliates or
assigns of the Corporation and the Trust, the Exchange Agent nor any other
person shall be under any duty to give any notification of any irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Old Capital Securities tendered hereby, the signature(s) must
correspond exactly with the name(s) as written on the face of the Certificate(s)
without alteration, enlargement or any change whatsoever.
If any of the Old Capital Securities tendered hereby are owned of
record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any tendered Old Capital Securities are registered in different
name(s) on several Certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal (or facsimiles thereof) as there
are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Corporation and the Trust, in their sole
discretion, of such persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of
the Old Capital Securities listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless New Capital
Securities are to be issued in the name of a person other than the registered
holder(s). Signature(s) on such Certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Capital Securities listed, the Certificates must
be endorsed or accompanied by appropriate bond powers, signed exactly as the
name or names of the registered owner(s) appear(s) on the Certificates, and also
must be accompanied by such opinions of counsel, certifications and other
information as the Corporation, the Trust or the Trustee for the Old Capital
Securities may require in accordance with the restrictions on transfer
applicable to the Old Capital Securities. Signatures on such Certificates or
bond powers must be guaranteed by an Eligible Institution.
6. Special Issuance and Delivery Instructions. If New Capital
Securities are to be issued in the name of a person other than the signer of
this Letter of Transmittal, or if New Capital Securities are to be sent to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Certificates for Old Capital Securities not exchanged will
be returned by mail or, if tendered by book-entry transfer, by crediting the
account indicated above maintained at DTC. See Instruction 4.
7. Irregularities. The Corporation and the Trust will determine, in
their sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities which determination shall be final and binding
on all parties. The Corporation and the Trust reserve the absolute right, in
their sole and absolute discretion, to reject any and all tenders determined by
either of them not to be in proper form or the acceptance of which, or exchange
for, may, in the view of counsel to the Corporation and the Trust, be unlawful.
The Corporation and the Trust also reserve the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer set forth
in the Prospectus under "The Exchange Offer -- Certain Conditions to the
Exchange Offer" or any conditions or irregularity in any tender of Old Capital
13
<PAGE>
Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders. The Corporation's and
the Trust's interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) will be final
and binding. No tender of Old Capital Securities will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. Neither the Corporation, the Trust, any affiliates or assigns
of the Corporation, the Trust, the Exchange Agent, or any other person shall be
under any duty to give notification of any irregularities in tenders or incur
any liability for failure to give such notification.
8. Questions, Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, this Letter of Transmittal and the Notice
of Guaranteed Delivery may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. Federal
income tax law, a holder whose tendered Old Capital Securities are accepted for
exchange is required to provide the Exchange Agent with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to Old Capital
Securities exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax.
Rather, the U.S. Federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
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<PAGE>
10. Lost, Destroyed or Stolen Certificates. If any Certificate(s)
representing Old Capital Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
11. Security Transfer Taxes. Holders who tender their Old Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, New Capital Securities are to be delivered
to, or are to be issued in the name of, any person other than the registered
holder of the Old Capital Securities tendered, or if a transfer tax is imposed
for any reason other than the exchange of Old Capital Securities in connection
with the Exchange Offer, then the amount of any such transfer tax (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Important: This Letter of Transmittal (or facsimile thereof) and all
other required documents must be received by the Exchange Agent on or prior to
the Expiration Date.
15
<PAGE>
TO BE COMPLETED BY ALL
TENDERING SECURITYHOLDERS
(See Instruction 9)
PAYER'S NAME: Investors Capital Trust I
<TABLE>
<CAPTION>
- ------------------------------------- --------------------------------------- ------------------------------------
<S> <C> <C>
SUBSTITUTE Part 1 - PLEASE PROVIDE YOUR TIN IN TIN
Form W-9 THE BOX AT RIGHT AND CERTIFY BY -------------------------
SIGNING AND DATING BELOW Social Security Number or
Employer Identification Number
----------------------------------------------------------------------------
Department of the Treasury Part 2
Internal Revenue Service Awaiting TIN[_]
------------------------------------
CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the
number shown on this form is my correct taxpayer identification number (or
I am waiting for a number to be issued to me), (2) I am not subject to
backup withholding either because (i) I am exempt from backup withholding,
(ii) I have not been notified by the Internal Revenue Service ("IRS") that
I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (iii) the IRS has notified me that I am no longer
subject to backup withholding, and (3) any other information provided on
this form is true and correct.
Payer's Request for Taxpayer SIGNATURE
Identification Number (TIN) --------------------------------------------------------------
and Certification DATE
-------------------------------------------------------------------
You must cross out item (iii) in Part (2) above if you have been notified
by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup
withholding.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT
TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all payments made to me on account of the New Capital Securities shall be
retained until I provide a taxpayer identification number to the Exchange Agent
and that, if I do not provide my taxpayer identification number within 60 days,
such retained amounts shall be remitted to the Internal Revenue Service as
backup withholding and 31% of all reportable payments made to me thereafter will
be withheld and remitted to the Internal Revenue Service until I provide a
taxpayer identification number.
Signature Date
----------------------------------- -------------------------
- --------------------------------------------------------------------------------
16
