As filed with the Securities and Exchange Commission on September 21, 2000.
REGISTRATION NO. 333-42958
------------------------------------------------------------------------------
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION Washington,ON OCTOBER 22, 2001.
REGISTRATION NOS. 333-71546
71546-01
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------------
VALLEY NATIONAL BANCORP NEW JERSEY 22-2477875
VNB CAPITAL TRUST I DELAWARE 22-6901843
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
SPECIFIED IN ITS CHARTER)
----------------
1455 VALLEY ROAD
WAYNE, NEW JERSEY 07470
(973) 305-8800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
GERALD H. LIPKIN
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
VALLEY NATIONAL BANCORP
(Exact Name of Registrant as Specified in Its Charter)
------------------------
New Jersey 22-2477875
---------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation)
1455 Valley Road
Wayne, New JerseyVALLEY ROAD
WAYNE, NEW JERSEY 07470
(973) 305-8800
--------------
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
------------------------
Gerald H. Lipkin
1455 Valley Road
Wayne, New Jersey 07470
(973) 305-8800
--------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
MICHAEL T. KOHLER, ESQ.
RONALD H. JANIS, ESQ. SIDLEY AUSTIN BROWN & WOOD LLP
PITNEY, HARDIN, KIPP & SZUCH LLP 875 THIRD AVENUE
200 CAMPUS DRIVE NEW YORK, NY 10022
FLORHAM PARK, NEW JERSEY (212) 906-2000
(973) 966-6300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: At such
time or timesAs soon as
practicable after the effective date of this Registration Statement as the selling shareholders shall determine.becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ][_]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x][_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ][_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ][_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE(1) FEE(2)
-[_]
---------------- ---------- ---------- --------------- ---
Common Stock, 57,626 shares $23.97 $1,381,296 $365
no par value
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the high and low prices
reported in the consolidated reporting system on August 1, 2000.
(2) This fee has already been paid in full with the initial filing of the
Registration Statement on Form S-3.
------------------------
THE REGISTRANTREGISTRANTS HEREBY AMENDSAMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTREGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a)8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a)8(A),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
--------------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Subject to completion, dated as of September 21, 2000.
===========================================================THE INFORMATION IN THIS PROSPECTUS ===========================================================IS NOT COMPLETE AND MAY BE CHANGED. VALLEY
NATIONAL BANCORP, 57,626 Shares
Common Stock, No Par Value
This prospectus relatesTHE TRUST AND THE UNDERWRITERS MAY NOT SELL THESE SECURITIES
UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 22, 2001
PROSPECTUS
[LOGO] VALLEY NATIONAL BANCORP
7,000,000 PREFERRED SECURITIES
VNB CAPITAL TRUST I
% TRUST ORIGINATED PREFERRED SECURITIES/SM/ (TOPRS/SM/)
LIQUIDATION AMOUNT $25 PER TOPRS
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED IN THIS PROSPECTUS, BY
VALLEY NATIONAL BANCORP
----------------
THE TRUST:
VNB Capital Trust I is a Delaware business trust. The trust will:
. sell TOPrS or the "preferred securities," representing undivided
beneficial interests in the assets of the trust to the offering for resalepublic;
. sell common securities representing undivided beneficial interests in the
assets of 57,626 sharesthe trust to Valley National Bancorp;
. use the proceeds from these sales to buy an equal principal amount of
common stock, no par value,junior subordinated debentures due , 2031 of Valley National Bancorp, a New Jersey
Corporation. AllBancorp;
. distribute the cash payments it receives on the junior subordinated
debentures it owns to the holders of the TOPrS and common stock being registered may be offeredsecurities; and
sold
from time. apply to time by certain selling shareholders of Valley (See "Selling
Shareholders" and "Manner of Offering"). We will not receive any proceeds fromhave the sale of the common stock by the selling shareholders.
Our common stock is listedTOPrS trade on the NYSENew York Stock Exchange under the
symbol "VLY""VLYPrA" starting within 30 days after the TOPrS are first issued.
QUARTERLY DISTRIBUTIONS:
. OnFor each TOPrS that you own, you will receive cumulative cash
distributions at an annual rate equal to % on the liquidation amount of
$25 per TOPrS, on March 15, June 15, September 18, 2000,15 and December 15 of each
year, beginning December 15, 2001.
. Valley National Bancorp can defer interest payments on the last reportedjunior
subordinated debentures at any time for up to 20 consecutive quarterly
periods. If Valley National Bancorp does defer interest payments, the
trust will also defer payment of distributions on the TOPrS and common
securities. However, deferred distributions will themselves accrue
interest at an annual rate equal to %, compounded quarterly, to the
extent permitted by law.
INVESTING IN THE TOPRS INVOLVES RISKS WHICH ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
----------------
PER TOPRS TOTAL
--------- -----
Public offering price(1)........................................ $25.00 $175,000,000
Underwriting commission to be paid by Valley National Bancorp(2) $ $
Proceeds to the trust(2)........................................ $ $
(1) Plus accumulated distributions from , 2001, if settlement
occurs after that date
(2) For sales price forof 10,000 or more TOPrS to a single purchaser, the
common stock was
$26.25underwriting commission will be $ per share.
----------------------------------------------------------------------
These securitiesTOPrS
The TOPrS are not deposits or accounts and are not insured or guaranteed by the
Federal Deposit Insurance Corporation the Commissioner of
Banking and Insurance of the State of New Jersey or any other governmental agency.
Neither the Securities and Exchange Commission nor any bank regulatory
agency, nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The TOPrS will be ready for delivery in book-entry form only through The
Depository Trust Company on or about , 2001.
----------------
MERRILL LYNCH & CO. SANDLER O'NEILL & PARTNERS, L.P.
LEGG MASON WOOD WALKER
INCORPORATED
LEHMAN BROTHERS
RYAN, BECK & CO.
SALOMON SMITH BARNEY
UBS WARBURG
----------------
The date of this Prospectusprospectus is _____________, 2000, 2001.
--------
"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
Page
FORWARD LOOKING STATEMENTS...................................................1
FOR ADDITIONAL INFORMATION ABOUT VALLEY NATIONAL BANCORP.....................1
INCORPORATION OF INFORMATION WE FILE WITH THE SEC............................1
VALLEY NATIONAL BANCORP......................................................2
SELLING SHAREHOLDERS.........................................................3
MANNER OF OFFERING...........................................................3
LEGAL MATTERS................................................................5
EXPERTS......................................................................5
PAGE
----
PROSPECTUS
Summary Information--Q&A......................................................................... 3
Risk Factors..................................................................................... 8
VNB Capital Trust I.............................................................................. 13
Selected Consolidated Financial Data............................................................. 14
Capitalization................................................................................... 16
Regulatory Capital Ratios........................................................................ 16
Accounting Treatment............................................................................. 17
Use of Proceeds.................................................................................. 17
Description of the Preferred Securities.......................................................... 18
Description of the Junior Subordinated Debentures................................................ 28
Description of the Guarantee..................................................................... 39
Relationship Among the Preferred Securities, the Junior Subordinated Debentures and the Guarantee 41
Book-Entry Issuance.............................................................................. 43
Material Federal Income Tax Consequences......................................................... 46
ERISA Considerations............................................................................. 49
Underwriting..................................................................................... 53
Legal Matters.................................................................................... 55
Experts.......................................................................................... 55
Where You Can Find Additional Information........................................................ 55
A Warning About Forward-Looking Information...................................................... 57
----------------
You should rely only on the information contained in or incorporated by
reference in this prospectus. This prospectus may be used only for the purpose
for which it has been prepared. No one is authorized to give information other
than that contained or incorporated by reference in this prospectus. We and the
Trust have not, and the underwriters have not, authorized anyoneany other person to
provide you with different information. If anyone provides you with different
or inconsistent information, thatyou should not rely on it.
We and the Trust are not, and the underwriters are not, making an offer
to sell these securities in any jurisdiction where the offer or sale is different.not
permitted. You should not assume that there have been no
changesthe information appearing in the affairsthis
prospectus or any document incorporated by reference is accurate as of Valley National Bancorp sinceany date
other than the date of this
prospectus.
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FORWARD-LOOKING STATEMENTS
This prospectus, including information incorporated by reference
herein, contains certain forward-looking statements with respect to the applicable document. Our business, financial
condition, results of operations and business of Valley. Such
statements areprospects may have changed since that
date. This prospectus does not historical facts and include expressions about Valley's
confidence, strategies and expectations about new and existing programs and
products, relationships, opportunities and market conditions. These statements
may be identified by forward-looking terminology such as "expect"constitute an offer, or "believe"an invitation on our
behalf or expressions of confidence like "substantial" or "continuing", or similar
statements. These forward-looking statements involve substantial risks and
uncertainties. Actual results may differ materially from those contemplated by
the forward-looking statements. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include,
among others, the following possibilities:
o Competitive pressure in the banking and financial services industry
causes unanticipated changes.
o Changes occur in the interest rate environment.
o Loss of current customers or failure to develop new customers.
o General economic conditions, either nationally or locally, are less
favorable than expected.
o Disruptions in the operations of Valley or its subsidiaries due to
computer problems.
We undertake no obligation to pubically update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
FOR ADDITIONAL INFORMATION ABOUT VALLEY NATIONAL BANCORP
We file annual, quarterly, and current reports, proxy statements, and
other information with the Securities and Exchange Commission. The SEC maintains
a web site at http://www.sec.gov that contains materials filed by Valley. You
can read and copy these materials at the SEC's public reference rooms at 450
Fifth Street, N.W., Washington, D.C.; 7 World Trade Center, Suite 1300, New
York, New York; and 500 West Madison Street, Suite 1400, Chicago, Illinois. You
can also order copies of these materials, on payment of copying fees, by writing
to the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for more information on the operationbehalf of the public
reference rooms. Our filings can also be read at the officesunderwriters, to subscribe for and purchase, any of
the New York
Stock Exchange, onpreferred securities, and may not be used for or in connection with an
offer or solicitation by anyone, in any jurisdiction in which our common stocksuch an offer or
solicitation is listed.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows usnot authorized or to "incorporate by reference" intoany person to whom it is unlawful to make
such an offer or solicitation.
References in this prospectus to "we," "us" and "our" refer to Valley
National Bancorp and its consolidated subsidiaries, unless otherwise specified.
As used in this prospectus, the "Trust" refers to VNB Capital Trust I.
2
SUMMARY INFORMATION--Q&A
The following information we filesupplements, and should be read together with,
the SEC.information contained in other parts of this prospectus. This means we can disclosesummary
highlights selected information from this prospectus to help you understand the
preferred securities. You should carefully read this prospectus to understand
fully the terms of the preferred securities, as well as the tax and other
considerations that are important
information to you by referring youin making a decision about whether to
other documents that we filed withinvest in the SEC separately. The information incorporated by reference is partpreferred securities. You should pay special attention to the
"Risk Factors" section beginning on page 8 of this prospectus exceptto determine
whether an investment in the preferred securities is appropriate for information that is superceded by informationyou.
For your convenience, we make reference to specific page numbers in this
document,prospectus for more detailed information on some of the terms and later information filed withconcepts used
throughout this prospectus.
WHAT ARE THE PREFERRED SECURITIES?
Each preferred security represents an undivided beneficial interest in
the SEC afterassets of VNB Capital Trust I, the date"Trust." Each preferred security will
entitle the holder to receive quarterly cash distributions as described in this
prospectus. The underwriters are offering preferred securities at a price of
this
prospectus will update$25 for each preferred security.
WHO IS VNB CAPITAL TRUST I?
The Trust is a statutory business trust created under Delaware law. The
Trust's business and supercedeaffairs are conducted by the information contained herein.property trustee, the
Delaware trustee and the three individual administrative trustees, who are
officers of Valley National Bancorp. The SEC filings incorporated by reference are:
1. Annual Report on Form 10-KTrust exists for the year ended December 31, 1999.
2. Quarterly Reports on Form 10-Q for quarters ended March 31, 2000 and June
30, 2000.
3. Current Reports filed on Form 8-K dated January 3, 2000, April 7, 2000, May
31, 2000, July 7, 2000 and September 21, 2000.
4. The descriptionexclusive
purposes of:
. issuing the preferred securities, which represent undivided
beneficial ownership interests in the Trust's assets;
. issuing the common securities to us in a total liquidation amount
equal to at least 3% of the Common Stock which is containedTrust's total capital;
. using the proceeds from these issuances to buy our junior
subordinated debentures;
. maintaining the Trust's status as a grantor trust for federal income
tax purposes; and
. engaging in Valley's
Registration Statement on Form 8-A including any amendmentonly those other activities necessary, advisable or
report filed
forincidental to the purposeabove, such as registering the transfer of
updating such description.
We also incorporates by reference additional reports, proxy statements,
and other documents that Valley may file withpreferred securities.
Accordingly, the SEC afterjunior subordinated debentures will be the date of this
prospectus under Section 13(a), 13(c), 14 or 15(d)sole assets of the
Securities Exchange
ActTrust, and payments under the junior subordinated debentures will be the sole
revenues of 1934 until our offering is completed.the Trust. We will provide each person to whom this prospectus is delivered with a
free copy of any orown all of the documents incorporated by reference, except for
exhibits to those documents (unlesscommon securities of the exhibit is specifically incorporated by
reference). You can request copies by calling or writing our Shareholder
Relations Department, as follows:
Valley National Bancorp
1455 Valley Road
Wayne, New Jersey 07470
Attention: Dianne M. Grenz
Telephone: 973-305-3380Trust.
WHO IS VALLEY NATIONAL BANCORPBANCORP?
Valley National Bancorp is a New Jersey corporation registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended. At
December 31, 1999, ValleyWe are
headquartered in Wayne, New Jersey, and as of June 30, 2001 we had consolidated total assets
of $6.4$8.1 billion, total loans of $5.2 billion and total deposits of $5.1 billion,$6.2
billion. Our reported net income per diluted share was $1.51 in 1999, $1.60 in
2000, and total shareholders' equity$0.80 for the first six months of $553.5 million. Its2001. Net income per diluted share
for the first six months of 2001 was $0.89 before the merger-related charges
for the acquisition of Merchants New York Bancorp, Inc.
3
Net interest income, generated primarily through loans, continues to be
our primary source of income. As of June 30, 2001, the percentage breakdown of
our loans by category was as follows:
. Commercial Loans, including.................... 49%
. Commercial Mortgage............. 24.5%
. Commercial...................... 20.5%
. Construction.................... 3.9%
. Consumer Loans, including...................... 27%
. Automobile...................... 18.2%
. Home Equity..................... 6.2%
. Credit Card..................... 0.5%
. Other Consumer.................. 1.7%
. Residential Mortgage Loans..................... 24%
Our principal subsidiary is Valley National Bank.
Valley National Bank, is a national banking
association, chartered in 1927 under the laws of the United States. Valley National Bank provides a full
range of commercial and retail banking services through 1171927. The bank operates approximately 125 branch
officesoffices. Of these, approximately 118 branches are located in northern78 communities
serving 10 counties in Northern New Jersey. TheseJersey and seven branches are located in
New York City. The services includeprovided by the following:bank include:
. the acceptance of demand, savings and time deposits;
. extension of consumer, real estate, Small Business Administration and
other commercial credits; title
insurance; investment services;loans; and
. full personal and corporate trust, as well as pension and fiduciary,
services.
Valley National Bank has several wholly-owned subsidiaries to serve our
customers, which includeinclude:
. a mortgage servicing company, a company which holds, maintains and
manages investment assets for Valley National Bank, a subsidiary which owns and
services auto loans, a subsidiary which owns and services commercial mortgage
loans,company;
. a title insurance company, anagency;
. registered investment advisers providing asset management company which is an SEC
registered investment company and an Edge Act Corporation which is the holding
company forservices;
. a wholly-owned finance company located in Toronto, Canada.Canada, which makes loans
through a program with an insurance company;
. a subsidiary specializing in asset-based lending; and
. a new leasing company which offers commercial equipment leases and
originates general aviation aircraft loans.
On January 19, 2001, we acquired Merchants New York Bancorp, Inc., parent
of The mortgage servicingMerchants Bank of New York headquartered in Manhattan. At the date of
acquisition, Merchants Bank, a commercial bank, had total assets of
approximately $1.5 billion and seven branch offices, all located in Manhattan.
The transaction was accounted for using the pooling of interests method of
accounting. The outstanding shares of Merchants common stock were exchanged for
approximately 14.3 million shares of our common stock. In connection with our
merger with Merchants New York Bancorp, Inc., Merchants Bank merged with and
into Valley National Bank. Our consolidated financial statements and the
financial information in this prospectus have been restated to include
Merchants' financial results for all periods presented.
In June 2001 we began operations of Valley Commercial Capital, LLC, our
new leasing company servicesthat offers both commercial equipment leases and financing
for general aviation aircraft. This transaction involved the purchase of
approximately $44 million of small aircraft loans.
On October 17, 2001, we announced unaudited financial results for the
quarter ended September 30, 2001. We reported net income of $36.0 million for
the quarter, an increase of 10.0% compared to the third quarter of 2000.
Diluted earnings per share were $0.46 for the third quarter of 2001 compared to
$0.42 for the third quarter of 2000. Non-performing assets to total assets
increased to .28% and non-performing loans to total loans increased to .27%. As
of September 30, 2001, our risk-based capital ratios were 11.2% for othersTier 1
capital and 12.3% for total capital. The Tier 1 leverage ratio was 8.3%. A copy
of our earnings release was included in our Current Report on Form 8-K dated
October 17, 2001 and is incorporated in this prospectus by reference.
In August, 2001, our board of directors authorized us to repurchase up to
8 million shares of our common stock. These purchases may be made in the open
market or in negotiated transactions at prices generally not exceeding market
prices. Our principal office is located at 1455 Valley Road, Wayne, New Jersey
07470, and our telephone number is (973) 305-8800.
4
WHEN WILL YOU RECEIVE QUARTERLY DISTRIBUTIONS?
If you purchase the preferred securities, you are entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $25 per preferred security. Distributions will accumulate from the
date the Trust issues the preferred securities and will be paid quarterly in
arrears on March 15, June 15, September 15 and December 15 of each year,
beginning December 15, 2001.
WHEN CAN PAYMENT OF YOUR DISTRIBUTIONS BE DEFERRED?
We can, on one or more occasions, defer interest payments on the junior
subordinated debentures for up to 20 consecutive quarterly periods unless an
event of default under the junior subordinated debentures has occurred and is
continuing (see pages 19 and 30 through 31). A deferral of interest payments
cannot extend, however, beyond the maturity date of the junior subordinated
debentures, which is , 2031.
If we defer interest payments on the junior subordinated debentures, the
Trust will also defer distributions on the preferred securities. During this
deferral period, distributions will continue to accrue on the preferred
securities at an annual rate of % of the liquidation amount of $25 per
preferred security. Also, the deferred distributions will themselves accrue
interest (to the extent permitted by law) at an annual rate of %, compounded
quarterly. Once we make all interest payments on the junior subordinated
debentures, with accrued interest, we can again postpone interest payments on
the junior subordinated debentures if no event of default under the junior
subordinated debentures has occurred and is continuing.
During any period in which we defer interest payments on the junior
subordinated debentures, we will not be permitted to:
. declare or pay a dividend or make any other payment or distribution
on our capital stock;
. redeem, purchase or make a liquidation payment on any of our capital
stock;
. make an interest, principal payment on, or repurchase or redeem, any
of our debt securities that rank equal with or junior to the junior
subordinated debentures; or
. make any guarantee payments with respect to any guarantee of the debt
securities of any of our subsidiaries (including other guarantees) if
such guarantee ranks equal or junior to the junior subordinated
debentures.
There are limited exceptions to these restrictions which are described on
page 31.
If we defer the payment of interest on the junior subordinated
debentures, the preferred securities will be treated as being reissued with
original issue discount for United States federal income tax purposes. This
means that, beginning at the time of deferral, you will be required to
recognize interest income with respect to distributions even during the period
those distributions are deferred and include those amounts in your gross income
for United States federal income tax purposes before you receive any cash
distributions relating to those interest payments. See "Material Federal Income
Tax Consequences" beginning on page 46.
WHEN CAN THE TRUST REDEEM THE PREFERRED SECURITIES?
The Trust will redeem all of the outstanding preferred securities when
the junior subordinated debentures are paid at maturity on , 2031. In
addition, if we redeem any junior subordinated debentures before their
maturity, the Trust will use the cash it receives on the redemption of the
junior subordinated debentures to redeem, on a pro rata basis, preferred
securities having an aggregate liquidation amount equal to the aggregate
principal amount of the junior subordinated debentures redeemed.
We can redeem the junior subordinated debentures before their maturity at
100% of their principal amount plus accrued interest to the date of redemption:
. in whole or in part, on one or more occasions any time on or after
, 2006; and
5
. in whole, but not in part, before , 2006, if specified changes in
bank regulatory, investment company or tax laws occur (each of which
is a "special event" and each of which is more fully described
beginning on page 32), and within 90 days of the occurrence of the
special event.
If required by rule or regulation of the Board of Governors of the
Federal Reserve System, we will obtain prior approval of the Federal Reserve
before any redemption of the junior subordinated debentures.
WHAT IS OUR GUARANTEE OF THE PREFERRED SECURITIES?
We will fully and unconditionally guarantee the preferred securities
based on:
. our obligations under the guarantee; and
. our obligations under the declaration of trust which governs the
terms of the preferred securities (see page 18); and
. our obligations under the indenture which governs the terms of the
junior subordinated debentures (see page 28).
If we do not make a payment on the junior subordinated debentures, the
Trust will not have sufficient funds to make payments on the preferred
securities. The guarantee does not cover payments when the Trust does not have
sufficient funds to make payments on the preferred securities.
Our obligations under the guarantee will constitute our unsecured
obligation and will rank subordinate and junior in right of payment to all of
our senior indebtedness, to the extent and in the manner set forth in the
guarantee agreement, and will rank on a equal basis with other guarantees that
may be issued by us with respect to preferred securities issued by other
trusts.
WHEN COULD THE JUNIOR SUBORDINATED DEBENTURES BE DISTRIBUTED TO YOU?
We have the right to dissolve the Trust at any time. If we decide to
exercise our right to dissolve the Trust, the Trust will, after satisfaction of
liabilities to creditors of the Trust, redeem the preferred securities by
distributing the junior subordinated debentures to holders of the preferred
securities on a pro rata basis.
Any distribution of the junior subordinated debentures may require
approval of the Board of Governors of the Federal Reserve System.
WILL THE PREFERRED SECURITIES BE LISTED ON A STOCK EXCHANGE?
The Trust will apply to have the preferred securities listed on the NYSE
under the symbol "VLYPrA." If approved for listing, trading is expected to
commence within 30 days after the preferred securities are first issued. You
should be aware that the listing of the preferred securities will not
necessarily assure that a liquid trading market will be available for the
preferred securities. If the Trust distributes the junior subordinated
debentures, we will use our best efforts to list the junior subordinated
debentures on the NYSE or any other exchange or other organization on which the
preferred securities are then listed.
WHAT HAPPENS IF THE TRUST IS DISSOLVED AND THE JUNIOR SUBORDINATED DEBENTURES
ARE NOT DISTRIBUTED?
The Trust may also dissolve in circumstances where the junior
subordinated debentures will not be distributed. In those situations, the Trust
will, after satisfaction of liabilities to creditors of the Trust, pay the
liquidation amount of $25 for each preferred security, plus unpaid
distributions to the date the payment is made. The Trust will be able to make
this distribution of cash only if the junior subordinated debentures are
redeemed by us.
6
IN WHAT FORM WILL THE PREFERRED SECURITIES BE ISSUED?
The preferred securities will be represented by one or more global
securities that will be deposited with and registered in the name of The
Depository Trust Company, New York, New York, "DTC," or its nominee. This means
that you will not receive a certificate for your preferred securities. The
Trust expects that the preferred securities will be ready for delivery through
DTC on or about , 2001.
7
RISK FACTORS
Before purchasing any preferred securities, you should read carefully
this prospectus and any documents incorporated by reference in this prospectus
and pay special attention to the following risk factors.
Because the Trust will rely on the payments it receives on the junior
subordinated debentures to fund all payments on the preferred securities, and
because the Trust may distribute the junior subordinated debentures in exchange
for the preferred securities, you are making an investment regarding the junior
subordinated debentures as well as the preferred securities. You should
carefully review the information in this prospectus about the preferred
securities, the guarantee and the junior subordinated debentures.
WE CANNOT MAKE PAYMENTS UNDER THE GUARANTEE OR THE JUNIOR SUBORDINATED
DEBENTURES IF WE DEFAULT ON OUR OBLIGATIONS THAT ARE MORE SENIOR, AND YOU MAY
LOSE ALL OR PART OF YOUR INVESTMENT IN THE PREFERRED SECURITIES.
Our obligations under junior subordinated debentures are unsecured and
rank:
. junior to all of our senior indebtedness;
. junior to all of our subsidiaries' liabilities, including the bank's
deposit accounts;
. senior to our capital stock; and
. equal to any other junior subordinated debentures and guarantees we
may issue in the future with respect to preferred securities of other
trusts we may issue.
Our obligations under the guarantee are unsecured and rank:
. subordinate and junior in right of payment to all our other
liabilities in the same manner as the junior subordinated debentures
as set forth in the indenture; and
. equally with all guarantees we may issue in the future with respect
to preferred securities of other trusts.
This means that we cannot make any payments under the guarantee or the
junior subordinated debentures if we default on payments of any of our senior
indebtedness. In addition, if the maturity of the junior subordinated
debentures is accelerated, we cannot make any payments under the guarantee or
the junior subordinated debentures until all of our senior indebtedness is paid
in full. Finally, if we liquidate, go bankrupt or dissolve, we would be able to
pay under the guarantee and the junior subordinated debentures only after we
have paid all of our liabilities that are senior to the guarantee. At June 30,
2001 we had approximately $10.0 million in senior indebtedness (holding company
only). In addition, because we are a holding company, the junior subordinated
debentures are effectively subordinated to all existing and future liabilities
of our subsidiaries, including depositors. At June 30, 2001, our subsidiaries
had total liabilities, including deposits, of $7.4 billion.
If we default on our obligations to pay principal or interest on the
junior subordinated debentures, the Trust will not have sufficient funds to
make distributions, redemptions or liquidation payments on the preferred
securities. This means you will not be able to rely upon our guarantee for
payment of distributions, redemptions or liquidation payments. Instead, you may
seek legal redress against us directly to collect payments owed to you or rely
on the property trustee to enforce the rights of the Trust under the junior
subordinated debentures against us.
The preferred securities, the guarantee, the junior subordinated
debentures and the indenture do not limit our ability to incur additional debt,
including debt that is senior to the junior subordinated debentures in priority
of payment.
The ability of the Trust to make payments due on the preferred securities
is solely dependent on us making payments on the junior subordinated debentures
as and when required. If the Trust cannot make payments on the preferred
securities, your investment in the preferred securities may become worthless.
8
IF VALLEY NATIONAL BANK, OUR BANK SUBSIDIARY, IS UNABLE TO PAY DIVIDENDS TO US
AND IF WE CANNOT BORROW FROM THE BANK OR ELSEWHERE, WE MAY NOT BE ABLE TO MAKE
PAYMENTS UNDER THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE, WHICH
WOULD PREVENT THE TRUST FROM MAKING ANY PAYMENTS ON THE PREFERRED SECURITIES.
We are a legal entity separate and distinct from our subsidiaries. Our
revenues (on a parent company only basis) result in substantial part from
dividends paid to us by our subsidiary, Valley National Bank. SELLING SHAREHOLDERSPayments of
dividends to us by the bank, without prior regulatory approval, are subject to
regulatory limitations.
Under the National Bank Act, a national bank may declare dividends only
if its surplus equals or exceeds its common capital. Moreover, a national bank
may not declare a dividend if the total amount of all dividends, including the
proposed dividend, declared by the national bank in any calendar year exceeds
the total of the national bank's retained net income of that year to date,
combined with its retained net income of the preceding two years, unless the
dividend is approved by the Office of the Comptroller of the Currency, or OCC.
Notwithstanding the permissibility of a particular dividend payment under the
National Bank Act, under the Federal Deposit Insurance Act, a bank may not pay
dividends, if, after payment of the dividends, the bank would be
"undercapitalized," as that term is defined under the statute. Lastly, the OCC
has the authority to prohibit the bank from paying dividends or otherwise
supplying funds to us if it determines that such payment would constitute an
unsafe and unsound banking practice. As of June 30, 2001, approximately $21.0
million was available for the payment of dividends by Valley National Bank to
us without further approval from the bank regulating authorities.
In addition to regulatory restrictions on the payment of dividends,
Valley National Bank is subject to certain restrictions imposed by federal law
on any extensions of credit it makes to its affiliates and on investments in
stock or other securities of its affiliates. We are considered an affiliate of
the bank. These restrictions prevent affiliates of the bank, including us, from
borrowing from the bank, unless various types of collateral secure the loans.
Federal law limits the aggregate amount of loans to and investments in any
single affiliate to 10% of the bank's capital stock and surplus and also limits
the aggregate amount of loans to and investments in all affiliates to 20% of
the bank's capital stock and surplus.
If we do not receive sufficient cash dividends or borrowings, then it is
unlikely that we will have sufficient funds to make payments on the junior
subordinated debentures and the guarantee, thereby leaving insufficient funds
for the Trust to make payments to you on the preferred securities.
Also, as a bank holding company, our right to receive any distribution of
assets of any subsidiary, upon that subsidiary's liquidation or reorganization
or otherwise (and thus your right to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary,
except to the extent we are also recognized as a creditor of that subsidiary
under the Federal Deposit Insurance Act. For example, if Valley National Bank
were to be liquidated or reorganized, depositors of the bank would have the
right to receive distributions from the bank before us unless we were
considered a creditor of the bank. At June 30, 2001, the bank had total
liabilities, including deposits, of $7.4 billion.
WE CAN DEFER INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES, CAUSING
YOUR PAYMENTS UNDER THE PREFERRED SECURITIES TO STOP, WHICH WILL HAVE ADVERSE
TAX CONSEQUENCES TO YOU AND MAY AFFECT THE MARKET PRICE OF THE PREFERRED
SECURITIES.
We have the right to defer interest payments on the junior subordinated
debentures for up to 20 consecutive quarterly periods, but not beyond ,
2031. If we defer interest payments, the Trust will defer paying distributions
to you on your preferred securities during the deferral period. In addition, if
we pay all interest then accrued and unpaid on the junior subordinated
debentures, we may elect to begin a new deferral period. There is no limitation
on the number of times that we may elect to begin a deferral period.
9
If we exercise our right to defer payments of interest on the junior
subordinated debentures, you will be required to accrue income (as original
issue discount) in respect of the deferred stated interest allocable to your
preferred securities for federal income tax purposes. As a result, you will be
required to recognize income for federal income tax purposes before you receive
any cash. Furthermore, if you sell your preferred securities prior to the
record date for the distribution payment, you will not receive the cash related
to this interest income.
As a result of our right to defer interest payments, the market price of
the preferred securities may be more volatile than the market prices of other
securities that are not subject to such deferral options. We do not currently
intend to exercise our right to defer interest payments on the junior
subordinated debentures. However, if we exercise this right in the future, the
market price of the preferred securities will probably decline and the
preferred securities may trade at a price that does not fully reflect the value
of accrued but unpaid interest on the junior subordinated debentures. If you
sell your preferred securities during a deferral period, you may not receive
the same return on your investment as someone who continues to hold the
preferred securities until the end of the deferral period.
THE PREFERRED SECURITIES GUARANTEE AGREEMENT COVERS PAYMENTS ONLY IF THE TRUST
HAS CASH AVAILABLE TO MAKE PAYMENTS TO HOLDERS OF PREFERRED SECURITIES, WHICH
THE TRUST MAY NOT HAVE.
The ability of the Trust to pay scheduled distributions on the preferred
securities, the redemption price of the preferred securities and the
liquidation amount of the preferred securities is solely dependent upon us
making the related payments on the junior subordinated debentures to the Trust
when due. If we default, the Trust will not have sufficient funds to pay
distributions, the redemption price or the liquidation amount of each preferred
security. In those circumstances, holders of preferred securities will not be
able to rely upon the preferred securities guarantee agreement for payment of
these amounts. Instead, holders of preferred securities must rely solely on the
property trustee to enforce the Trust's rights under the junior subordinated
debentures or may directly sue us to collect their pro rata share of payments
owed. In this situation, holders of preferred securities may not be able to
collect any or all of the payments owed to them by the Trust.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES MAY BE TAXABLE AND MAY DEPRESS
TRADING PRICES TO A PRICE BELOW THE PRICE THAT YOU PAID FOR THE PREFERRED
SECURITIES.
We have the right to dissolve the Trust at any time if the dissolution
and any distribution of the junior subordinated debentures would not be taxable
to the holders of the preferred securities. If we dissolve the Trust, the Trust
will be liquidated by distribution of the junior subordinated debentures to
holders of the preferred securities and the common securities after
satisfaction of liabilities to creditors of the Trust.
Under current federal income tax laws, that distribution would not be
taxable to you unless the Trust is classified for federal income tax purposes
as an association taxable as a corporation at the time it is dissolved. In
addition, if there is a change in law, a distribution of junior subordinated
debentures to you on the dissolution of the Trust could also be a taxable
event.
Your investment in the preferred securities may decrease in value if the
junior subordinated debentures are distributed to you upon a liquidation of the
Trust. We cannot predict the liquidity of the market price or market prices, if
any, for the junior subordinated debentures that may be distributed.
Accordingly, the junior subordinated debentures that you receive upon a
distribution, or the preferred securities you hold pending such distribution,
may trade at a discount to the price that you paid to purchase the preferred
securities.
We may not be able to deduct the payments we make on the junior
subordinated debentures for federal income tax purposes, which could
significantly increase our income tax liability and could impair our ability to
make payments on the preferred securities.
Our ability to deduct interest paid on the junior subordinated debentures
will depend on whether the junior subordinated debentures are characterized as
debt instruments for United States federal income tax
10
purposes, taking all the relevant facts and circumstances into account. Our
counsel has rendered an opinion to us that the junior subordinated debentures
are debt instruments for United States federal income tax purposes.
Accordingly, we intend to deduct interest on the junior subordinated debentures
for United States federal income tax purposes. However, a legal opinion is not
binding on the tax authorities or the courts. If the tax authorities or the
courts determine that we are not able to deduct interest on the junior
subordinated debentures, we would have significant additional income tax
liability. This tax liability may have a material adverse effect on our results
of operations, financial condition and ability to make payments on the junior
subordinated debentures and, consequently, the Trust's ability to make payments
on the preferred securities. This tax liability would also give us the right to
redeem the junior subordinated, debentures in whole prior to , 2006, which
would require the Trust to redeem the corresponding amount of the preferred
securities.
WE WILL CONTROL THE TRUST AND YOU WILL HAVE LIMITED VOTING RIGHTS, AND OUR
INTERESTS MAY NOT BE ALIGNED WITH YOURS.
As a holder of preferred securities, you will have limited voting rights.
You can vote only to modify specified terms of the preferred securities or on
the removal of the property and Delaware trustees of the Trust upon a limited
number of events. We, along with the property trustee and the administrative
trustees, may amend the declaration without your consent even if those actions
adversely affect your interests, to ensure that the Trust:
. will continue to be classified as a grantor trust for federal income
tax purposes; and
. will not be required to register as an "investment company" under the
Investment Company Act of 1940.
You will not have any voting rights regarding Valley National Bancorp or
the administrative trustees or with respect to any matters submitted to a vote
of our common shareholders. Because we will control the Trust, our interests
may not be aligned with your interests.
THE PREFERRED SECURITIES MAY BE REDEEMED PRIOR TO THEIR MATURITY DATE AND YOU
MAY NOT BE ABLE TO REINVEST THE PROCEEDS FROM THE REDEMPTION AT THE SAME OR A
HIGHER RATE OF RETURN.
Generally, the junior subordinated debentures (and therefore the
preferred securities) may not be redeemed prior to , 2006. After , 2006, we
will have the right, subject to receipt of any necessary Federal Reserve
approval, to redeem the junior subordinated debentures (and therefore the
preferred securities) in whole or in part at a price equal to 100% of their
principal amount plus any accrued and unpaid interest. However, if specified
events occur relating to changes in tax law, the Investment Company Act of 1940
or the treatment of the securities for bank regulatory capital purposes, then
we will be able, subject to receipt of any necessary Federal Reserve approval,
to redeem all of the junior subordinated debentures at a price equal to 100% of
their principal amount plus any accrued and unpaid interest before , 2006. If
a redemption of the junior subordinated debentures occurs, the Trust must use
the redemption price it receives to redeem all of the preferred securities.
You may not be able to reinvest the proceeds of the redemption at a rate
that is equal to or higher than the rate of return on the preferred securities.
THE LIMITED COVENANTS RELATING TO THE PREFERRED SECURITIES AND THE JUNIOR
SUBORDINATED DEBENTURES DO NOT PROTECT YOU.
The covenants in the governing documents relating to the preferred
securities and the junior subordinated debentures are extremely limited. As a
result, the governing documents do not protect you in the event of an adverse
change in our financial condition or results of operations. You should not
consider the terms of the governing documents to be a significant factor in
evaluating whether we will be able to comply with our obligations under the
junior subordinated debentures or the guarantee.
11
TRADING CHARACTERISTICS OF THE PREFERRED SECURITIES MAY CREATE ADVERSE TAX
CONSEQUENCES FOR YOU.
The preferred securities may trade at a price that does not reflect the
value of the accrued but unpaid interest on the underlying junior subordinated
debentures. If you dispose of your preferred securities between the record date
for payments on the preferred securities, you may have adverse tax
consequences. Under these circumstances, you will be required to include in
your income accrued but unpaid interest on the junior subordinated debentures
allocable to the preferred securities through the date of disposition. If
interest on the junior subordinated debentures is included in income under the
original issue discount provisions, you would add this amount to your adjusted
tax basis in your share of the underlying junior subordinated debentures deemed
disposed. If your selling price is less than your adjusted tax basis, which
will include all accrued but unpaid original issue discount interest included
in your income, you could recognize a capital loss which can only be applied to
a limited extent to offset ordinary income for federal income tax purposes.
THERE IS NO EXISTING MARKET FOR THE PREFERRED SECURITIES, AND EVEN IF A MARKET
DEVELOPS, IT MAY BE SUBJECT TO EXTREME PRICE FLUCTUATIONS.
Prior to this offering, there has been no public market for the preferred
securities. The Trust will apply to have the preferred securities listed on the
New York Stock Exchange. Trading of the preferred securities on the New York
Stock Exchange is expected to commence within a 30-day period after the initial
delivery of the preferred securities. In order to meet one of the requirements
for listing on the New York Stock Exchange, the underwriters have undertaken to
sell preferred securities to a minimum of 400 beneficial holders. We cannot
assure you that the preferred securities will be listed on the New York Stock
Exchange or, if listed, that the preferred securities will continue to be
approved for listing on the New York Stock Exchange. In addition, a listing
does not guarantee that a trading market for the preferred securities will
develop or, if a trading market does develop, the depth of that market or the
ability of the holders to sell their preferred securities easily. The
underwriters have advised us and the Trust that they intend to make a market in
the preferred securities prior to commencement of trading on the New York Stock
Exchange, but are not obligated to do so and may discontinue market making at
any time without notice.
The trading price of the preferred securities could widely fluctuate in
response to variations in operating results, general market prices movements,
interest rates, developments specifically related to the banking industry, and
other events or factors. In addition, the stock market has experienced extreme
price and volume fluctuations in recent years.
As discussed above, we will have the right to dissolve the Trust and to
distribute the junior subordinated debentures to holders of preferred
securities. Under those circumstances, we will use our best efforts to list the
junior subordinated debentures on a market or an exchange. However, there is no
existing market for the junior subordinated debentures and, if distributed to
holders of preferred securities, the junior subordinated debentures will be
subject to risks similar to those described in the two preceding paragraphs.
12
VNB CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law. The
Trust exists for the exclusive purposes of:
. issuing the preferred securities, which represent undivided
beneficial ownership interests in the Trust's assets;
. issuing the common securities to us in a total liquidation amount
equal to at least 3% of the Trust's total capital;
. using the proceeds from the issuances to buy our junior subordinated
debentures;
. maintaining the Trust's status as a grantor trust for federal income
tax purposes; and
. engaging in only those other activities necessary, advisable or
incidental to the above, such as registering the transfer of
preferred securities.
The junior subordinated debentures will be the sole assets of the Trust,
and, accordingly, payments under the junior subordinated debentures will be the
sole revenues of the Trust. We will acquire and own all of the common
securities of the Trust, which will have an aggregate liquidation amount equal
to at least 3% of the total capital of the Trust. The common securities will
rank on a parity with, and payments will be made on the common securities pro
rata with, the preferred securities, except that upon an event of default under
the amended and restated declaration of trust resulting from an event of
default under the debentures, our rights as holder of the common securities to
distributions and payments upon liquidation or redemption will be subordinated
to the rights of the holders of the preferred securities.
The Trust has a term of 31 years, but may dissolve earlier as provided in
the declaration. The Trust's business and affairs are conducted by the
trustees. The trustees for the Trust will be The Bank of New York, as the
property trustee, The Bank of New York (Delaware) as the Delaware trustee, and
three administrative trustees who are officers of Valley National Bancorp. The
Bank of New York, as property trustee, will act as sole indenture trustee under
the declaration. The Bank of New York will also act as guarantee trustee under
the guarantee and as debenture trustee under the indenture. The holder of the
common securities of the Trust will be entitled generally to appoint, remove or
replace the property trustee and/or the Delaware trustee. In the event of a
default of the declaration, the holders of a majority in liquidation amount of
the preferred securities may appoint, remove or replace the property trustee
and/or the Delaware trustees, instead. In no event will the holders of the
preferred securities have the right to vote to appoint, remove or replace the
administrative trustees; such voting rights will be vested exclusively in the
holder of the common securities.
The duties and obligations of each trustee are governed by the
declaration. As issuer of the junior subordinated debentures, we will pay all
fees, expenses, debts and obligations (other than the payment of distributions
and other payments on, the preferred securities) related to the Trust and the
offering of the preferred securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trust. The principal executive
office of the Trust is c/o Valley National Bancorp, 1455 Valley Road, Wayne,
New Jersey 07470 and its telephone number is 973-305-8800.
13
SELECTED CONSOLIDATED FINANCIAL DATA
The following presents our selected consolidated financial data for the
six months ended June 30, 2001 and 2000 and for each of the years in the
five-year period ended December 31, 2000. The financial data as of and for the
six months ended June 30, 2001 and 2000 have been derived from our unaudited
consolidated quarterly financial statements incorporated by reference in this
prospectus and, in the opinion of management, include all adjustments,
consisting of only normal, recurring adjustments, considered necessary for a
fair presentation. The financial data as of December 31, 2000 and 1999, and for
the years ended December 31, 2000, 1999 and 1998 have been derived from our
audited restated consolidated financial statements included in our Form 8-K
filed with the Securities and Exchange Commission, referred to as the SEC, on
October 1, 2001, which is incorporated by reference in this prospectus. The
financial data as of December 31, 1998, 1997 and 1996 and for the years ended
December 31, 1997 and 1996 have been restated to reflect the Merchants New York
Bancorp, Inc. merger, which was consummated on January 19, 2001 in a
transaction accounted for as a pooling-of-interests. Certain amounts in prior
periods have been reclassified to conform to current year presentation. The
selected consolidated financial data for the six months ended June 30, 2001 is
not necessarily indicative of our operating results or financial condition to
be expected for any future period. You should read the selected consolidated
financial data in conjunction with our consolidated financial statements and
notes thereto incorporated by reference in this prospectus. On October 17,
2001, we announced unaudited financial results for the quarter ended September
30, 2001. A copy of the earnings release was included in our Current Report on
Form 8-K dated October 17, 2001 and is incorporated in this prospectus by
reference.
14
SIX MONTHS
ENDED JUNE 30, YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA(1):
Interest income......................... $ 284,609 $ 278,571 $ 568,206 $ 517,818 $ 497,561 $ 489,639 $ 459,939
Interest expense........................ 120,955 121,675 252,648 208,792 208,531 212,436 202,050
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income..................... 163,654 156,896 315,558 309,026 289,030 277,203 257,889
Provision for loan losses............... 4,935 5,325 10,755 11,035 14,070 14,830 6,536
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision for
loan losses............................ 158,719 151,571 304,803 297,991 274,960 262,373 251,353
Non-interest income..................... 34,425 28,540 59,100 53,803 50,822 50,377 37,896
Non-interest expense.................... 95,653 82,546 171,139 164,719 170,097 163,579 156,851
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes.............. 97,491 97,565 192,764 187,075 155,685 149,171 132,398
Income taxes............................ 34,369 32,955 66,027 61,734 38,512 44,458 45,167
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income(2)........................... $ 63,122 $ 64,610 $ 126,737 $ 125,341 $ 117,173 $ 104,713 $ 87,231
========== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE DATA:
Earnings per share(1)(2):
Basic................................. $ 0.81 $ 0.81 $ 1.61 $ 1.52 $ 1.41 $ 1.26 $ 1.07
Diluted............................... 0.80 0.81 1.60 1.51 1.39 1.24 1.06
Book value.............................. 8.90 7.87 8.41 8.04 8.41 7.75 7.13
Dividends............................... 0.51 0.49 0.98 0.93 0.85 0.73 0.66
PERFORMANCE RATIOS(1)(2):
Return on average assets................ 1.59% 1.70% 1.66% 1.70% 1.70% 1.54% 1.34%
Return on average equity................ 18.64% 20.69% 20.24% 18.30% 17.72% 16.88% 14.96%
Net interest margin..................... 4.39% 4.39% 4.40% 4.49% 4.52% 4.42% 4.35%
FINANCIAL CONDITION DATA
(AT PERIOD END)(1):
Total assets............................ $8,126,153 $7,662,405 $7,901,260 $7,755,707 $7,168,540 $6,882,167 $6,768,951
Investment securities held to maturity.. 443,447 633,466 577,450 560,673 495,252 422,224 453,377
Investment securities available for sale 1,988,126 1,480,244 1,626,086 1,644,167 1,673,015 1,680,828 1,673,814
Loans................................... 5,196,318 5,109,093 5,189,110 4,991,849 4,509,412 4,304,348 4,080,613
Allowance for loan losses............... 61,996 65,432 61,995 64,228 62,606 59,337 58,543
Deposits................................ 6,196,179 5,945,304 6,136,828 6,010,233 5,904,473 5,756,168 5,861,594
Shareholders' equity.................... 695,406 617,253 655,982 652,708 702,787 646,794 599,867
ASSET QUALITY RATIOS:
Non-performing assets to total assets... 0.08% 0.10% 0.05% 0.08% 0.17% 0.22% 0.35%
Non-performing loans to total loans..... 0.12% 0.13% 0.07% 0.08% 0.17% 0.24% 0.43%
REGULATORY CAPITAL RATIOS:
Tier 1 risk-based capital............... 11.65% 11.26% 11.26% 12.03% 13.82% 14.03% 13.53%
Total risk-based capital................ 12.68% 12.39% 12.33% 13.17% 15.05% 15.15% 14.81%
Tier 1 leverage capital................. 8.44% 8.36% 8.48% 8.81% 9.71% 9.15% 8.62%
RATIO OF EARNINGS TO FIXED CHARGES(3):
Excluding interest on deposits(4)....... 4.12x 4.23x 4.03x 5.62x 7.19x 8.36x 10.94x
Including interest on deposits(5)....... 1.80x 1.80x 1.76x 1.89x 1.74x 1.70x 1.65x
--------
(1)On October 17, 2001, we announced unaudited financial results for the
quarter ended September 30, 2001. A copy of the earnings release was
included in our Current Report on Form 8-K dated October 17, 2001 and is
incorporated in this prospectus by reference.
(2)For the six months ended June 30, 2001, net income, earnings per share data
and the performance ratios include the merger-related charges, net of tax,
recorded in connection with the Merchants New York Bancorp, Inc. merger on
January 19, 2001 of $7.0 million, or $0.09 per diluted share. Excluding the
merger-related changes, the annualized return on average assets for the six
months ended June 30, 2001 would be 1.77% and the annualized return on
average equity would be 20.72%.
(3)The ratio of earnings to fixed charges is calculated by adding income before
income taxes plus fixed charges and dividing that sum by fixed charges.
(4)For the purpose of computing the ratio of earnings, excluding interest on
deposits, to net fixed charges, earnings represent income before income
taxes plus net fixed charges. Net fixed charges include interest expense,
other than interest on deposits, and that portion of rental expense,
generally one third, deemed representative of the interest factor.
(5)For the purpose of computing the ratio of earnings, including interest on
deposits, to net fixed charges, earnings represent income before income
taxes plus fixed charges. Fixed charges include interest expense and that
portion of rental expense, generally one third, deemed representative of the
interest factor.
15
CAPITALIZATION
The following table sets forth certainour consolidated capitalization at June
30, 2001:
. on an actual basis; and
. as adjusted to give effect to the receipt and application by us of
the net proceeds we expect to receive from the sale of the preferred
securities in this offering.
JUNE 30, 2001
------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
Long-term debt(1)...................................................................... $949,768 $949,768
-------- --------
Company obligated mandatorily redeemable trust preferred securities of subsidiary trust
holding solely junior subordinated debentures........................................ $ -- $175,000
-------- --------
Preferred stock, no par value: authorized 30,000,000 shares, none issued............... -- --
Common stock, no par value: authorized 113,953,711 shares; issued 78,176,866 shares.... 33,316 33,316
Surplus................................................................................ 405,336 405,336
Retained earnings...................................................................... 245,994 245,994
Unallocated common stock held by employee benefit plan................................. (686) (686)
Accumulated other comprehensive income................................................. 11,446 11,446
-------- --------
Total shareholders' equity............................................................. $695,406 $695,406
-------- --------
Total capitalization................................................................... $695,406 $870,406
======== ========
--------
(1)Represents long-term debt of subsidiary bank consisting of Federal Home Loan
Bank advances and repurchase agreements. This amount is not included in
total capitalization because it is not rated debt.
REGULATORY CAPITAL RATIOS
The following table sets forth our consolidated capital ratios at June
30, 2001:
. on an actual basis; and
. as adjusted to give effect to the sale of the preferred securities in
this offering.
JUNE 30, 2001
-------------------
AS
ACTUAL ADJUSTED (1)
------ ------------
Tier 1 risk-based capital...... 11.7% 14.2%
Total risk-based capital....... 12.7% 15.3%
Leverage....................... 8.4% 10.4%
--------
(1) Assumes the net proceeds are invested in 100% risk-weighted assets.
16
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as our
subsidiary, and, accordingly, the accounts of the Trust will be included in our
consolidated financial statements. The preferred securities will be presented
as a separate line item in our consolidated balance sheet and appropriate
disclosures about the preferred securities, the guarantee and the junior
subordinated debentures will be included in the notes to our consolidated
financial statements. For financial reporting purposes, we will record
distributions on the preferred securities in the consolidated statements of
income.
Future reports we file under the Securities Exchange Act of 1934, as
amended, referred to as the Exchange Act, will include a footnote to the
consolidated financial statements stating that:
. the Trust is wholly-owned;
. the sole assets of the Trust are the junior subordinated debentures
(specifying the principal amount, interest rate and maturity date of
the junior subordinated debentures); and
. our obligations under the declaration, the junior subordinated
debentures and related indenture and the guarantee, in the aggregate,
constitute a full and unconditional guarantee by us of the
obligations of the Trust under the preferred securities.
We expect that the Trust will not be required to provide separate reports
under the Exchange Act.
USE OF PROCEEDS
The Trust will issue the preferred securities and common securities and
the proceeds from such issuances to buy our junior subordinated debentures. The
net proceeds we will receive from the sale of the preferred securities, net of
estimated underwriting discounts, commissions and other estimated offering
expenses, are estimated to be approximately $ million. The Trust will invest
all of the proceeds from the sale of the preferred securities in the junior
subordinated debentures. We intend to use the net proceeds for general
corporate purposes, which may include the repurchase of our common stock, the
repayment of our debt and investments in or advances to our existing or future
subsidiaries.
17
DESCRIPTION OF THE PREFERRED SECURITIES
We have summarized below the material terms of the preferred securities.
This summary is not a complete description of all of the terms and provisions
of the preferred securities. For more information, we refer you to the form of
the amended and restated declaration of trust, which we filed as an exhibit to
the registration statement of August 1,
2000,which the prospectus is a part.
GENERAL
The preferred securities will represent undivided beneficial ownership
interests in the assets of the Trust.
The preferred securities will be limited to $ aggregate liquidation
amount at any one time outstanding. The preferred securities will rank equally
with the common securities, except as described under "Subordination of Common
Securities." The property trustee will have legal title to the junior
subordinated debentures and will hold them in trust for the benefit of you and
the other holders of the preferred securities. Our guarantee for the benefit of
the holders of the preferred securities is a guarantee on a subordinated basis
with respect to the preferred securities but it does not guarantee payment of
distributions or amounts payable on redemption of the preferred securities or
liquidation of the Trust when the Trust does not have funds available for such
payments.
DISTRIBUTIONS
Distributions on the preferred securities will be cumulative, and will
accumulate from the date that the preferred securities are first issued.
Distributions will be payable at the annual rate of % of the liquidation
amount, payable quarterly in arrears on the distribution dates, which are March
15th, June 15th, September 15th and December 15th of each year, commencing
December 15, 2001 to the holders of the preferred securities on the relevant
record dates. The record date will be the 1st day of the month in which the
relevant payment date occurs. The record dates and payment dates for the
preferred securities are the same as the record dates and payment dates for the
junior subordinated debentures. Distributions payable on any preferred
securities that are not paid on the scheduled distribution date will cease to
be payable to the person in whose name such preferred securities are registered
on the relevant record date, and such distribution will instead be payable to
the person in whose name such preferred securities are registered on a special
record date set for this purpose. The amount of distributions payable for any
distribution period will be based on a 360-day year of twelve 30-day months.
The amount of distributions payable for any period shorter than a full
quarterly period will be computed on the basis of a 30-day month and, for
periods of less than a month, the actual number of days elapsed in a 30-day
month.
Distributions not paid when due will accumulate additional distributions
at the annual rate of % on the amount of unpaid distributions, compounded
quarterly.
If any distribution date would otherwise fall on a day that is not a
business day, the required payment will be made on the next business day
without any additional payments for the delay. A business day means any day
other than a Saturday or a Sunday, or a day on which banking institutions in
Wilmington, Delaware, Wayne, New Jersey or New York, New York are authorized or
required by law or executive order to remain closed.
The Trust's revenue available for distribution to holders of the
preferred securities will be limited to our payments to the Trust under our
junior subordinated debentures. If we do not make interest payments on the
junior subordinated debentures, the property trustee will not have funds
available to pay distributions on the preferred securities. Our guarantee only
covers the payment of distributions if and to the extent that the Trust has
funds available to pay the distributions.
18
DEFERRAL OF DISTRIBUTIONS
As long as no debenture event of default exists, we have the right under
the indenture to elect to defer the payment of interest on the junior
subordinated debentures. We may exercise this right at any time or from time to
time before the end of any deferral period, for no more than 20 consecutive
quarterly periods. No deferral period will end on a date other than an interest
payment date or extend beyond , 2031, the stated maturity date of the junior
subordinated debentures. If we defer payments, the Trust will defer quarterly
distributions on the preferred securities during the deferral period subject to
the above requirements. During any deferral period, distributions will continue
to accumulate on the preferred securities and on any accumulated and unpaid
distributions, compounded quarterly at the annual rate of %, to the extent
permitted by law from the relevant distribution date. The term distributions
includes any accumulated additional distributions.
At the end of any deferral period and upon the payment of all amounts
then due on any interest payment date, we may elect to begin a new deferral
period. No interest will be due and payable during a deferral period until the
deferral period ends. We must give the property trustee, the administrative
trustees and the debenture trustee notice of our election to defer interest
payments or to extend a deferral period at least five business days before the
earlier of:
. the date the distributions on the preferred securities would have
been payable, except for the election to begin a deferral period; or
. the date the property trustee is required to give notice to any
securities exchange or automated quotation system or to holders of
the preferred securities of the record date or the date such
distributions are payable, but in any event at least five business
days before such record date.
There is no limitation on the number of times that we may elect to begin
a deferral period.
During any deferral period, we may not and we may not permit any
subsidiary to:
. declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any
of our capital stock;
. make any payment of principal of, or interest on, or repay,
repurchase or redeem any debt securities (including any other
debentures) that rank equal or junior to the junior subordinated
debentures; or
. make any guarantee payments with respect to any guarantee of the debt
securities of any of our subsidiaries (including other guarantees) if
such guarantee ranks equal or junior to the junior subordinated
debentures.
Notwithstanding the foregoing, during a deferral period the following is
permitted:
. a payment of dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, our common
stock;
. a 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;
. a payment under the guarantee;
. a reclassification of our capital stock or the exchange or conversion
of one class or series of our capital stock for another class or
series of our capital stock;
. the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged; and
. the purchase of common stock beneficially ownedrelated to the issuance of common stock
or rights under any of our benefit plans for our directors, officers
or employees or any of our dividend reinvestment plans.
19
We do not currently intend to exercise our right to defer payments of
interest on the junior subordinated debentures.
REDEMPTION
We will have the right to redeem the junior subordinated debentures at a
redemption price equal to 100% of the principal amount, plus accrued interest
to the date of redemption:
. in whole or in part, on or after , 2006; and
being
offered hereby. in whole, but not in part, prior to , 2006 if there are specified
changes in the bank regulatory, investment company or tax laws that
would adversely affect the status of the Trust, the preferred
securities or the junior subordinated debentures (each of which is a
special event and is described more fully below).
Upon repayment at maturity on , 2031 or redemption, in whole or in part
after , 2006, or redemption in whole, but not in part, prior to , 2006 of
the junior subordinated debentures (other than following the distribution of
the junior subordinated debentures to you as a holder of the preferred
securities and us, as the holder of the common securities), the property
trustee will apply the proceeds from the repayment or redemption of the junior
subordinated debentures (as long as the property trustee has received written
notice no later than 45 days before the repayment) to redeem preferred
securities and common securities having an aggregate liquidation amount equal
to the principal amount of the junior subordinated debentures paid to the
Trust. The redemption price for any preferred security or common security will
be equal to the $25 liquidation amount of such security plus accumulated and
unpaid distributions to the redemption date. The Trust will give notice of any
redemption of preferred securities between 30 to 60 days prior to the
redemption date.
If we redeem less than all of the junior subordinated debentures on the
stated maturity date or a redemption date, then the property trustee will
allocate the proceeds of the redemption on a pro rata basis among the preferred
securities and the common securities unless an event of default has occurred
under the junior subordinated debentures, in which case no proceeds will be
allocated to the common securities until the preferred securities are paid in
full.
If required by rule or regulation, we will obtain prior approval of the
Board of Governors of the Federal Reserve before any redemption of the junior
subordinated debentures.
The redemption price of the preferred securities will correspond to the
maturity and redemption prices of the junior subordinated debentures.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding preferred
securities unless all accrued and unpaid distributions have been paid on all
preferred securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
Whenever we redeem or repay the junior subordinated debentures, the Trust
will redeem preferred securities at the redemption price with the proceeds that
it receives from our redemption or repayment of the junior subordinated
debentures. Any redemption of preferred securities will be made and the
redemption price will be payable on the redemption date only to the extent that
the Trust has funds available to pay the redemption price.
If the Trust gives a notice of redemption for the preferred securities,
then, by 12:00 noon, New York City time, on the redemption date, to the extent
funds are available, with respect to:
. the preferred securities held by DTC or its nominees, the property
trustee will deposit, or cause the paying agent to deposit,
irrevocably with DTC funds sufficient to pay the redemption price;
and
20
. the preferred securities held in certificated form, if any, the
property trustee will irrevocably deposit with the paying agent funds
sufficient to pay the redemption price and will give the paying agent
irrevocable instructions and authority to pay the redemption price to
the holders upon surrender of their certificates evidencing the
preferred securities.
The paying agent will initially be the property trustee and any co-paying
agent chosen by the selling shareholders listed below. Allproperty trustee and acceptable to the administrative
trustees and us.
Notwithstanding the foregoing, distributions payable on or before the
redemption date will be payable to the holders of the shares were
issuedpreferred securities on
the relevant record dates for the related distribution dates. If the Trust
gives a notice of redemption and funds are deposited as required, then
immediately prior to the shareholdersclose of Hallmark Capital Management, Inc.business on the redemption date,
distributions will cease to accrue on the preferred securities called for
redemption, all rights of the holders of the preferred securities called for
redemption will cease, except the right of the holders of the preferred
securities to receive the redemption price, without interest, and the preferred
securities called to be redeemed will cease to be outstanding.
Any notice of redemption will be irrevocable. If any redemption date for
the preferred securities is not a business day, then the redemption price,
without interest or any other payment in respect of the delay, will be paid on
the next business day.
If payment of the redemption price is improperly withheld or refused and
not paid either by the Trust or by us pursuant to the guarantee:
. distributions on the preferred securities will continue to accumulate
from the redemption date originally established by the Trust to the
date such redemption price is actually paid; and
. the actual payment date will be the redemption date for purposes of
calculating the redemption price.
Notice of any redemption will be mailed between 30 and 60 days before the
redemption date to each holder of preferred securities at its registered
address. Unless we default in payment of the redemption price on, or in the
repayment of, the junior subordinated debentures, on and after the redemption
date, distributions will cease to accrue on the preferred securities called for
redemption.
The Trust will not be required to:
. issue, or register the transfer or exchange of, any preferred
securities or common securities during a period beginning at the
opening of business 15 days before the mailing of a notice of
redemption of preferred securities or common securities and ending at
the close of business on the day of the mailing of the relevant
notice of redemption; and
. register the transfer or exchange of any preferred securities or
common securities so selected for redemption, in whole or in part,
except the unredeemed portion of any preferred securities or common
securities being redeemed in part.
Subject to applicable law, including, without limitation, federal
securities laws and the regulations of the Federal Reserve Board, we or our
subsidiaries may at any time, and from time to time, purchase outstanding
preferred securities in the open market or by private agreement.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We will have the right at any time to dissolve the Trust and, after
satisfying the liabilities owed to the Trust's creditors, we will have the
right to distribute the junior subordinated debentures to the holders of the
preferred securities and to us as holder of the common securities. This may
require the prior approval of the
21
Federal Reserve Board if approval is then required under applicable law, rules,
guidelines or policies. If the junior subordinated debentures are distributed
to the holders of the preferred securities, we will use our best efforts to
cause the junior subordinated debentures to be listed on any exchange as the
preferred securities are then listed. Our right to dissolve the Trust is
subject to our receiving:
. an opinion of counsel to the effect that if we distribute the junior
subordinated debentures, the holders of the preferred securities will
not experience a taxable event; and
. all required regulatory approvals.
The Trust will automatically dissolve if:
. specified bankruptcy events occur, or we dissolve or liquidate;
. we, as sponsor, have given written directions to the property trustee
to dissolve the Trust (which direction is at our option and, except
as described above, wholly within our discretion, as sponsor) and
distribute junior subordinated debentures having a principal amount
equal to the liquidation amount of the preferred securities and the
common securities to holders of such securities;
. the Trust redeems all of the preferred securities and common
securities in accordance with their terms;
. the junior subordinated debentures are redeemed or repaid or there
are no junior subordinated debentures outstanding;
. the Trust's term expires; or
. a court of competent jurisdiction enters an order for the dissolution
of the Trust.
If the Trust is dissolved for any of the above reasons, except for a
redemption of all preferred securities and the common securities, the
administrative trustees will liquidate the Trust as quickly as they determine
to be possible by distributing to holders of the preferred securities and the
common securities, after satisfying the liabilities owed to the Trust's
creditors, junior subordinated debentures having a principal amount equal to
the liquidation amount of the preferred securities and the common securities,
unless the property trustee determines that this distribution is not
practicable. If the property trustee determines that this distribution is not
practicable, the holders of the preferred securities will be entitled to
receive an amount equal to the aggregate of the liquidation amount, plus
accumulated and unpaid distributions on the preferred securities to the date of
payment out of the assets of the Trust available for distribution to holders,
after satisfying the liabilities owed to the Trust's creditors as provided by
applicable law. If such a distribution can be paid only in part because the
Trust has insufficient assets available to pay the full amount of that
distribution, then the amounts payable shall be paid pro rata on the preferred
securities and the common securities, except that if an event of default exists
under the indenture, the preferred securities will have a priority over the
common securities.
After the liquidation date is fixed for any distribution of junior
subordinated debentures to holders of the preferred securities:
. the preferred securities will no longer be deemed to be outstanding;
. DTC or its nominee will receive in respect of each registered global
certificate representing preferred securities a registered global
certificate representing the junior subordinated debentures to be
delivered upon this distribution; and
. certificates representing preferred securities not held by DTC or its
nominee, if any, will be deemed to represent junior subordinated
debentures having a principal amount equal to the liquidation amount
of those preferred securities, bearing an interest rate identical to
the distribution rate of the preferred securities, and bearing
accrued and unpaid interest in an amount equal to the accumulated and
unpaid distributions on those preferred securities until such
certificates are presented to the
22
administrative trustees or their agent for cancellation, in which
case we will issue to those holders, and the debenture trustee will
authenticate, a certificate representing the junior subordinated
debentures.
We cannot assure you of the market prices for the preferred securities or
the junior subordinated debentures that may be distributed to you in exchange
for the preferred securities if a dissolution and liquidation of the Trust were
to occur. Accordingly, the preferred securities that you purchase, or the
junior subordinated debentures that you may receive upon a dissolution and
liquidation of the Trust, may trade at a discount to the price that you paid to
purchase the preferred securities.
If we elect not to redeem the junior subordinated debentures prior to
maturity and either elect not to or we are unable to liquidate the Trust and
distribute the junior subordinated debentures to holders of the preferred
securities, the preferred securities will remain outstanding until the
repayment of the junior subordinated debentures on , 2031.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, the redemption price of, and the liquidation
distribution for, the preferred securities and the common securities, as
applicable, will generally be made on a pro rata basis. However, if an event of
default under the junior subordinated debentures exists on any distribution,
redemption or liquidation date, no payment of any distribution on, or
redemption price of, or liquidation distribution for, any of the common
securities, and no other payment on account of the redemption, liquidation or
other acquisition of the common securities, will be made unless payment in full
in cash of all accumulated and unpaid distributions on all of the outstanding
preferred securities for all distribution periods terminating on or before the
distribution, redemption or liquidation date, or payment of the redemption
price or liquidation distribution, is made in full. All funds available to the
property trustee will first be applied to the payment in full in cash of all
distributions on, or redemption price of, or liquidation distribution for, the
preferred securities then due and payable.
In the case of any event of default under the declaration, we, as holder
of all of the common securities, will be deemed to have waived any right to act
with respect to the event of default until the effect of the event of default
has been cured or waived. Until any event of default has been cured or waived,
the property trustee will act solely on behalf of the holders of the preferred
securities and not on our behalf, and only the holders of the preferred
securities will have the right to direct the property trustee to act on their
behalf.
EVENTS OF DEFAULT; NOTICE
An event of default under the junior subordinated debentures constitutes
an event of default under the declaration.
The declaration provides that within ten (10) business days after the
property trustee has actual knowledge that any event of default has occurred,
the property trustee will give notice of the event of default to the holders of
the preferred securities, the administrative trustees and, to us, as sponsor,
unless the event of default has been cured or waived. We, as sponsor, and the
administrative trustees are required to file annually with the property trustee
a certificate as to whether we and the administrative trustees have complied
with the applicable conditions and covenants of the declaration.
If an event of default under the junior subordinated debentures exists
that is attributable to our failure to pay the principal or interest (including
compounded interest and additional sums, if any) on the junior subordinated
debentures on the due date, a holder of preferred securities may institute a
direct action against us for enforcement of payment to that holder of the
principal of or interest on the junior subordinated debentures having a
principal amount equal to the total liquidation amount of that holder's
preferred securities.
23
If an event of default exists under the junior subordinated debentures,
the preferred securities will have a preference over the common securities. An
event of default does not entitle the holders of preferred securities to
require the redemption of the preferred securities.
REMOVAL OF ISSUER TRUSTEES
Unless an event of default exists under the debentures, we may remove the
property trustee and the Delaware trustee at any time. If an event of default
exists, the property trustee and the Delaware trustee may be removed only by
the holders of a majority in liquidation amount of the outstanding preferred
securities. In no event will the holders of the preferred securities have the
right to vote to appoint, remove or replace the administrative trustees,
because these voting rights are vested exclusively in us as the holder of all
of the common securities. No resignation or removal of the property trustee or
the Delaware trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor trustee in
accordance with the declaration.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
If the property trustee, the Delaware trustee or any administrative
trustee that is not a natural person is merged, converted or consolidated into
another entity, or the property trustee or the Delaware trustee is a party to a
merger, of Hallmark into HCM Acquisition Corp.,conversion or consolidation which results in a subsidiary of Valley. The offer
and salenew entity, or an entity
succeeds to all or substantially all of the shares herebycorporate trust business of the
property trustee or the Delaware trustee, the new entity shall be the successor
of the respective trustee under the declaration, provided that the entity is
otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease all or substantially all of its
properties and assets to any corporation or other entity, except as described
below. The Trust may, at our request, as sponsor, and with the consent of the
administrative trustees but without the consent of the holders of the preferred
securities, merge with or into, consolidate, amalgamate or be replaced by or
convey, transfer or lease all or substantially all of its properties and assets
to a trust organized as such under the laws of any state; provided, that:
. the successor trust either:
. expressly assumes all of the obligations of the Trust with respect
to the preferred securities; or
. substitutes securities for the preferred securities that have
substantially the same terms as the preferred securities so long
as the substitute securities rank equal to the preferred
securities in priority with respect to distributions and payments
upon liquidation, redemption and otherwise;
. we appoint a trustee of the successor trust possessing the same
powers and duties as the property trustee with respect to the junior
subordinated debentures;
. the substitute securities are being registered pursuantlisted or quoted, or any substitute
securities will be listed or quoted upon notification of issuance, on
any national securities exchange or other organization on which the
preferred securities are then listed or quoted, if any;
. if the preferred securities, substitute securities or junior
subordinated debentures are rated by any nationally recognized
statistical rating organization prior to registrationsuch transaction, the
transaction does not cause any of those securities to be downgraded
by any such organization;
. the transaction does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities (including any
successor securities) in any material respect;
24
. the successor has a purpose substantially identical to that of the
Trust;
. prior to the transaction, we received an opinion from independent
counsel to the Trust experienced in such matters to the effect that:
. the transaction does not adversely affect the rights, preferences
and privileges of the holders of the preferred securities
(including any successor securities) in any material respect
(other than any dilution of such holders' interests in the new
entity);
. following the transaction, neither the Trust nor the successor
will be required to register as an investment company under the
Investment Company Act; and
. the Trust continues to be, and any successor will be, classified
as a grantor trust for federal income tax purposes; and
. we, or any permitted successor or assignee, own all of the common
securities of the successor and guarantee the obligations of the
successor under the substitute securities at least to the extent
provided by our guarantee and the common securities guarantee.
Notwithstanding the foregoing, the Trust may not, except with the consent
of holders of 100% in liquidation amount of the preferred securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease all or substantially all of its properties and assets to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if the transaction would cause the Trust or the
successor not to be classified as a grantor trust for federal income tax
purposes.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except under limited circumstances and as otherwise required by law and
the declaration, the holders of the preferred securities will have no voting
rights.
We, together with the property trustee and the administrative trustees,
may amend the declaration from time to time, without the consent of the holders
of the preferred securities, 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 are not inconsistent with the
other provisions of the declaration; or
. modify, eliminate or add to any provisions of the declaration as is
necessary to ensure that at all times that any preferred securities
are outstanding, the Trust will be classified as a grantor trust for
federal income tax purposes, or to ensure that the Trust will not be
required to register as an investment company under the Investment
Company Act;
provided, however, that the amendment would not adversely affect in any
material respect the interests of the holders of the preferred securities.
We, together with the trustees, may amend the declaration:
. with the consent of holders of a majority in liquidation amount of
the outstanding preferred securities; and
. upon receipt by the trustees of an opinion of counsel experienced in
such matters to the effect that the amendment or the exercise of any
power granted to the selling shareholderstrustees in accordance with the amendment will
not affect the Trust's status as being a grantor trust for federal
income tax purposes or the Trust's exemption from status as an
investment company under the Investment Company Act;
25
provided, that, without the consent of each holder of preferred securities and
common securities, no amendment may change the amount or timing of any
distribution on the preferred securities and common securities or otherwise
adversely affect the amount of any distribution required to be made in respect
of the preferred securities and common securities as of a specified date,
change any of the redemption provisions, or restrict the right of a holder of
preferred securities and common securities to sue for the enforcement of any
payment on or after the specified date.
So long as the property trustee holds any junior subordinated debentures,
the trustees may not:
. direct the time, method and place of conducting any proceeding for
any remedy available to the debenture trustee, or execute any trust
or power conferred on the debenture trustee with respect to the
junior subordinated debentures;
. waive certain past defaults under the indenture;
. exercise any right to rescind or annul a declaration accelerating the
maturity of the principal of the junior subordinated debentures; or
. 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 consent of the holders of a majority
in liquidation amount of all outstanding preferred securities; provided,
however, that where a consent under the indenture would require the consent of
each holder of junior subordinated debentures affected by the amendment,
modification or termination, the property trustee will not give its consent
without the prior approval of each holder of the preferred securities; provided
further, where a consent under the indenture would require the consent of
holders of more than or less than a majority of the aggregate principal amount
of junior subordinated debentures affected thereby, only the holders of the
percentage of aggregate stated liquidation amount of the preferred securities
which is at least equal to the percentage required under the indenture may
direct the property trustee to give such consent; provided further, that if an
event of default under the debentures has occurred and is continuing, then
holders of 25% of the aggregate liquidation amount of the preferred securities
may direct the property trustee to declare the principal of and interest or
other required payments on the junior subordinated debentures due and payable.
The trustees shall not revoke any action previously authorized or
approved by a vote of the holders of the preferred securities, except by
subsequent vote of such holders. The property trustee shall notify each holder
of preferred securities of any notice of default with respect to the junior
subordinated debentures. In addition to obtaining the approvals of the holders
of the preferred securities, prior to taking any of the foregoing actions, the
trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust will continue to be classified as a grantor trust for
federal income tax purposes after taking the action into account.
Any required approval of holders of preferred securities may be given at a
meeting of the holders convened for the purpose of approving the matter or
pursuant to written consent. The property trustee will cause a notice to be
given of any meeting at which holders of preferred securities are entitled to
vote or of any matter upon which action by written consent of such holders is to
be taken, to be given to each holder of preferred securities in accordance with
the declaration.
No vote or consent of the holders of preferred securities will be
required for the Trust to redeem and cancel the preferred securities in
accordance with the declaration.
Notwithstanding that holders of the preferred securities are entitled to
vote or consent under any of the circumstances described above, any of the
preferred securities that are owned by us, the Trust, the trustees or any
affiliates thereof shall, for purposes of such vote or consent, be treated as
if they were not outstanding.
FORM, REGISTRATION AND TRANSFER
The preferred securities will be represented by one or more preferred
securities in registered, global form. The global preferred securities will be
deposited upon issuance with the property trustee as custodian for DTC, in The
Borough of Manhattan, City of 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.
26
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the Trust so that:
. the Trust will not be deemed to be an investment company required to
be registered under the Investment Company Act;
. the Trust will be classified as a grantor trust for federal income
tax purposes; and
. the junior subordinated debentures will be treated as our
indebtedness for federal income tax purposes.
We, together with 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 we and the administrative trustees determine in
our discretion is necessary or desirable, as long as it does not materially
adversely affect the interests of the holders of the preferred securities.
The declaration provides that holders of the preferred securities have no
preemptive or similar rights to subscribe for any additional preferred
securities and the issuance of preferred securities is not subject to
preemptive or similar rights.
We will make a commercially reasonable effort to maintain the listing of
the preferred securities on the New York Stock Exchange or another national
securities exchange or the Nasdaq National Market, but this listing requirement
will not prevent us from redeeming all or a portion of the preferred securities
in accordance with the declaration.
The Trust may not, among other things, borrow money, issue debt, execute
mortgages or pledge any of its assets.
GOVERNING LAW
The declaration and preferred securities will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflict of law principles.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
Except if an event of default exists under the declaration, the property
trustee will undertake to perform only the duties specifically set forth in the
declaration. While such an event of default exists, the property trustee must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision, the
property trustee is not obligated to exercise any of the powers vested in it by
the declaration at the request of any holder of preferred securities, unless it
is offered reasonable indemnity against the costs, expenses and liabilities
that it might incur. If no event of default exists and the property trustee is
required to decide between alternative courses of action or to construe
ambiguous provisions in the declaration or is unsure of the application of any
provision of the declaration, and the matter is not one on which holders of the
preferred securities or the common securities are entitled under the
declaration to vote, then the property trustee shall take such action as
directed by us and, if not directed, shall take such action as it deems
advisable and in the best interests of the holders of the preferred securities
and will have no liability, except for its own bad faith, negligence or willful
misconduct.
27
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
We have summarized below the material terms of the junior subordinated
debentures. This summary is not a complete description of all of the terms and
provisions of the junior subordinated debentures. For more information, we
refer you to the indenture and the form of the junior subordinated debentures,
which we filed as exhibits to the registration statement of which this
prospectus is a part. The Bank of New York will act as debenture trustee under
the indenture.
GENERAL
The Trust will issue the preferred securities and the common securities
and use the proceeds from such issuances to buy junior subordinated debentures
issued by Valley National Bancorp. The junior subordinated debentures will bear
interest at the annual rate of % of the principal amount of the junior
subordinated debentures, payable quarterly in arrears on interest payment dates
of March 15th, June 15th, September 15th and December 15th of each year to the
person in whose name each junior subordinated debenture is registered at the
close of business on the relevant record date, except that interest payable on
the maturity date of the junior subordinated debentures shall be paid to the
person to whom principal is paid. The record dates will be the 1st day of the
month in which the relevant interest payment occurs. The first interest payment
date for the junior subordinated debentures will be December 15, 2001. The
period beginning on and including the date the junior subordinated debentures
are first issued and ending on but excluding December 15, 2001 and each period
beginning on and including an interest payment date and ending on but excluding
the next interest payment date is an interest period.
We anticipate that, until the liquidation, if any, of the Trust, each
junior subordinated debenture will be held by the property trustee in trust for
the benefit of the holders of the preferred securities and common securities.
The amount of interest payable for any interest period will be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full quarterly period will be computed on the
basis of a 30-day month and, for periods of less than a month, the actual
number of days elapsed per 30-day month. In the event that any interest payment
date would otherwise fall on a day that is not a business day, the required
payment will be made on the next business day (without any interest or other
payment due to the delay).
The distribution provisions of the preferred securities correspond to the
interest payment provisions of the junior subordinated debentures because the
preferred securities represent undivided beneficial ownership interests in the
junior subordinated debentures.
Accrued interest that is not paid on the applicable interest payment date
will bear additional interest (to the extent permitted by law) at the rate of
% per year, compounded quarterly, from the last interest payment date for which
interest was paid. The term "interest" as used in this prospectus includes
quarterly interest payments and interest on quarterly interest payments not
paid on the applicable interest payment date.
Notwithstanding anything to the contrary above, if the stated maturity
date or date of earlier redemption falls on a day that is not a business day,
the payment of principal and interest will be paid on the next business day,
with the same force and effect as if made on such date, and no interest on such
payments will accrue from and after such date.
The junior subordinated debentures will be issued as a series of junior
subordinated deferrable interest debentures under the indenture.
The junior subordinated debentures will mature on , 2031 unless
redeemed prior thereto in accordance with the terms discussed below.
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The junior subordinated debentures will rank equal to all of our other
junior subordinated debentures and will be unsecured and rank subordinate and
junior to all of our senior indebtedness to the extent and in the manner set
forth in the indenture.
We are a New Jersey corporation registered as a bank holding company and
our bank subsidiary, Valley National Bank, directly or through its own
subsidiaries, owns almost all of our operating assets. We are a legal entity
separate and distinct from our subsidiaries. Our revenues (on a parent company
only basis) result in substantial part from dividends paid to us by Valley
National Bank. Payments of dividends to us by the bank, without prior
regulatory approval, are subject to regulatory limitations.
Under the National Bank Act, a national bank may declare dividends only
if its surplus equals or exceeds its common capital. Moreover, a national bank
may not declare a dividend if the total amount of all dividends, including the
proposed dividend, declared by the national bank in any calendar year exceeds
the total of the national bank's retained net income of that year to date,
combined with its retained net income of the preceding two years, unless the
dividend is approved by the OCC. The OCC also has the authority to prohibit the
bank from paying dividends or otherwise supplying funds to us if it determines
that such payment would constitute an unsafe and unsound banking practice. As
of June 30, 2001, approximately $21.0 million was available for the payment of
dividends by Valley National Bank to us without further approval from the bank
regulating authorities.
Notwithstanding the permissibility of a particular dividend payment under
the National Bank Act, under the Federal Deposit Insurance Act, a bank may not
pay dividends, if, after payment of the dividends, the bank would be
"undercapitalized," as that term is defined under the statute. Based on Valley
National Bank's current financial condition, we do not expect that this
provision will have any impact on our ability to obtain dividends from the
bank.
In addition to regulatory restrictions on the payment of dividends,
Valley National Bank is subject to certain restrictions imposed by federal law
on any extensions of credit it makes to its affiliates and on investments in
stock or other securities of its affiliates. We are considered an affiliate of
the bank. These restrictions prevent affiliates of the bank, including us, from
borrowing from the bank, unless various types of collateral with a market value
well in excess of the principal amount secure the loan. Federal law limits the
aggregate amount of loans to and investments in any single affiliate to 10% of
the bank's capital stock and surplus and also limits the aggregate amount of
loans to and investments in all affiliates to 20% of the bank's capital stock
and surplus.
If we do not receive sufficient cash dividends or borrowings from the
bank, then it is unlikely that we will have sufficient funds to make payments
on the junior subordinated debentures and the guarantee, thereby leaving
insufficient funds for the Trust to make payments to you on the preferred
securities.
Also, as a bank holding company, our right to receive any distribution of
assets of any subsidiary, upon that subsidiary's liquidation or reorganization
or otherwise (and thus your right to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary,
except to the extent we are also recognized as a creditor of that subsidiary
under the Federal Deposit Insurance Act. For example, if Valley National Bank
were to be liquidated or reorganized, depositors of the bank would have the
right to receive distributions from the bank before us unless we were
considered a creditor of the bank. At June 30, 2001, the bank had total
liabilities, including deposits, of $7.4 billion.
The junior subordinated debentures will be effectively subordinated to
all existing and future liabilities of our subsidiaries (including the bank's
deposit liabilities) and all liabilities of any of our future subsidiaries. At
June 30, 2001, we had approximately $10.0 million in senior indebtedness. The
indenture does not limit us or any of our subsidiaries from incurring or
issuing other secured or unsecured debt, including senior indebtedness.
29
FORM, REGISTRATION AND TRANSFER
If the junior subordinated debentures are distributed to the holders of
the preferred securities, the junior subordinated debentures may be represented
by one or more global certificates registered in the name of Cede & Co., as the
nominee of DTC. The depositary arrangements for such junior subordinated
debentures are expected to be substantially similar to those in effect for the
preferred securities.
PAYMENT AND PAYING AGENTS
Payment of principal of and interest on the junior subordinated
debentures will be made at the office of the debenture trustee in The Borough
of Manhattan, City of New York at the office of such paying agent or paying
agents as we may designate from time to time, except that, at our option,
payment of any interest may be made, except in the case of junior subordinated
debentures in global form:
. by check mailed to the address of the person or entity entitled to
the interest payment as such address shall appear in the register for
the junior subordinated debentures; or
. by transfer to an account maintained by the person or entity entitled
to the interest payment as specified in the register, provided that
proper transfer instructions have been received by the relevant
record date.
Payment of any interest on any junior subordinated debenture will be made
to the person or entity in whose name the junior subordinated debenture is
registered at the close of business on the record date for the interest payment
date, except in the case of defaulted interest. Interest payable on the
maturity date of the junior subordinated debenture will be paid to the person
to whom principal is paid.
We may at any time designate additional paying agents or rescind the
designation of any paying agent; however we will always be required to maintain
a paying agent in each place of payment for the junior subordinated debentures.
Any moneys deposited with the debenture trustee or any paying agent, or
then held by us, in trust for the payment of the principal of or interest on
any junior subordinated debenture and remaining unclaimed for two years after
such principal or interest has become due and payable shall, at our request, be
repaid to us and the holder of the junior subordinated debenture shall
thereafter look, as a general unsecured creditor, only to us for payment.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no event of default has occurred and is continuing under the
indenture, which we refer to as a debenture event of default, we will have the
right under the indenture to defer the payment of interest on the junior
subordinated debentures, at any time and from time to time, for no more than 20
consecutive quarterly periods, provided that no deferral period shall end on a
date other than an interest payment date or extend beyond , 2031. At the end of
a deferral period, we must pay all interest then accrued and unpaid (together
with interest thereon at the rate of % per year, compounded quarterly from the
last interest payment date to which interest was paid, to the extent permitted
by applicable law). During a deferral period, interest will continue to accrue,
and holders of the preferred securities or, if the junior subordinated
debentures have been distributed to holders of the preferred securities,
holders of junior subordinated debentures, will be required to include that
deferred interest in gross income for federal income tax purposes on an accrual
method of accounting prescribed by the Internal Revenue Code, as amended (the
"Code") and Treasury regulation provisions on original issue discount prior to
the receipt of cash attributable to that income.
During any deferral period, we may not, and we may not permit any of our
subsidiaries, to:
. declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any
of our capital stock;
30
. make any payment of principal of, or interest on, or repay,
repurchase or redeem any of our debt securities (including any other
debentures) that rank equal to or junior to the junior subordinated
debentures; or
. make any guarantee payments with respect to any guarantee by us of
the debt securities of any of our subsidiaries (including our
guarantee of the preferred securities of the Trust and any other
guarantees) if such guarantee ranks equal or junior to the junior
subordinated debentures.
Notwithstanding the foregoing, during a deferral period the following is
permitted:
. dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, our capital stock;
. 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
rights pursuant thereto;
. payments under the guarantee;
. a reclassification of our acquisitioncapital stock or the exchange or conversion
of Hallmark. No selling shareholder owns one percentclass or moreseries of our capital stock for another class or
series of our capital stock;
. the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged; and
. purchases of our common stock or
beneficially owns our stock other than what is being offered hereby. The selling
shareholders may obtain additional sharesrelated to the issuance of common stock
or rights under any of our benefit plans for our directors, officers
or employees or any of our dividend reinvestment plans.
Before the end of any deferral period, we may extend the deferral period,
as long as no event of default exists and the extension does not cause the
deferral period to exceed 20 consecutive quarterly periods, to end on a date
other than an interest payment date or to extend beyond , 2031. At the end
of any deferral period and upon the payment of all then accrued and unpaid
interest (together with interest thereon at the rate of % per year, compounded
quarterly, to the extent permitted by applicable law), we may elect to begin a
new deferral period, subject to certain
contingenciesthe requirements set forth in this prospectus.
No interest will be due and payable during a deferral period until the deferral
period ends.
We must give the property trustee, the administrative trustees and the
debenture trustee notice of our deferral election at least five business days
before the earlier of:
. the next succeeding date on which the distributions on the preferred
securities would have been payable; and
. the date the property trustee is required to give notice to any
securities exchange or automated quotation system on which the
preferred securities are listed or quoted or to holders of preferred
securities of the record date for such distributions 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 will notify holders of the preferred securities of
our election to begin a new or extend a deferral period.
There is no limit on the number of times that we may elect to begin a
deferral period.
We do not currently intend to exercise our right to defer payments of
interest on the junior subordinated debentures, but we cannot assure you that
we will not elect to exercise our deferral right in the future.
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REDEMPTION
The junior subordinated debentures will be redeemed, in whole or in part,
at our option on or after , 2006, at an optional redemption price equal to
100% of the principal amount plus accrued and unpaid interest on the junior
subordinated debentures, if any, to the date of redemption.
If, prior to , 2006, there are changes in the bank regulatory,
investment company or tax laws that adversely affect the status of the Trust,
the preferred securities or the junior subordinated debentures, we may, at our
option, subject to our receipt of any required regulatory approval, redeem the
junior subordinated debentures, in whole but not in part, at any time within 90
days of the change in the law, at the special event redemption price. The
special event redemption price will be an amount equal to 100% of the principal
amount of the junior subordinated debentures plus accrued and unpaid interest
to the date of redemption.
A change in the bank regulatory law means our receipt of an opinion of
independent bank regulatory counsel experienced in such matters to the effect
that, as a result of:
. any amendment to, or change (including any announced prospective
change) in, any laws or regulations of the United States or any
rules, guidelines or policies of any applicable regulatory agency or
authority; or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the preferred securities are first issued, the
preferred securities do not constitute, or within 90 days of the opinion will
not constitute, Tier 1 capital (or its then equivalent if we were subject to
such capital requirement).
A change in the investment company law means the receipt by us and the
Trust of an opinion of independent securities counsel experienced in such
matters to the effect that, as a result of:
. any amendment to, or change (including any announced prospective
change) in, any laws or regulations of the United States or any
rules, guidelines or policies of any applicable regulatory agency or
authority; or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the preferred securities are first issued, the
Trust is, or within 90 days of the date of the opinion will be, considered an
investment company that is required to be registered under the Investment
Company Act.
A change in tax law means the receipt by us and the Trust of an opinion
of independent tax counsel experienced in such matters to the effect that, as a
result of:
. any amendment to, or change (including any announced prospective
change) in, any laws or regulations of the United States or any
political subdivision or taxing authority thereof or therein; or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the preferred securities are first issued, there
is more than an insubstantial risk that:
. the Trust is, or will be within 90 days of the date of such opinion,
subject to federal income tax with respect to any income received or
accrued on the junior subordinated debentures;
. interest payable by us on the junior subordinated debentures is not,
or within 90 days of the date of such opinion will not be, deductible
by us, in whole or in part, for federal income tax purposes; or
32
. 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.
We will mail any notice of redemption at least 30 and no more than 60
days before the redemption date to each holder of junior subordinated
debentures to be redeemed at its registered address. Unless we default in
payment of the redemption price, on the redemption date interest shall cease to
accrue on the junior subordinated debentures called for redemption.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a change in the tax law, we will pay as
additional amounts on the junior subordinated debentures any amounts as may be
necessary in order that the amount of distributions then due and payable by the
Trust on the outstanding preferred securities shall not be reduced as a result
of any additional sums, including taxes, duties or other governmental charges
to which the Trust has become subject as a result of a change in the tax law.
If required by rule or regulation, we will obtain prior approval of the
Board of Governors of the Federal Reserve before any redemption of the junior
subordinated debentures.
CERTAIN COVENANTS OF VALLEY NATIONAL BANCORP
We will covenant that we will not, nor permit any of our subsidiaries to:
. declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any
of our capital stock;
. make any payment of principal of, or interest on, or repay,
repurchase or redeem any of our debt securities (including any other
debentures) that rank equal or junior to the junior subordinated
debentures; or
. make any guarantee payments with respect to any of our guarantees of
the debt securities of any of our subsidiaries (including any other
guarantees) if such guarantee ranks equal or junior to the junior
subordinated debentures;
if at such time:
. we have actual knowledge that there is any event that is, or with
notice or the lapse of time, or both, would be, a debenture event of
default and that we have not taken reasonable steps to cure;
. we are in default with respect to our payment obligations under the
guarantee; or
. we have given notice of our election to exercise our right to defer
interest payments on the junior subordinated debentures as provided
in the indenture and the deferral period, or any extension of the
deferral period, is continuing.
Notwithstanding the foregoing, the following is permitted:
. dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, our capital stock;
. any declaration of a dividend in connection with the merger agreement. The numberimplementation
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;
. payments under the guarantee;
. a reclassification of our capital stock or the exchange or conversion
of one class or series of our capital stock for another class or
series of our capital stock;
33
. the purchase of fractional interests in shares thatof our capital stock
pursuant to the shareholders will receive isconversion or exchange provisions of such capital
stock or the security being converted or exchanged; and
. purchases of our common stock related to the growthissuance of Hallmark over the
three years subsequent to the merger. We cannot predict the growth of Hallmark.
However, for purposes of illustration, assuming a stock price of $26.25, which
was the last reported stock price on September 18, 2000, and assuming that
Hallmark achieves a 20 percent growth rate per year, the selling shareholders
would receive approximately 85,300 shares of Valley common stock
overor rights under any of our benefit or compensation plans for our
directors, officers or employees or any of our dividend reinvestment
plans.
So long as the next
three years. Ifpreferred securities and common securities remain
outstanding, we also will covenant:
. to directly or indirectly maintain 100% direct or indirect ownership
of the growth rate were 10 percent per year,common securities; provided, however, that any of our
permitted successors under the selling
shareholders would receive approximately 71,100 sharesindenture may succeed to our ownership
of Valleythe common stock
oversecurities;
. to use our best efforts to cause the next three years. Any shares that the selling shareholders may receive
in the futureTrust to remain a business
trust, except in connection with the merger agreement are not being registered
for sale by this registration statement.
SHARES OF COMMON STOCK
NAME BEING OFFERED
---- -------------
Peter S. Hagerman..................................... 26,956
Kathryn A. Skwieralski................................ 11,124
Cynthia S. Bechmann................................... 575
Thomas G. Schiller.................................... 1,540
Thomas S. Moore....................................... 9,369
Jeffrey P. Braff...................................... 6,002
Margaret I. Hemmer.................................... 2,060
In additiondistribution of junior
subordinated debentures to the shares enumerated above, Hagerman, Skwieralski,
Mooreholders of preferred securities and
Braffcommon securities in liquidation of the Trust, the redemption of all
of the preferred securities and common securities, or certain
mergers, consolidations or amalgamations, each as permitted by the
declaration;
. to use our best efforts to cause the Trust to otherwise continue to
be classified as a grantor trust for federal income tax purposes;
. to use our best efforts to cause each holder of preferred securities
to be treated as owning an undivided beneficial interest in the
junior subordinated debentures; and
. to not cause, as sponsor of the Trust, or permit, as holder of the
common securities, the dissolution, winding-up or liquidation of the
Trust, except as provided in the declaration.
MODIFICATION OF INDENTURE
From time to time and at any time, we, together with the debenture
trustee, may, without the consent of the holders of junior subordinated
debentures, amend the indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies, provided that any
amendment to the indenture does not materially adversely affect the interest of
the holders of junior subordinated debentures. We, together with the debenture
trustee, may amend the indenture, regardless of the effect on the interest of
the holders of the junior subordinated debentures, for specific purposes
including, among other things, qualifying, or maintaining the qualification of,
the indenture under the Trust Indenture Act.
The indenture permits us and the debenture trustee, with the consent of
the holders of a majority in aggregate principal amount of junior subordinated
debentures, to modify the indenture in a manner affecting the rights of the
holders of the junior subordinated debentures; provided that no modification
may, without the consent of the holders of each outstanding subordinated
debenture affected:
. change the stated maturity date, or reduce the principal amount, of
the junior subordinated debentures;
. reduce the rate or extend the time of payment of interest except
pursuant to our right under the indenture to defer the payment of
interest;
. change any of the redemption provisions;
. make the principal of, or interest on, the junior subordinated
debentures payable in any coin or currency other than that provided
in the junior subordinated debentures;
. impair or affect the right of any holder of junior subordinated
debentures to institute suit for the payment thereof;
34
. reduce the percentage of the principal amount of the junior
subordinated debentures, the holders of which are required to consent
to any such modification; or
. make any change adverse to a holder with respect to the subordination
provisions.
DEBENTURE EVENTS OF DEFAULT
A "debenture event of default" is:
. our failure for 30 days to pay any interest, including compounded
interest and additional sums, if any, on the junior subordinated
debentures or any other debentures when due (subject to the deferral
of any interest due date in the case of a deferral period with
respect to the junior subordinated debentures or other debentures, as
the case may be);
. our failure to pay any principal on the junior subordinated
debentures or any other debentures when due, whether at maturity,
upon redemption, by accelerating the maturity or otherwise;
. our failure to observe or perform any other covenant contained in the
indenture for 90 days after written notice to us from the debenture
trustee or to us and the debenture trustee from the holders of at
least 25% in aggregate outstanding principal amount of junior
subordinated debentures; or
. certain events related to our bankruptcy, insolvency or
reorganization.
The holders of a majority in aggregate outstanding principal amount of
the junior subordinated debentures have, an optionsubject to purchase 1,000 sharescertain exceptions, the
right to direct the time, method and place of Valley stockconducting 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 Bechmann, Schillerpayable immediately
upon a debenture event of default and Hemmershould the debenture trustee or such
holders fail to make such declaration, the holders of at least 25% in the
aggregate liquidation amount of preferred securities will have such right. The
holders of a majority in aggregate outstanding principal amount of the junior
subordinated debentures may annul this declaration and waive the default if the
default (other than the non-payment of the principal of the junior subordinated
debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the debenture trustee.
If the holders of such junior subordinated debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
liquidation amount of the preferred securities shall have such right.
Prior to any declaration accelerating the maturity of the junior
subordinated debentures, the holders of a majority in aggregate outstanding
principal amount of the junior subordinated debentures affected may, on behalf
of the holders of all the junior subordinated debentures, waive any past
default, except a default in the payment of principal or interest (including
compounded interest and additional sums, if any), unless such default 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, 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. If the holders of
such junior subordinated debentures fail to waive such default, the holders of
a majority in aggregate liquidation amount of the preferred securities shall
have an optionsuch right.
The indenture requires that we file with the debenture trustee a
certificate annually as to purchase 500 sharesthe absence of Valley stock. These optionsdefaults specified under the
indenture.
The indenture provides that the debenture trustee may withhold notice of
a debenture event of default from the holders of the junior subordinated
debentures if the debenture trustee considers it in the interest of the holders
to do so.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If the property trustee fails to enforce its rights under the junior
subordinated debentures, under certain circumstances, any holder of preferred
securities may institute a legal proceeding against us to enforce the property
trustee's rights under the junior subordinated debentures and the indenture
without first instituting legal proceedings against the property trustee or any
other person. If a debenture event of default exists that is attributable to
our failure to pay the principal of, or interest (including compounded interest
and additional sums, if any) on the junior subordinated debentures on the due
date, a holder of preferred securities may institute a direct action against us
for enforcement of payment to that holder of the principal of or interest on
the junior subordinated debentures having a principal amount equal to the total
liquidation amount of that holder's preferred securities. We may not amend the
indenture to remove this right to bring a direct action without the prior
written consent of the holders of all of the preferred securities.
Notwithstanding any payments that we make to a holder of preferred securities
in connection with a direct action, we shall remain obligated to pay the
principal of and interest on the junior subordinated debentures, and we shall
be exercised yet andsubrogated to the rights of the holder of the preferred securities with
respect to payments on the preferred securities to the extent that we make any
payments to a holder in any direct action.
The holders of the preferred securities will not be exercisableable to exercise
directly any remedies, other than those described in the above paragraph,
available to the holders of the junior subordinated debentures, unless an event
of default exists under the declaration.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The indenture provides that we will not consolidate with or merge into
any other person or convey, transfer or lease all or substantially all of our
properties to any person, and no person shall consolidate with or merge into us
or convey, transfer or lease all or substantially all of its properties to us,
unless:
. in case we consolidate with or merge into another person or convey or
transfer all or substantially all of our properties to any person,
the successor is organized under the laws of the United States or any
state or the District of Columbia and, if we are not the surviving
corporation, the successor expressly assumes our obligations under
the indenture with respect to the junior subordinated debentures;
. immediately after giving effect to the transaction, no debenture
event of default, and no event which, after notice or lapse of time
or both, would become a debenture event of default, exists; and
. certain other conditions as prescribed in the indenture are met.
The general provisions of the indenture do not afford holders of the
junior subordinated debentures protection in the event of a highly leveraged or
other transaction that we may become involved in that may adversely affect
holders of the junior subordinated debentures.
SATISFACTION AND DISCHARGE
The indenture provides that when, among other things,
. all junior subordinated debentures not previously delivered to the
debenture trustee for cancellation have become due and payable or
will become due and payable at maturity or called for redemption
within one year; and
. we deposit or cause to be deposited with the next 60 days.
Afterdebenture trustee funds,
in trust, for the merger between Hallmarkpurpose and HCM was consummated,in an amount sufficient to pay and
discharge the selling
shareholders became employeesentire indebtedness on the junior subordinated
debentures not previously delivered to the debenture trustee for
cancellation, for the principal and interest (including compounded
interest and additional sums, if any) to the date of HCM,the deposit or
to , 2031, as the case may be,
36
. then the indenture will cease to be of further effect (except as to
our obligations to pay all other sums due pursuant to the indenture
and to provide the officers' certificates and opinions of counsel),
and we will be deemed to have satisfied and discharged the indenture.
SUBORDINATION
We have promised that any of our junior subordinated debentures issued
under the indenture will rank junior to all of our senior indebtedness to the
extent provided in the indenture. Upon any payment or distribution of our
assets to creditors upon our liquidation, dissolution, winding up,
reorganization, assignment for the benefit of our creditors, marshaling of our
assets or any bankruptcy, insolvency, debt restructuring or similar proceedings
in connection with any insolvency or bankruptcy proceeding involving us, the
allocable amounts in respect of the senior indebtedness must be paid in full
before the holders of the junior subordinated debentures will be entitled to
receive or retain any payment in respect thereof.
If the maturity of junior subordinated debentures is accelerated, the
holders of all senior indebtedness outstanding at such time will first be
entitled to receive payment in full of the allocable amounts in respect of such
senior indebtedness before the holders of junior subordinated debentures will
be entitled to receive or retain any payment in respect of the principal of or
interest, if any, on the junior subordinated debentures.
No payments on account of principal or interest, if any, in respect of
the junior subordinated debentures may be made if there is a default in any
payment with respect to senior indebtedness, or an event of default exists with
respect to any senior indebtedness that accelerates the maturity of the senior
indebtedness, or if any judicial proceeding shall be pending with respect to
the default.
Allocable amounts, when used with respect to any senior indebtedness,
means all amounts due or to become due on such senior indebtedness less, if
applicable, any amount that would have been paid to, and retained by, the
holders of such senior indebtedness (whether as a result of the receipt of
payments by the holders of such senior indebtedness from us or any other
obligor thereon or from any holders of, or trustee in respect of, other
indebtedness that is subordinate and junior in right of payment to such senior
indebtedness pursuant to any provision of such indebtedness for the payment
over of amounts received on account of such indebtedness to the holders of such
senior indebtedness or otherwise) but for the fact that such senior
indebtedness is subordinate or junior in right of payment to (or subject to a
requirement that amounts received on such senior indebtedness be paid over to
obligees on) trade accounts payable or accrued liabilities arising in the
ordinary course of business.
Indebtedness for money borrowed means any of our obligations, or any
obligation guaranteed by us, to repay borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, except that
indebtedness for money borrowed does not include trade accounts payable or
accrued liabilities arising in the ordinary course of business.
Indebtedness ranking on a parity with the junior subordinated debentures
means:
. indebtedness for money borrowed, whether outstanding on the date the
indenture is executed or created, assumed or incurred after the date
that the indenture is executed, to the extent the indebtedness for
money borrowed by its terms ranks equal to and not prior or senior to
the junior subordinated debentures in the right of payment upon the
happening of our dissolution, winding-up, liquidation or
reorganization;
. all other debt securities issued to any trust other than the Trust,
or a trustee of such trust, partnership or other entity affiliated
with us, that is our financing vehicle, in connection with the
issuance by such vehicle of equity securities or other securities
that are similar to the preferred securities; and
37
. 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 means
any indebtedness for money borrowed, whether outstanding on the date the
indenture is executed or created, assumed or incurred after the date the
indenture is executed, to the extent the indebtedness for money borrowed by its
terms ranks junior to and not equal 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 our
dissolution or winding-up or liquidation or reorganization. The securing of any
indebtedness otherwise constituting indebtedness ranking junior to the junior
subordinated debentures shall not be deemed to prevent such indebtedness for
money borrowed from constituting indebtedness ranking junior to the junior
subordinated debentures.
Senior indebtedness means the principal of (and premium, if any) and
interest, if any, on all indebtedness for money borrowed, whether outstanding
on the date the indenture is executed or created, assumed or incurred after the
date the indenture is executed, 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 the
senior indebtedness.
Various laws and regulations applicable to us and our bank subsidiary
impose restrictions and requirements in many areas, including capital
requirements, the maintenance of ours. The selling
shareholdersreserves, establishment of new offices, the
making of loans and investments, consumer protection, and entry into new types
of business. There are eligiblevarious legal limitations, including Sections 23A and
23B of the Federal Reserve Act, which govern the extent to which a bank
subsidiary may finance or otherwise supply funds to its holding company or its
holding company's non-bank subsidiaries. Under federal law, no bank subsidiary
may, subject to certain limited exceptions, make loans or extensions of credit
to, or investments in the securities of, its parent or the non-bank
subsidiaries of its parent (other than direct subsidiaries of such bank which
are not financial subsidiaries) or take their securities as collateral for
loans to any borrower. Our bank subsidiary is also subject to collateral
security requirements for any loans or extensions of credit permitted by such
exceptions.
Because we are a bank holding company, our right to participate in various Valleyany
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the preferred
securities to benefit plans by
which theyindirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary (including depositors, in the case
of the bank), except to the extent we may acquire beneficial ownershipbe recognized as a creditor of additional sharesthat
subsidiary. At June 30, 2001, our subsidiaries had total liabilities, including
deposits, of $7.4 billion. Accordingly, the junior subordinated debentures will
be effectively subordinated to all existing and future liabilities of our
common
stock.subsidiaries (including the bank's deposit liabilities) and all liabilities of
any of our future subsidiaries. At June 30, 2001 we had senior indebtedness of
approximately $10.0 million. The sharesindenture does not limit us or our
subsidiaries from incurring or issuing other secured or unsecured debt,
including senior indebtedness.
AGREEMENT BY PURCHASERS OF SPECIFIED TAX TREATMENT
Each junior subordinated debenture will provide that, a selling shareholder may receive by participating in a
Valley benefit plan are not being registered for sale by this registration
statement.
MANNER OF OFFERING
The shares of common stock offered hereby may be sold from time to time
by the selling shareholder, or by pledgees, donees, transferees or other
successors in interest. Such sales may be made on the NYSE, or otherwise. The
sales may be made at prices and terms then prevailing on such markets, at prices
related to the then current market price or in negotiated transactions. The
shares of offered common stock may be sold in one or moreacceptance of
the following:
o A block trade in whichjunior subordinated debentures, or a beneficial interest therein, the
broker-dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portionholder of the blockjunior subordinated debenture intends that such junior
subordinated debenture constitutes debt and agrees to treat it as principal to facilitatedebt for
United States federal, state and local tax purposes.
GOVERNING LAW
The indenture and the transaction;
o Purchasesjunior subordinated debentures will be governed by
a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this prospectus;
o An exchange distributionconstrued in accordance with the ruleslaws of the exchange; or
o Ordinary brokerage transactionsState of New York.
38
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The debenture trustee will have and transactionbe 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 not
obligated to exercise any of the powers vested in which the broker
solicits purchasers.
In effecting sales, broker-dealers engagedit by the selling shareholders
may arrangeindenture at the
request of any holder of junior subordinated debentures, unless offered
reasonable indemnity by the holder against the costs, expenses and liabilities
which might be incurred thereby. The debenture trustee is not required to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of its duties under the indenture.
DESCRIPTION OF THE GUARANTEE
We have summarized below the material terms of the guarantee. This
summary is not a complete description of all of the terms and provisions of the
guarantee. For more information, we refer you to the guarantee, which we filed
as an exhibit to the registration statement of which this prospectus is a part.
The Bank of New York will act as guarantee trustee under the guarantee.
GENERAL
We will irrevocably agree to pay in full on a subordinated basis, to the
extent set forth in this prospectus, the following payments with respect to the
preferred securities to the extent not paid by the Trust:
. any accumulated and unpaid distributions required to be paid on the
preferred securities, to the extent that the Trust has funds
available at that time;
. the redemption price with respect to the preferred securities called
for other broker-dealersredemption, to participatethe extent that the Trust has funds available at
that time; and
. upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Trust (other than in resales.
In connection with the
distribution of the junior subordinated debentures to holders of the
preferred securities or the redemption of all preferred securities),
the lesser of:
. the liquidation amount and all accumulated and unpaid
distributions on the preferred securities, to the extent the Trust
has funds available at that time; and
. the amount of assets of the Trust remaining available for
distribution to holders of preferred securities after satisfying
the liabilities owed to the Trust's creditors as required by
applicable law.
The guarantee will rank subordinate and junior to all senior indebtedness
and rank on parity with guarantees of other preferred securities we may issue.
Our obligation to make a guarantee payment may be satisfied by our direct
payment of the required amounts to the holders of the preferred securities or
by causing the Trust to pay these amounts to the holders of the preferred
securities.
The guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the preferred securities, but will apply only to
the extent that the Trust has funds sufficient to make these payments. If we do
not make payments on the junior subordinated debentures held by the Trust, then
it will not be able to make the related payments to you on the preferred
securities and will not have funds available.
The guarantee does not limit us from incurring or issuing other secured
or unsecured debt, including senior indebtedness. The holders of at least a
majority in aggregate liquidation amount of the preferred securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee in respect of our guarantee or to
direct the exercise of any trust power conferred upon the guarantee trustee
under our guarantee, except the guarantee trustee may refuse to follow any
direction it believes
39
is unjustly prejudicial to other holders not taking part in the direction,
unlawful or would subject the guarantee trustee to personal liability. Any
holder of the preferred securities may institute a legal proceeding directly
against us to enforce their rights under the guarantee without first
instituting a legal proceeding against the Trust, the guarantee trustee or any
other person or entity.
If we default on our obligation to pay amounts payable under the junior
subordinated debentures, the Trust will lack funds for the payment of
distributions or amounts payable on redemption of the preferred securities or
otherwise, and the holders of the preferred securities will not be able to rely
upon the guarantee for payment of such amounts. Instead, if a debenture event
of default exists that is attributable to our failure to pay principal of or
interest on the junior subordinated debentures on a payment date, then any
holder of preferred securities may institute a direct action against us
pursuant to the terms of the indenture for enforcement of payment to that
holder of the principal of or interest on such junior subordinated debentures
having a principal amount equal to the aggregate liquidation amount of the
preferred securities of that holder. In connection with a direct action, we
will have a right of set-off under the indenture to the extent that we made any
payment to the holder of preferred securities in the direct action. Except as
described in this prospectus, holders of preferred securities will not be able
to exercise directly any other remedy available to the holders of the junior
subordinated debentures or assert directly any other rights in respect of the
junior subordinated debentures. The declaration provides that each holder of
preferred securities by accepting the preferred securities agrees to the
provisions of the guarantee and the indenture.
We will, through our guarantee, the declaration, the junior subordinated
debentures and the indenture, taken together, fully, irrevocably and
unconditionally guarantee all of the Trust's obligations under the preferred
securities. No single document standing alone, or operating in conjunction with
fewer than all of the other documents, constitutes that guarantee. Only the
combined operation of these documents provides a full, irrevocable and
unconditional guarantee of the Trust's obligations under the preferred
securities.
STATUS OF THE GUARANTEE
Our guarantee will constitute an unsecured obligation and will rank
subordinate and junior to all senior indebtedness in the same manner as the
junior subordinated debentures. In addition, because we are a holding company,
our right to participate in any distribution of the assets of our subsidiaries,
upon their liquidation or reorganization or otherwise is subject to the prior
claims of their creditors (including their depositors), except to the extent we
may be recognized as their creditor. Accordingly, our obligations under the
guarantee effectively will be subordinated to all existing and future
liabilities of our present and future subsidiaries (including depositors of the
bank).
Our guarantee will rank equal to all of our other guarantees with respect
to preferred beneficial interests issued by other trusts we may create. Our
guarantee of the Trust's preferred securities does not limit the amount of
secured or unsecured debt, including senior indebtedness, that we or any of our
subsidiaries may incur. We expect from time to time that we will incur
additional indebtedness and that our subsidiaries will also incur additional
liabilities.
Our guarantee will constitute a guarantee of payment only to the extent
that the Trust has funds available and not of collection, enabling the
guaranteed party to institute a legal proceeding directly against us to enforce
their rights under the guarantee without first instituting a legal proceeding
against any other person or entity. Our guarantee will not be discharged,
except by payment of the guarantee payments in full to the extent that the
Trust has not paid, or upon distribution of the junior subordinated debentures
to, the holders of the preferred securities.
40
EVENTS OF DEFAULT
There will be an event of default under the guarantee if we fail to
perform any of our payment or other obligations under the guarantee. However,
other than with respect to a default in payment of any guarantee payment, we
must have received notice of default and not have cured the default within 60
days after receipt of the notice. We, as guarantor, will be required to file
annually with the guarantee trustee a certificate regarding our compliance with
the applicable conditions and covenants under our guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely
affect the rights of holders of the preferred securities (in which case no
approval will be required), the guarantee may not be amended without the prior
approval of the holders of a majority of the liquidation amount of such
outstanding preferred securities. All guarantees and agreements contained in
the guarantee agreement shall bind our successors, assigns, receivers, trustees
and representatives and shall inure to the benefit of the holders of the
preferred securities then outstanding.
TERMINATION OF THE GUARANTEE
Our guarantee will terminate and be of no further force and effect upon:
. full payment of the redemption price of all outstanding preferred
securities;
. full payment of the liquidation amount payable upon liquidation of
the Trust; or
. distribution of junior subordinated debentures to the holders of the
preferred securities.
Our guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of the preferred securities must restore
payment of any sums paid under the preferred securities or the guarantee.
GOVERNING LAW
The guarantee will be governed by and construed in accordance with the
laws of the State of New York.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, except if we default under the guarantee, will
undertake to perform only such duties as are specifically set forth in the
guarantee and, in case a default with respect to the guarantee has occurred,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the guarantee trustee will not be obligated to exercise any of the
powers vested in it by the guarantee at the request of any holder of the
preferred securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that it might incur.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEE
UNCONDITIONAL GUARANTEE
We will irrevocably guarantee payments of distributions and other amounts
due on the preferred securities to the extent the Trust has funds available to
pay such amounts as and to the extent set forth under "Description of
Guarantee." Taken together, our obligations under the junior subordinated
debentures, the indenture, the declaration and the guarantee will provide a
full, irrevocable and unconditional guarantee of the Trust's payments of
distributions and other amounts due on the preferred securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes this guarantee. Only the
41
combined operation of these documents effectively provides a full, irrevocable
and unconditional guarantee of the Trust's obligations under the preferred
securities.
If and to the extent that we do not make the required payments on the
junior subordinated debentures, the Trust will not have sufficient funds to
make its related payments, including distributions on the preferred securities.
Our guarantee will not cover any payments when the Trust does not have
sufficient funds available to make those payments. Your remedy, as a holder of
preferred securities, is to institute a direct action against us. Our
obligations under the guarantee will be subordinate to all senior indebtedness.
SUFFICIENCY OF PAYMENTS
As long as we pay the interest and other payments when due on the junior
subordinated debentures, the Trust will have sufficient funds to cover
distributions and other payments due on the preferred securities, primarily
because:
. the aggregate principal amount or redemption price of the junior
subordinated debentures will equal the aggregate liquidation amount
of the preferred securities and the common stock,securities;
. the selling shareholdersinterest rate and interest payment dates and other payment dates
on the junior subordinated debentures will match the distribution
rate and distribution dates and other payment dates for the preferred
securities and the common securities;
. as sponsor, we will pay for all and any costs, expenses and
liabilities of the Trust, except for the Trust's obligations to
holders of preferred securities and the common securities; and
. the declaration also provides that the Trust is not authorized to
engage in any activity that is not consistent with its limited
purposes.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
If a debenture event of default occurs, the holders of preferred
securities would rely on the enforcement by the property trustee of its rights
as registered holder of the junior subordinated debentures against us. In
addition, the holders of a majority in liquidation amount of the preferred
securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the property trustee or
to direct the exercise of any trust or power conferred upon the property
trustee under the declaration, including the right to direct the property
trustee to exercise the remedies available to it as the holder of the junior
subordinated debentures.
If the property trustee fails to enforce its rights under the junior
subordinated debentures in respect of an event of default under the indenture
after a holder of preferred securities has made a written request, such holder
may, enter into hedging transactions with broker-dealers.to the extent permitted by applicable law, institute a legal proceeding
against us to enforce the property trustee's rights under the junior
subordinated debentures. In addition, if we fail to pay interest or principal
on the junior subordinated debentures, a holder of preferred securities may
institute a proceeding directly against us for enforcement of payment to that
holder of the principal of or interest on junior subordinated debentures having
a principal amount equal to the total liquidation amount of that holder's
preferred securities (which we refer to as a "direct action"). In connection
with such transactions, broker-dealers may engage in short salesa direct action, we will have the right to set off any payment made
to such holder by us. The holders of preferred securities will not be able to
exercise directly any other remedy available to the holders of the offered common stockjunior
subordinated debentures.
LIMITED PURPOSE OF THE TRUST
The preferred securities will represent undivided beneficial interests in
the courseTrust, and the Trust exists for the sole purpose of hedgingissuing and selling the
preferred securities and the common securities and using the proceeds from such
issuances to buy our junior subordinated debentures and engaging in only those
other activities
42
necessary, advisable or incidental thereto. A principal difference between the
rights of a holder of a preferred security and a holder of a junior
subordinated debenture is that a holder of a junior subordinated debenture will
be entitled to receive from us the principal of and interest on junior
subordinated debentures held, while a holder of preferred securities is
entitled to receive distributions from the Trust (or, in certain circumstances,
from us under our guarantee) if and to the extent the Trust has funds available
to pay the distributions.
RIGHTS UPON DISSOLUTION
Unless the junior subordinated debentures are distributed to holders of
the preferred securities, if the Trust is voluntarily or involuntarily
dissolved, wound-up or liquidated, after satisfying the liabilities owed to the
Trust's creditors as required by applicable law, the holders of the preferred
securities will be entitled to receive, out of assets held by the Trust, the
liquidation distribution in cash.
If we are voluntarily or involuntarily liquidated or bankrupted, the
property trustee, as holder of the junior subordinated debentures, would be one
of our subordinated creditors, subordinated in right of payment to all senior
indebtedness, but entitled to receive payment in full of principal and
interest, before any of our stockholders receive payments or distributions.
Since we will be the guarantor under the guarantee and will agree to pay all
costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of its preferred securities), the positions they assume withof a
holder of preferred securities and a holder of junior subordinated debentures
relative to other creditors and to our stockholders in the selling shareholders.event of our
liquidation or bankruptcy are expected to be substantially the same.
BOOK-ENTRY ISSUANCE
The selling shareholders may also
o sell shares of common stock short and deliver the shares of offered common
stock to close out such short positions;
o enter into option or other transactions with broker-dealers that
require the delivery of the shares, which the broker-dealer may
resell or otherwise transfer pursuant to this prospectus;
o lend or pledge the shares to a broker-dealer and the broker-dealer may sell
the loaned or pledged shares upon a default pursuant to this prospectus;
o pledge the shares to a lender other than a broker-dealer, and upon default
the lender may sell the pledged shares pursuant to this prospectus; or
o contribute or sell the shares to trusts or other entities for the benefit
of the contributing shareholder and members of his or her family.
Broker-dealers or agents may receive compensationpreferred securities will be issued in the form of commissions, discountsone or concessions frommore fully
registered securities in book-entry form registered in the selling shareholdersname of Cede & Co
(DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. So long as the junior subordinated debentures
are held by the property trustee, the junior subordinated debentures will not
be issued in amounts
tobook-entry form, but will be negotiatedevidenced by one or more certificates
held by, and registered in connection with the salename of, the shares. These broker-dealersproperty trustee. However, if the
junior subordinated debentures are distributed to holders of preferred
securities upon dissolution or liquidation of the trust, we anticipate that the
junior subordinated debentures will be issued in fully registered book-entry
form. The following discussion is relevant only with respect to preferred
securities and junior subordinated debentures in book-entry form which are
evidenced by one or more global certificates registered in the name of DTC or
its nominee.
DTC will act as a securities depository for all preferred securities
while they are in book-entry form and, if applicable, junior subordinated
debentures issued in book-entry form. Except as set forth below, the global
preferred securities may be deemedtransferred only to another nominee of DTC or to a
successor of DTC. Beneficial interests in the global preferred securities may
not be "underwriters" withexchanged for preferred securities in certificated form, except in the
limited circumstances described below. Additionally, transfers of beneficial
interests in the global preferred securities will be subject to the applicable
rules and procedures of DTC and its direct or indirect participants, which may
change from time to time.
DEPOSITARY PROCEDURES
DTC has advised the Trust and us that it is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve, a "clearing corporation" within the meaning of the SecuritiesUniform
Commercial Code and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC was created to hold securities for its
participating organizations, or 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, to eliminate the
need for physical movement of certificates.
43
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Indirect participants in
DTC's system include banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly. Persons who are not participants may beneficially own
securities held by or on behalf of DTC only through participants or 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 participants and indirect participants.
DTC also has advised the Trust and us that, pursuant to procedures
established by it:
. upon deposit of the global preferred securities, DTC will credit the
accounts of participants designated by the underwriters with the
designated liquidation amount of the global preferred securities; and
. ownership of beneficial interests in the global preferred securities
will be shown on, and the transfer of ownership of the global
preferred securities will be effected only through, records
maintained by DTC (with respect to participants) or by participants
and indirect participants (with respect to other owners of beneficial
interests in the global preferred securities).
You may hold your interests in the global preferred security directly
through DTC if you are a participant, or indirectly through organizations that
are participants. All interests in a global preferred security will be subject
to the procedures and requirements of DTC. 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
preferred security to pledge its interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of its
interests, may be affected by the lack of a physical certificate evidencing its
interests.
Except as described below, owners of beneficial interests in the global
preferred securities will not have preferred securities registered in their
name, will not receive physical delivery of preferred securities in
certificated form and will not be considered the registered owners or holders
thereof under the declaration for any purpose.
Payments on the global preferred security registered in the name of Cede
& Co., will be payable by the property trustee to Cede & Co. in its capacity as
the holder under the declaration. Under the terms of the declaration, the
property trustee will treat the persons in whose names the preferred
securities, including the global preferred securities, are registered as the
owners thereof for the purpose of receiving such payments and for any and all
other purposes whatsoever. Neither the property trustee nor any agent thereof
has or will have any responsibility or liability for:
. 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 preferred 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 preferred securities; or
. 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 us that its current practice, upon receipt
of any payment on the preferred 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 the
preferred securities as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on the payment date. Payments by
participants and indirect participants to the beneficial owners of preferred
securities will be governed by standing instructions and customary practices
and will be the responsibility of participants or indirect participants and
will not be the responsibility of DTC, the property trustee, the Trust or us.
None of us, the Trust or the property trustee will be liable for any delay by
DTC or any of its participants or indirect participants in identifying the
44
beneficial owners of the preferred securities, and we, the Trust and the
property trustee may conclusively rely on, and will be protected in relying on,
instructions from DTC or its nominee for all purposes.
Any secondary market trading activity in interests in the global
preferred securities will settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants. Transfers
between participants in DTC will be effected in accordance with DTC's
procedures, and will settle in same-day funds.
DTC has advised the Trust and us that it will take any action permitted
to be taken by a holder of preferred securities (including, without limitation,
presenting the preferred securities for exchange as described below) only at
the direction of one or more participants who have an interest in DTC's global
preferred securities in respect of the portion of the liquidation amount of the
preferred securities as to which the participant or participants has or have
given direction. However, if an event of default exists under the declaration,
DTC reserves the right to exchange the global preferred securities for legended
preferred securities in certificated form and to distribute the certificated
preferred securities to its participants.
We believe that the information in this section concerning DTC and its
book-entry system has been obtained from reliable sources, but we do not take
responsibility for the accuracy of this information.
Although DTC has agreed to the procedures described in this section to
facilitate transfers of interests in the global preferred securities among
participants in DTC, DTC is not obligated to perform or to continue to perform
these procedures, and these procedures may be discontinued at any time. None of
us, the Trust, or the property trustee will have any responsibility or
liability for any aspect of the performance by DTC or its participants or
indirect participants of any of their respective obligations under the rules
and procedures governing their operations or for maintaining, supervising or
reviewing any records relating to the global preferred securities that are
maintained by DTC or any of its participants or indirect participants.
EXCHANGE OF BOOK-ENTRY PREFERRED SECURITIES FOR CERTIFICATED PREFERRED
SECURITIES
A global preferred security will be exchanged for preferred securities in
registered certificated form if:
. DTC notifies the Trust that it is unwilling or unable to continue as
depositary for the global preferred security and the Trust fails to
appoint a successor depositary within 90 days of receipt of DTC's
notice, or DTC has ceased to be a clearing agency registered under
the Exchange Act and the Trust fails to appoint a successor
depositary within 90 days of 1933becoming aware of this condition;
. the Trust, in its sole discretion, elects to cause the preferred
securities to be issued in certificated form; or
. an event of default, or any event which after notice or lapse of time
or both would be an event of default, exists under the declaration.
In all cases, certificated preferred securities, delivered in exchange
for any global preferred security will be registered in the names, and issued
in any approved denominations, requested by or on behalf of DTC, in accordance
with its customary procedures.
PAYMENT AND PAYING AGENCY
The Trust will make payments on any global preferred security to DTC or
its nominee, which will credit the relevant accounts at DTC on the applicable
distribution dates. The Trust will make payments on the preferred securities
that are not held by DTC, if any, by mailing a check to the address of the
holder entitled to the payment as the holder's address appears on the register
or at its option by wire transfer. The paying agent will initially be
45
the property trustee and any co-paying agent chosen by the property trustee and
acceptable to the administrative trustees and us. The paying agent will be
permitted to resign as paying agent upon 30 days' notice to the property
trustee, the administrative trustees and us. In the event that the property
trustee is no longer the paying agent, the administrative trustees will appoint
a successor (which must be a bank or trust company acceptable to the
administrative trustees and us) to act as paying agent.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the
preferred securities.
The Trust will register transfers of the preferred securities without
charge, except for any tax or other governmental charges that may be imposed in
connection with any sales. Commissions, discountstransfer or concessions mayexchange. The Trust will not be deemedrequired to
be underwriting discounts or commissions underhave the Securities Act. In
addition, securities covered by this prospectus that qualify for sale pursuant
to Rule 144 under the Securities Act, may be sold pursuant to Rule 144 rather
than pursuant to this prospectus.
All costs, expenses and fees in connection with the registrationtransfer of the offered shares is being borne by us. Commissions and discounts, if any,
attributable topreferred securities registered after they have been
called for redemption.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the sale of the offered shares will be borne by the selling
shareholders. The selling shareholders may agree to indemnify any broker-dealer
or agent that participates in a transaction involving sales of the shares
against certain liabilities arising under the Securities Act. We have agreed to
indemnify the selling shareholders against certain liabilities in connection
with this offering, including liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been
passed upon for Valley by Pitney, Hardin, Kipp & Szuch LLP, Florham Park, New
Jersey. Attorneys in the law firmopinion of Pitney, Hardin, Kipp & Szuch LLP, beneficially own approximately 5,000 sharesspecial federal
income tax counsel to us and the Trust, the following describes the material
federal income tax consequences of the Company's Common Stockpurchase, ownership and disposition of a
preferred security.
This summary addresses only the tax consequences to a person that
acquires a preferred security on its original issuance at its original price
and that holds the security as a capital asset. This summary does not address
all tax consequences that may be applicable to a beneficial owner of a
preferred security and does not address the tax consequences to holders subject
to special tax regimes (like banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors or persons that will hold a preferred security
as a position in a "straddle," as part of a "synthetic security" or "hedge" or
as part of a "conversion transaction" or other integrated investment). This
summary 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 apply to a preferred security. This discussion is only
addressed to a U.S. Holder, which is defined as a beneficial owner of a
preferred security that, for federal income tax purposes, is (or is treated
as):
. a citizen or individual resident of the United States;
. a corporation or partnership (or entity treated for federal income
tax purposes as a corporation or partnership) created or organized in
or under the laws of the United States or of any state (including the
District of Columbia);
. an estate the income of which is includable in gross income for
federal income tax purposes without regard to its source; or
. a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S. persons have the ability to control all substantial
decisions of the trust.
This summary does not address the consequences to a non-U.S. Holder who
acquires a preferred security. For purposes of this discussion, a "Non-U.S.
Holder" generally is any corporation, individual, partnership, estate, trust or
other person that is not a U.S. Holder for federal income tax purposes.
This summary does not address the tax consequences to any stockholder,
partner or beneficiary of a holder of a preferred security. This summary is
based on the Internal Revenue Code of 1986, as amended (the
46
"Code"), Treasury regulations thereunder and the administrative and judicial
interpretations thereof, as of August 1, 2000.the date hereof, all of which are subject to
change, possibly on a retroactive basis. An opinion of Pitney, Hardin, Kipp &
Szuch LLP is not binding on the IRS or the courts. No rulings have been or are
expected to be sought from the IRS with respect to any of the matters described
in this prospectus. We can give no assurance that the opinions expressed will
not be challenged by the IRS or, if challenged, that the challenge will not be
successful.
Prospective investors are advised to consult with their own tax advisors
with respect to the tax consequences to them of the purchase, ownership and
disposition of the preferred securities, including the tax consequences under
state, local, foreign, and other tax laws and possible effects of changes in
such tax laws.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In the opinion of Pitney, Hardin, Kipp & Szuch LLP, the junior
subordinated debentures will be classified for federal income tax purposes as
our indebtedness. We, together with the Trust and the holders of the preferred
securities (by acceptance of a beneficial interest in a preferred security)
will agree to treat the junior subordinated debentures as our indebtedness for
all federal income tax purposes. We cannot be sure that this position will not
be challenged by the IRS or, if challenged, that the challenge will not be
successful. The remainder of this discussion assumes that the junior
subordinated debentures will be classified as our indebtedness for federal
income tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the preferred securities, Pitney,
Hardin, Kipp & Szuch LLP will render its opinion 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 that opinion, the Trust will be classified for federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, for federal income tax purposes, the Trust will not
be subject to federal income tax, and each holder of a preferred security will
be required to include in its gross income and in accordance with its own
method of accounting any interest (or accrued original issue discount), with
respect to its allocable share of the junior subordinated debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the indenture, we have the right to defer the payment of interest
on the junior subordinated debentures at any time or from time to time for one
or more deferral periods not exceeding 20 consecutive quarterly periods each,
provided that no deferral period shall end on a date other than an interest
payment date or extend beyond , 2031. By reason of that right, the
Treasury regulations will subject the junior subordinated debentures to the
rules in the Code and Treasury regulations on debt instruments issued with
original issue discount, unless the indenture or junior subordinated debentures
contain terms or conditions that make the likelihood of exercise of the
deferral option remote. Under the Treasury regulations, a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with original issue discount. Although the
matter is not entirely clear, we believe that the likelihood that we would
exercise our option to defer payments of interest is remote since exercising
that option would, among other things, prevent us from declaring dividends on
any class of our equity securities. Accordingly, we intend to take the position
that the junior subordinated debentures will not be considered to be issued
with original issue discount 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 U.S. Holder's
method of accounting.
Under the Treasury regulations, if we were to exercise our option to
defer payments of interest, the junior subordinated debentures would at that
time be treated as issued with original issue discount, and all stated interest
on the junior subordinated debentures would thereafter be treated as original
issue discount as long as the junior subordinated debentures remain
outstanding. If this occurred, all of a holder's interest income with respect
47
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 U.S. Holder of a preferred security would be required to
include in gross income original issue discount even though we would not make
actual cash payments during a deferral period. The amount of such includable
original issue discount could be significant. Also, under the Treasury
regulations, if the option to defer the payment of interest were determined not
to be remote, the junior subordinated debentures would be treated as having
been originally issued with original issue discount. In such event, a U.S.
Holder would be required to include in gross income an amount of original issue
discount each taxable year that approximates the amount of interest that
accrues on the junior subordinated debentures at the stated interest rate,
regardless of such U.S. Holder's method of tax accounting, and actual cash
payments of interest on the junior subordinated debenture would not be
separately includable in gross income. It is possible that the IRS could take a
position contrary to the interpretation described in this prospectus.
Because income on the preferred securities will constitute interest or
original issue discount, corporate holders of the preferred securities will not
be entitled to a dividends-received deduction with respect to any income
recognized with respect to the preferred securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURE OR CASH UPON LIQUIDATION OF THE TRUST
We will have the right at any time to liquidate the Trust and cause the
junior subordinated debentures to be distributed to the holders of the trust
securities. Under current law, the liquidation of the Trust and the
distribution of the junior subordinated debentures to trust security holders,
for federal income tax purposes, would be treated as a nontaxable event to each
holder, and the aggregate tax basis in the junior subordinated debentures
received by such holder would be equal to the holder's aggregate tax basis in
its preferred securities surrendered. A holder's holding period in the junior
subordinated debentures received in liquidation of the Trust would be the same
as the holding period that the holder had in the preferred securities
surrendered.
The junior subordinated debentures may be redeemed in cash, and the
proceeds of that redemption would be distributed to holders in redemption of
their preferred securities. Under current law, that redemption would
constitute, for federal income tax purposes, a taxable disposition of the
redeemed preferred securities, the tax consequences of which are described
below under "--Sales or Redemptions of Preferred Securities."
SALES OR REDEMPTIONS OF PREFERRED SECURITIES
On a sale or redemption of a preferred security for cash, a U.S. Holder
will recognize gain or loss equal to the difference between its amount realized
on the sale or redemption (other than amounts representing accrued and unpaid
interest) of the preferred security and its adjusted tax basis in the preferred
security. If the rules regarding original issue discount do not apply, a
holder's adjusted tax basis in a preferred security generally will be its
initial purchase price, and if the holder uses an accrual method of accounting,
the holder's tax basis will be increased by any accrued but unpaid interest. If
the rules regarding original issue discount apply, a holder's adjusted tax
basis in a preferred security generally will be its initial purchase price
increased by any original issue discount previously included in the holder's
gross income to the date of disposition and decreased by any payments received
with respect to original issue discount on the preferred security. Gain or loss
recognized on a sale or redemption of a preferred security will be capital gain
or loss. Capital gain recognized by an individual in respect of a preferred
security held for more than one year as of the date of sale or redemption will
be long term capital gain that is subject to a maximum federal income tax rate
of 20%.
The preferred securities may trade at a price that discounts any accrued
but unpaid interest on the junior subordinated debentures. Therefore, the
amount realized by a U.S. Holder who disposes of a preferred security between
distribution payment dates and whose adjusted tax basis in the preferred
security has been increased by
48
the amount of any accrued but unpaid original issue discount (or interest) may
be less than the U.S. Holder's adjusted tax basis in the preferred security. A
holder's tax basis in a preferred security could be increased either under the
rules regarding original issue discount or, if those rules do not apply, in the
case of a holder that uses an accrual method of accounting, under the accrual
accounting rules (as discussed above). In that case, the U.S. Holder will
recognize a capital loss. Subject to a limited exception in the case of
individual taxpayers, capital losses cannot be applied to offset ordinary
income for federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest, including original issue discount, accrued on
preferred securities held of record by U.S. persons (other than corporations
and other exempt holders) will be reported to the IRS. "Backup" withholding
will apply to payments of interest to non-exempt U.S. persons unless the holder
furnishes its taxpayer identification number in the manner prescribed in
applicable Treasury regulations, certifies that the number is correct,
certifies as to no loss of exemption from backup withholding and meets certain
other conditions. The backup withholding rate will be the fourth lowest rate of
tax applicable to unmarried individuals under Section 1(c) of the Code, as
determined from time to time.
Payment of the proceeds from the disposition of preferred securities to
or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amount withheld from a holder under the backup withholding rules will
be allowed as a refund or credit against such holder's federal income tax
liability, provided the required information is furnished to the IRS.
It is anticipated that income on preferred securities will be reported to
holders on Form 1099 (or any successor form) and mailed to holders of preferred
securities by January 31 following each calendar year.
The federal income tax discussion set forth above is included for general
information only and may not be applicable depending upon a holder's particular
situation. You should consult your tax adviser with respect to the tax
consequences to you of the purchase, ownership and disposition of a preferred
security, including the tax consequences under state, local, foreign and other
tax laws and the possible effects of changes in federal or other tax laws.
ERISA CONSIDERATIONS
GENERAL
The following is a summary of certain considerations associated with the
purchase of the preferred securities by employee benefit plans that are subject
to Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan described in Section 4975 of the Code, including an
individual retirement arrangement under Section 408 of the Code or a Keogh
plan, a plan (such as a governmental, church or non-U.S. plan) subject to the
provisions under applicable federal, state, local, non-U.S. or other laws or
regulations that are similar to the provisions of Title I of ERISA or Section
4975 of the Code ("Similar Laws"), and any entity whose underlying assets are
considered to include "plan assets" of such plans, accounts and arrangements
(each, a "Plan").
ERISA and the Code impose certain duties on persons who are fiduciaries
of a Plan subject to Title I of ERISA or Section 4975 of the Code (an "ERISA
Plan") and prohibit certain transactions involving the assets of an ERISA Plan
and its fiduciaries or other interested parties. Generally, a person who
exercises discretionary authority or control with respect to the assets of an
ERISA Plan will be considered a fiduciary of the ERISA Plan.
49
In evaluating the purchase of preferred securities with assets of an
ERISA Plan, a fiduciary should consider, among other matters:
. whether the acquisition and holding of preferred securities is in
accordance with the documents and instruments governing such Plan;
. whether the acquisition and holding of preferred securities is solely
in the interest of Plan participants and beneficiaries and otherwise
consistent with the fiduciary's responsibilities and in compliance
with the requirements of Part 4 of Title I of ERISA, including, in
particular, the diversification, prudence and liquidity requirements
of Section 404 of ERISA and the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code;
. whether the assets of the Trust are treated as assets of the Plan;
and
. the need to value the assets of the Plan annually.
PLAN ASSET REGULATION
Under a Department of Labor regulation (29 C.F.R. Sec. 2510.3-101, the
"Plan Assets Regulation") governing what constitutes the assets of a Plan
("Plan Assets") for purposes of ERISA and the related prohibited transaction
provisions of the Code, when an ERISA Plan acquires an equity interest in an
entity that is neither a "publicly-offered security" nor a security issued by
an investment company registered under the Investment Company Act of 1940, the
ERISA Plan's assets include both the equity interest and an undivided interest
in each of the underlying assets of the entity, unless an exception under the
Plan Assets Regulation applies. Although no assurance can be given, it is
anticipated that the preferred securities will qualify for the exception for
"publicly-offered securities." For purposes of the Plan Assets Regulation, a
"publicly-offered security" is a security that is:
. "freely transferable";
. part of a class of securities that is "widely held"; and
. either (i) sold to the Plan as part of an offering of securities to
the public pursuant to an effective registration statement under the
Securities Act of 1933, as amended, referred to as the Securities
Act, and the class of securities to which such security is a part is
registered under the Exchange Act within 120 days after the end of
the fiscal year of the issuer during which the offering of such
securities to the public has occurred, or (ii) is part of a class of
securities that is registered under Section 12 of the Exchange Act.
The Plan Assets Regulation provides that a security is "widely held" only
if it is part of a class of securities that is owned by 100 or more investors
independent of the issuer and one another. A security will not fail to be
"widely held" because the number of independent investors falls below 100
subsequent to the initial offering thereof as a result of events beyond the
control of the issuer. The preferred securities are expected to be sold in an
offering registered under the Securities Act and to be registered under the
Exchange Act within the period required under the Plan Assets Regulation; it is
expected that they will be held by 100 or more investors at the conclusion of
the offering; and it is expected that the preferred securities will satisfy the
conditions necessary to be considered "freely transferable," although no
assurance can be given in this regard. If the preferred securities qualify for
this exception, ownership of the preferred securities by an ERISA Plan would
not cause the assets of the Trust to constitute Plan Assets.
If the assets of the Trust were deemed to be Plan Assets under ERISA,
this could result, among other things, in:
. the application of the prudence and other fiduciary responsibility
standards of ERISA to investments made by the Trust; and
. the possibility that certain transactions in which the Trust might
seek to engage could result in a non-exempt "prohibited transaction"
under ERISA and the Code.
50
PROHIBITED TRANSACTIONS
Section 406 of ERISA and Section 4975 of the Code prohibits ERISA Plans
from engaging in specified transactions involving Plan Assets with persons or
entities who are "parties in interest," within the meaning of ERISA, or
"disqualified persons" within the meaning of Section 4975 of the Code, unless
an exemption is available. A party in interest or disqualified person who
engages in a non-exempt prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code. In addition, the
fiduciary of the ERISA Plan that engaged in such non-exempt prohibited
transaction may be subject to penalties and liabilities under ERISA and the
Code.
Whether or not the underlying assets of the Trust were deemed to include
Plan Assets as described above, the acquisition and/or holding of the preferred
securities by an ERISA Plan with respect to which the Trust, Valley National
Bancorp (the obligor with respect to the junior subordinated debentures held by
the Trust), the underwriters, the property trustee or their affiliates may be a
party in interest or a disqualified person, may give rise to a prohibited
transaction. Consequently, before investing in the preferred securities, any
person who is acquiring such securities for, or on behalf of, an ERISA Plan
should determine that either a statutory or an administrative exemption from
the prohibited transaction rules is applicable to such investment in the
preferred securities, or that such acquisition and holding of such securities
will not result in a non-exempt prohibited transaction.
The statutory or administrative exemptions from the prohibited
transaction rules under ERISA and the Code which may be available to an ERISA
Plan investing in the preferred securities include the following:
. Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding
investments by insurance company pooled separate accounts;
. PTCE 91-38, regarding investments by bank collective investment
funds;
. PTCE 84-14, regarding transactions effected by qualified professional
asset managers;
. PTCE 96-23, regarding transactions effected by in-house asset
managers; and
. PTCE 95-60, regarding investments by insurance company general
accounts.
Governmental plans, non-U.S. plans and certain church plans while not
subject to the prohibited transaction provisions of ERISA and Section 4975 of
the Code may nevertheless be subject to Similar Laws, which may affect their
investment in the preferred securities. Any fiduciary of such a governmental,
non-U.S. or church plan considering an investment in the preferred securities
should consult with its counsel before purchasing preferred securities, to
consider the applicable fiduciary standards and to determine the need for, and
the availability, if necessary, of any exemptive relief under such Similar
Laws.
Because of the foregoing, the preferred securities should not be
purchased or held by any person investing Plan Assets of any Plan unless such
purchase and holding will not constitute a non-exempt prohibited transaction
under ERISA and the Code or a violation under any applicable Similar Laws.
Accordingly, by its acquisition of a preferred security, each purchaser and
subsequent transferee of preferred securities shall be deemed to be making a
representation to the trustee of the Trust, Valley National Bancorp and the
underwriter either that: it is not a Plan or an entity holding assets deemed to
be Plan Assets under the Plan Assets Regulation, and no part of the assets to
be used by it to acquire and/or hold such preferred securities or any interest
therein constitutes Plan Assets of any Plan; or such acquisition and holding
will not result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code (or a violation under Similar Laws) for which there is
no applicable statutory or administrative exemption.
In the case of preferred securities delivered in certificated form, the
purchaser will be required to make such representation, in writing, to the
trustee of the Trust, Valley National Bancorp and the underwriter.
51
The discussion of ERISA in this prospectus is general in nature and is
not intended to be all inclusive. Any person considering an investment in the
preferred securities on behalf of a Plan should consult with its legal advisors
regarding the consequences of such investment and consider whether the Plan can
make the representations noted above.
Further, the sale of investments to Plans is in no respect a
representation by the Trust, Valley National Bancorp, the property trustee, the
underwriter or any other person associated with the sale of the preferred
securities that such securities meet all relevant legal requirements with
respect to investments by Plans generally or by any particular Plan, or that
such securities are otherwise appropriate for Plans generally or any particular
Plan.
52
UNDERWRITING
We intend to offer the preferred securities through the underwriters.
Subject to the terms and conditions contained in a purchase agreement between
us and the underwriters, we have agreed to sell to the underwriters and the
underwriters severally have agreed to purchase from us, the amount of the
preferred securities listed opposite their names below.
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
------------ ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................
Sandler O'Neill & Partners, L.P......
Legg Mason Wood Walker, Incorporated.
Lehman Brothers Inc..................
Ryan, Beck & Co., L.L.C..............
Salomon Smith Barney Inc.............
UBS Warburg LLC......................
---------
Total....................... 7,000,000
=========
The underwriters have agreed to purchase all of the preferred securities
sold pursuant to the purchase agreement if any of the preferred securities are
purchased. If an underwriter defaults, the purchase agreement provides that the
purchase commitments of the nondefaulting underwriters may be increased or the
purchase agreement may be terminated.
We and the Trust have agreed to indemnify the underwriters against, or
contribute to payments that the underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act.
The underwriters are offering the preferred securities, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
legal matters by their counsel, including the validity of the preferred
securities, and other conditions contained in the purchase agreement, such as
the receipt by the underwriters of officer's certificates and legal opinions.
The underwriters reserve the right to withdraw, cancel or modify offers to the
public and to reject orders in whole or in part.
COMMISSIONS AND DISCOUNTS
The underwriters propose initially to offer the preferred securities to
the public at the initial public offering price set forth on the cover page of
this prospectus and to dealers at that price less a concession not in excess of
$ per preferred security. The underwriters may allow, and the dealers may
reallow, a discount not in excess of $ per preferred security to other
dealers. After the preferred securities are released for sale to the public,
the offering price, concession and discount may be changed.
In view of the fact that the proceeds of the sale of the preferred
securities will ultimately be used to purchase the junior subordinated
debentures, the purchase agreement provides that we will pay as compensation to
the underwriters arranging the investment therein of those proceeds, an amount
in immediately available funds of $ per preferred security, or $ in the
aggregate, for the accounts of the several underwriters. For sales of 10,000 or
more preferred securities to a single purchaser, the underwriting commission
will be $ per preferred security.
NO SALES OF SIMILAR SECURITIES
During a period of 30 days from the date of the prospectus, neither we
nor the Trust will, without the prior written consent of Merrill Lynch,
directly or indirectly, sell, offer to sell, grant any option for sale of, or
53
otherwise dispose of, any preferred securities, any security convertible into
or exchangeable into or exercisable for preferred securities or junior
subordinated debentures or any debt securities substantially similar to the
junior subordinated debentures or equity securities substantially similar to
the preferred securities, except for the preferred securities offered in
connection with this offering.
NEW YORK STOCK EXCHANGE LISTING
Prior to this offering, there has been no public market for the preferred
securities. The Trust will apply to have the preferred securities listed on the
New York Stock Exchange. Trading of the preferred securities on the New York
Stock Exchange is expected to commence within a 30-day period after the initial
delivery of the preferred securities. The representative has advised us and the
Trust that they intend to make a market in the preferred securities prior to
commencement of trading on the New York Stock Exchange, but are not obligated
to do so and may discontinue market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
preferred securities.
In order to meet one of the requirements for listing the preferred
securities on the New York Stock Exchange, the underwriters have undertaken to
sell preferred securities to a minimum of 400 beneficial holders.
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of the preferred securities is completed, rules of
the SEC may limit the ability of the underwriters and any selling group members
to bid for and purchase the preferred securities. As an exception to these
rules, the underwriters are permitted to engage in some transactions that
stabilize the price of the preferred securities. Those transactions consist of
bids or purchases for the purposes of pegging, fixing or maintaining the price
of the preferred securities.
If the underwriters create a short position in the preferred securities
in connection with the offering, i.e., if they sell more preferred securities
than are set forth on the cover page of this prospectus, the underwriters may
reduce the short position by purchasing preferred securities in the open
market.
The underwriters may also impose a penalty bid on certain selling group
members. This means that if the underwriters purchase preferred securities in
the open market to reduce the underwriters' short position or to stabilize the
price of the preferred securities, they may reclaim the amount of the selling
concession from the selling group members who sold those preferred securities
as part of the offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of those purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.
None of Valley National Bancorp, the Trust nor any of the underwriters
makes any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the
preferred securities. In addition, none of Valley National Bancorp, the Trust
nor any of the underwriters makes any representation that the underwriters will
engage in those transactions or that those transactions, once commenced, will
not be discontinued without notice.
OTHER RELATIONSHIPS
Some of the underwriters or their affiliates engage in transactions with,
and, from time to time, have performed services for, us and our subsidiaries in
the ordinary course of business.
54
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the preferred
securities will be passed upon on behalf of the Trust by Morris, Nichols, Arsht
& Tunnell, special Delaware counsel to the Trust and us. The validity of the
junior subordinated debentures and the preferred securities guarantee and
certain matters relating thereto will be passed upon for us and certain United
States federal income taxation matters will be passed upon for us and the Trust
by Pitney, Hardin, Kipp & Szuch LLP. Certain legal matters will be passed upon
on behalf of the underwriters by Sidley Austin Brown & Wood LLP, New York, New
York, counsel to the underwriters.
EXPERTS
TheOur consolidated financial statements and schedules of Valley as of December 31, 19992000 and 19981999
and for each of the years in the three-year period ended December 31, 19992000 and
included in Valley'sour Annual Report on Form 10-K for the year ended December 31, 1999,2000
have been incorporated by reference in this Registration Statement in reliance
upon the report of KPMG LLP, independent certified public accountants, and arewhich is
incorporated by reference herein, and upon the authority of saidsuch firm as
experts in accounting and auditing.
Our restated consolidated financial statements as of December 31, 2000
and 1999 and for each of the years in the three-year period ended December 31,
2000 and included in Valley's October 1, 2001 Current Report on Form 8-K have
been incorporated by reference in this Registration Statement in reliance upon
the report of KPMG LLP, independent certified public accountants, which is
incorporated by reference herein, and upon the authority of such firm as
experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of Exchange Act and, in
accordance therewith, files reports, proxy statements and other information
with the SEC. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's
regional office at Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661. You may also obtain copies of such material by mail
from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. If available, you may also access
such information through the SEC's electronic data gathering, analysis and
retrieval system, commonly referred to as EDGAR, via electronic means,
including the SEC's home page on the Internet (http://www.sec.gov). Our common
stock is traded on the New York Stock Exchange under the symbol "VLY." You may
inspect the reports, proxy statements and other information concerning us at
the offices of the New York Stock Exchange, 11 Wall Street, New York, New York
10005.
No separate financial statements of the Trust have been included in this
prospectus and no separate financial statements will be prepared in the future.
We do not consider that such financial statements would be material to holders
of the securities offered by this prospectus because:
. the Trust is a newly-formed special purpose entity;
. has no operating history or independent operations; and
. is not engaged in and does not propose to engage in any activity
other than holding as trust assets the junior subordinated debentures
of Valley National Bancorp, issuing the capital and common securities
and engaging in incidental activities.
We do not expect that the Trust will file reports, proxy statements and
other information under the Exchange Act with the SEC.
55
This prospectus constitutes part of a registration statement on Form S-3
filed by us and the Trust with the SEC under the Securities Act. This
prospectus does not contain all the information set forth in the registration
statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC, and reference is made to the registration statement and
to the exhibits relating to such registration statement for further information
with respect to Valley National Bancorp and the preferred securities. Any
statements contained in this prospectus 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 SEC. Each such statement is qualified in its
entirety by such reference.
The following documents that we have filed with the SEC are incorporated
into this prospectus by reference:
. Our Annual Report on Form 10-K for the year ended December 31, 2000
filed with the SEC on March 1, 2001 and Current Report on Form 8-K
restating our financial statements and management discussion for the
year ended December 31, 2000 filed with the SEC on October 1, 2001;
. Our Quarterly Reports on Form 10-Q for the quarters ended March 31
and June 30, 2001, filed with the SEC on May 14 and August 14, 2001,
respectively; and
. Our Current Reports on Form 8-K filed on January 29, 2001, April 6,
2001, August 21, 2001 and October 19, 2001.
In addition to the documents listed above, we also incorporate by
reference into this prospectus, any other documents we file with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the completion of the offering of the preferred
securities referred to in this prospectus. Any statement contained in this
prospectus or in a document incorporated or deemed incorporated by reference
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in any other
subsequently filed document which is or is deemed to be incorporated by
reference in this prospectus modifies or supersedes that statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
You may obtain a copy of our filings with the SEC at no cost, by writing
or telephoning us at the following address:
Valley National Bancorp
1455 Valley Road
Wayne, New Jersey 07470
Attn: Diane Grenz
973-305-3380
When we refer to this prospectus, we mean not only this prospectus but
also any documents which are incorporated or deemed to be incorporated in this
prospectus by reference. You should rely only on the information incorporated
by reference or provided in this prospectus or any supplement. We have not
authorized anyone else to provide you with additional or different information.
This prospectus is used to offer and sell the preferred securities referred to
in this prospectus, and only under circumstances and in jurisdictions where it
is lawful to do so.
56
A WARNING ABOUT FORWARD-LOOKING INFORMATION
Some of the information presented or incorporated by reference in this
Prospectus contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are not
historical facts and include expressions about management's confidence and
strategies and management's expectations about new and existing programs and
products, relationships, opportunities, technology and market conditions. These
statements may be identified by an "asterisk" (*) or such forward-looking
terminology as "expect," "look," "believe," "anticipate," "may," "will," or
similar statements or variations of such terms. Such forward-looking statements
involve certain risks and uncertainties. These include, but are not limited to,
the direction of the economy in New Jersey and New York especially as it has
been affected by recent developments, the direction of interest rates,
continued levels of loan quality and origination volume, continued
relationships with major customers including sources for loans, as well as the
effects of general economic conditions and legal and regulatory barriers and
structure. Actual results may differ materially from such forward-looking
statements. We assume no obligation for updating any such forward-looking
statement at any time.
57
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[LOGO] VALLEY NATIONAL BANCORP
7,000,000 PREFERRED SECURITIES
VNB CAPITAL TRUST I
% TRUST ORIGINATED PREFERRED SECURITIES/SM/ (TOPRS/SM/)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED IN THIS PROSPECTUS BY
VALLEY NATIONAL BANCORP
-----------
PROSPECTUS
-----------
MERRILL LYNCH & CO.
SANDLER O'NEILL & PARTNERS, L.P.
LEGG MASON WOOD WALKER
INCORPORATED
LEHMAN BROTHERS
RYAN, BECK & CO.
SALOMON SMITH BARNEY
UBS WARBURG
, 2001
--------
"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ItemITEM 14. Other Expenses of Issuance and DistributionOTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by Valleyus in connection
with the sale of the common stockpreferred securities being registered:
Registration $ 365
Printing expenses $1,000
Legal fees and expenses $5,000
Accounting fees and expenses $1,000
Miscellaneous $ 635
==== ===
Total $8,000
Item
Registration fee.................... $ 43,750
Printing expenses................... 17,000
Blue sky fees and expenses.......... 2,500
Rating agency fees.................. 150,000
Legal fees and expenses............. 200,000
Accounting fees and expenses........ 35,000
NYSE filing fees.................... 25,000
Trustee's fees and expenses......... 10,000
Miscellaneous....................... 25,000
--------
Total............................ $508,250
========
ITEM 15. Indemnification of Directors and OfficersINDEMNIFICATION OF DIRECTORS AND OFFICERS
(a).Limitation of Liability of Directors and Officers. LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS. Section 14A:2-7(3)
of the New Jersey Business Corporation Act permits a corporation to provide in
its certificate of incorporation that a director or officer shall not be
personally liable to the corporation or its shareholders for breach of any duty
owed to the corporation or its shareholders, except that such provisions shall
not relieve a director or officer from liability for any breach of duty based
upon an action or omission (a) in breach of such person's duty of loyalty to
the corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of any
improper personal benefit. Article VII of Valley'sour restated certificate of
incorporation includes limitation on the liability of officers and directors to
the fullest extent permitted by New Jersey law.
(b).Indemnification of Directors, Officers, Employees and Agents. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. Under
Article VI of itsour restated certificate of incorporation, Valleywe must, to the full
extent permitted by law, indemnify itsour directors, officers, employees and
agents. Section 14A:3-5 of the New Jersey Business Corporation Act provides
that a corporation may indemnify its directors, officers, employees and agents
against judgments, fines, penalties, amounts paid in settlement and expenses,
including attorneys' fees, resulting from various types of legal actions or
proceedings if the actions of the party being indemnified meet the standards of
conduct specified therein. Determinations concerning whether or not the
applicable standard of conduct has been met can be made by (a) a disinterested
majority of the Board of Directors, (b) independent legal counsel, or (c) an
affirmative vote of a majority of shares held by the shareholders. No
indemnification is permitted to be made to or on behalf of a corporate
director, officer, employee or agent if a judgment or other final adjudication
adverse to such person establishes that his acts or omissions (a) were in
breach of his duty of loyalty to the corporation or its shareholders, (b) were
not in good faith or involved a knowing violation of law or (c) resulted in
receipt by such person of an improper personal benefit.
(c).Insurance. The Company maintainsDeclaration of Trust limits the liability of the Trust and certain
other persons and provides for the indemnification by the Trust or us of the
trustees, their officers, directors and employees and certain other persons.
(c) INSURANCE. We maintain insurance policies insuring the
Company'sour directors and
officers against liability for wrongful acts or omissions arising out of their
positions as directors and officers, subject to certain limitations.
Item 16. Exhibits(d) The following exhibits areform of Purchase Agreement filed herewith oras an exhibit hereto, and
incorporated herein by reference.
The reference, numbers correspondcontains some provisions relating to the
numbered paragraphsindemnification of Item 601 of
Regulation S-K.
5 Opinion of Pitney, Hardin, Kipp & Szuch LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of Pitney, Hardin, Kipp & Szuch LLP (incorporated inour directors, officers and controlling persons.
II-1
ITEM 16. EXHIBITS
See Exhibit 5).
24 Power of Attorney for Directors and Executive Officers.*
- -------------------
*Previously Filed
ItemIndex.
ITEM 17. UndertakingsUNDERTAKINGS
(a) The undersigned registrantregistrants hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of 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;
(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;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference 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; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakesundertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant'sour
annual report pursuant to Section 13(a) or Section 15(d) of the securitiesSecurities 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 the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c)(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrantregistrants pursuant to the foregoing provisions, or otherwise,
the registrant hasregistrants have 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 the
registrantregistrants of expenses incurred or paid by a director, officer or controlling
person of theeither 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, the registrantregistrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrants hereby undertake that:
(i) For purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus 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.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Wayne, State of New
Jersey, on the 2122nd day of September, 2000.October, 2001.
VALLEY NATIONAL BANCORP
By: PETER SOUTHWAY
-----------------------------------------------
Peter Southway,
Vice Chairman
By: /S/ ALAN D. ESKOW
----------------------------------------------------
ALAN D. ESKOW
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
Signature Title Date
---------TITLE DATE
----- ----
* Chairman, President, Chief October 22, 2001
--------------------- Executive Officer and Director
GERALD(GERALD H. LIPKIN*LIPKIN) (Principal Executive Officer)
September 21, 2000
- -------------------------------------------
(Gerald H. Lipkin)
ANDREW B. ABRAMSON* Director September 21, 2000
- -------------------------------------------
(Andrew B. Abramson)
PAMELA BRONANDER* Director September 21, 2000
- -------------------------------------------
(Pamela Bronander)
JOSEPH COCCIA, JR./S/ ALAN D. ESKOW Executive Vice President and Chief October 22, 2001
--------------------- Financial Officer (Principal
(ALAN D. ESKOW) Financial Officer)
* Director September 21, 2000
- -------------------------------------------
(Joseph Coccia, Jr.)
HAROLD P. COOK, III* Director September 21, 2000
- -------------------------------------------
(Harold P. Cook, III)
AUSTIN C. DRUKKER* Director September 21, 2000
- -------------------------------------------
(Austin C. Drukker)
GRAHAM O. JONES* Director September 21, 2000
- -------------------------------------------
(Graham O. Jones)
WALTER H. JONES, III* Director September 21, 2000
- -------------------------------------------
(Walter H. Jones, III)
GERALD KORDE* Director September 21, 2000
- -------------------------------------------
(Gerald Korde)
JOLEEN MARTIN* Director September 21, 2000
- -------------------------------------------
(Joleen Martin)
ROBERT E. MCENTEE* Director September 21, 2000
- -------------------------------------------
(Robert E. McEntee)
RICHARD S. MILLER* Director September 21, 2000
- -------------------------------------------
(Richard S. Miller)
ROBERT RACHESKY* Director September 21, 2000
- -------------------------------------------
(Robert Rachesky)
BARNETT RUKIN* Director September 21, 2000
- -------------------------------------------
(Barnett Rukin)First Vice President and Controller October 22, 2001
--------------------- (Principal Accounting Officer)
(CHRISTINE MOZER)
--------------------- Vice Chairman and Director PETER SOUTHWAY (Principal Financial Officer) September 21, 2000
- -------------------------------------------
(Peter Southway)
RICHARDOctober , 2001
(SPENCER B. WITTY)
* Director October 22, 2001
---------------------
(ANDREW B. ABRAMSON)
* Director October 22, 2001
---------------------
(CHARLES J. BAUM)
* Director October 22, 2001
---------------------
(PAMELA BRONANDER)
--------------------- Director October , 2001
(JOSEPH COCCIA, JR.)
* Director October 22, 2001
---------------------
(HAROLD P. COOK, III)
* Director October 22, 2001
---------------------
(AUSTIN C. DRUKKER)
S-1
TITLE DATE
----- ----
* Director October 22, 2001
-----------------------
(GRAHAM O. JONES)
----------------------- Director October , 2001
(WALTER H. JONES, III)
* Director October 22, 2001
-----------------------
(GERALD KORDE)
* Director October 22, 2001
-----------------------
(ROBINSON MARKEL)
----------------------- Director October , 2001
(JOLEEN J. MARTIN)
* Director October 22, 2001
-----------------------
(ROBERT E. MCENTEE)
* Director October 22, 2001
-----------------------
(RICHARD S. MILLER)
* Director October 22, 2001
-----------------------
(ROBERT RACHESKY)
* Director October 22, 2001
-----------------------
(BARNETT RUKIN)
* Director October 22, 2001
-----------------------
(PETER SOUTHWAY)
* Director October 22, 2001
-----------------------
(RICHARD F. TICE*TICE)
* Director September 21, 2000
- -------------------------------------------
(Richard F. Tice)
LEONARD VORCHEIMER*October 22, 2001
-----------------------
(LEONARD J. VORCHEIMER)
----------------------- Director September 21, 2000
- -------------------------------------------
(Leonard Vorcheimer)
Director
- -------------------------------------------
(JosephOctober , 2001
(JOSEPH L. Vozza)
Senior Vice President,VOZZA)
/s/ ALAN D. ESKOW
*By: ----------------------------
ALAN D. ESKOW
ATTORNEY-IN-FACT
S-2
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the Town of Wayne, State of New
Jersey, on the 22nd day of October, 2001.
VNB CAPITAL TRUST I
By:VALLEY NATIONAL BANCORP, as Sponsor
By: /S/ ALAN D. ESKOW
Principal Accounting Officer and September 21, 2000
- -------------------------------------------
(Alan D. Eskow) Controller
ALAN D. ESKOW
*By:____________________________ September 21, 2000
-----------------------------------
Name:Alan D. Eskow
(as attorney-in-fact)Title:Executive Vice President and
Chief Financial Officer
S-3
INDEX TO EXHIBITS
5 Opinion of Pitney, Hardin, Kipp & Szuch LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of Pitney, Hardin, Kipp & Szuch LLP (incorporated in Exhibit 5).
24 Power of Attorney for Directors and Executive Officers.
EXHIBIT DESCRIPTION
------- -----------
1 Form of Purchase Agreement.
4.1* Form of Junior Subordinated Indenture.
4.2* Form of Junior Subordinated Debenture (included in Exhibit 4.1).
4.3* Certificate of Trust of VNB Capital Trust I.
4.4* Declaration of Trust of VNB Capital Trust I.
4.5* Form of Amended and Restated Declaration of Trust.
4.6* Form of Preferred Security (included in Exhibit 4.5).
4.7* Form of Common Security (included in Exhibit 4.5).
4.8* Form of Preferred Securities Guarantee Agreement.
4.9* Form of Common Securities Guarantee Agreement.
5.1 Opinion of Pitney, Hardin, Kipp & Szuch LLP.
5.2 Opinion of Morris, Nichols, Arsht & Tunnell.
8 Tax Opinion of Pitney, Hardin, Kipp & Szuch LLP.
12* Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG LLP.
23.2 Consent of Pitney, Hardin, Kipp & Szuch LLP (included in Exhibit 5.1).
23.3 Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.2).
24 Power of Attorney
25.1 Form T-1 Statement of Eligibility for The Bank of New York to act as trustee for the Preferred
Securities of VNB Capital Trust I.
25.2 Form T-1 Statement of Eligibility for The Bank of New York to act as trustee for the Debentures of
Valley National Bancorp.
25.3 Form T-1 Statement of Eligibility for The Bank of New York to act as trustee for the Preferred
Securities Guarantee Agreement.
--------
* - -------------------
*Previously Filed previously.