AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
OCTOBER __, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PATRIOT BANK CORP. PATRIOT CAPITAL TRUST I
(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) specified in its trust
agreement)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction
incorporation or organization) of incorporation or
organization)
6712 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
23-2820537 23-7897586
(I.R.S. Employer Identification (I.R.S. Employer
No.) Identification No.)
HIGH AND HANOVER STREETS
POTTSTOWN, PENNSYLVANIA 19464
(610) 323-1500
(Address, including zip code, and telephone number, including
area code, of Registrants' principal executive offices)
RICHARD A. ELKO
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
PATRIOT BANK CORP.
HIGH AND HANOVER STREETS
POTTSTOWN, PENNSYLVANIA 19464
(610) 323-1500
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
COPIES TO:
JEFFREY P. WALDRON
STEVENS & LEE
1275 DRUMMERS LANE
ONE GLENHARDIE CORPORATE CENTER, SUITE 202
WAYNE, PENNSYLVANIA 19087-0236
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Each Offering Aggregate Amount of
Class of Securities Amount to be Price Offering Registration
to be Registered Registered Per Unit(1) Price(1) Fee(2)
<S> <C> <C> <C> <C>
Exchange Capital Securities
of Patriot Capital Trust I $19,000,000 100% $19,000,000 $5,757.58
Exchange Junior Subordinated
Deferrable Interest Debentures
of Patriot Bank Corp.(2)
Patriot Bank Corp. Exchange
Guarantee with respect to
Exchange Capital
Securities(3)
Total(4) $19,000,000(5) 100% $19,000,000(5) $5,757.58
</TABLE>
(1) Estimated solely for the purpose of computing the
registration fee.
(2) No separate consideration will be received for the Exchange
Junior Subordinated Deferrable Interest Debentures of
Patriot Bank Corp. (the "Exchange Junior Subordinated
Debentures") distributed upon any liquidation of Patriot
Capital Trust I.
(3) No separate consideration will be received for the Patriot
Bank Corp. Exchange Guarantee.
(4) This Registration Statement is deemed to cover rights of
holders of Exchange Junior Subordinated Deferrable Interest
Debentures under the Indenture, the rights of holders of
Exchange Capital Securities of Patriot Capital Trust I under
an Amended and Restated Declaration of Trust, the rights of
holders of such Capital Securities under the Exchange
Guarantee and certain backup undertakings as described
herein.
(5) Such amount represents the liquidation amount of the Patriot
Capital Trust I Exchange Capital Securities to be exchanged
hereunder and the principal amount of Exchange Junior
Subordinated Deferrable Interest Debentures that may be
distributed to holders of such Capital Securities upon any
liquidation of Patriot Capital Trust I.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED ______________ __, 1997
PATRIOT CAPITAL TRUST I
OFFER TO EXCHANGE ITS
10.30% EXCHANGE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER EXCHANGE CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
10.30% ORIGINAL CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER ORIGINAL CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
PATRIOT BANK CORP., INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
PATRIOT CAPITAL TRUST I, A TRUST FORMED UNDER THE LAWS OF
THE STATE OF DELAWARE (THE "TRUST"), HEREBY OFFERS, UPON THE
TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS PROSPECTUS
(AS THE SAME MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME,
THE "PROSPECTUS") AND IN THE ACCOMPANYING LETTER OF TRANSMITTAL
(WHICH TOGETHER CONSTITUTE THE "EXCHANGE OFFER"), TO EXCHANGE UP
TO $19,000,000 AGGREGATE LIQUIDATION AMOUNT OF ITS 10.30%
EXCHANGE CAPITAL SECURITIES (THE "EXCHANGE CAPITAL SECURITIES")
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), PURSUANT TO A REGISTRATION
STATEMENT (AS DEFINED HEREIN) OF WHICH THIS PROSPECTUS
CONSTITUTES A PART, FOR A LIKE LIQUIDATION AMOUNT OF ITS
OUTSTANDING 10.30% CAPITAL SECURITIES (THE "ORIGINAL CAPITAL
SECURITIES"), OF WHICH $19,000,000 AGGREGATE LIQUIDATION AMOUNT
IS OUTSTANDING. PURSUANT TO THE EXCHANGE OFFER, PATRIOT BANK
CORP., A DELAWARE CORPORATION (THE "CORPORATION" OR "PATRIOT"),
IS ALSO OFFERING TO EXCHANGE (I) ITS GUARANTEE OF PAYMENTS OF
CASH DISTRIBUTIONS AND PAYMENTS ON LIQUIDATION OF THE TRUST OR
REDEMPTION OF THE ORIGINAL CAPITAL SECURITIES (THE "ORIGINAL
GUARANTEE") FOR A LIKE GUARANTEE IN RESPECT OF THE EXCHANGE
CAPITAL SECURITIES (THE "EXCHANGE GUARANTEE") AND
(II) $19,000,000 AGGREGATE PRINCIPAL AMOUNT OF ITS 10.30% JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE JUNE 1, 2027 (THE
"ORIGINAL JUNIOR SUBORDINATED DEBENTURES") FOR A LIKE AGGREGATE
PRINCIPAL AMOUNT OF ITS 10.30% EXCHANGE JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURES DUE JUNE 1, 2027 (THE "EXCHANGE
JUNIOR SUBORDINATED DEBENTURES"), WHICH EXCHANGE GUARANTEE AND
EXCHANGE JUNIOR SUBORDINATED DEBENTURES ALSO HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT. THE ORIGINAL CAPITAL SECURITIES, THE
ORIGINAL GUARANTEE AND THE ORIGINAL JUNIOR SUBORDINATED
DEBENTURES ARE COLLECTIVELY REFERRED TO HEREIN AS THE "ORIGINAL
SECURITIES" AND THE EXCHANGE CAPITAL SECURITIES, THE EXCHANGE
GUARANTEE AND THE EXCHANGE JUNIOR SUBORDINATED DEBENTURES ARE
COLLECTIVELY REFERRED TO HEREIN AS THE "EXCHANGE SECURITIES."
THE TERMS OF THE EXCHANGE SECURITIES ARE IDENTICAL IN ALL
MATERIAL RESPECTS TO THE RESPECTIVE TERMS OF THE ORIGINAL
SECURITIES, EXCEPT THAT (1) THE EXCHANGE SECURITIES HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT AND THEREFORE WILL NOT BE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER APPLICABLE TO THE
ORIGINAL SECURITIES, (2) THE EXCHANGE CAPITAL SECURITIES WILL NOT
PROVIDE FOR ANY INCREASE IN THE DISTRIBUTION RATE THEREON AND
(3) THE EXCHANGE JUNIOR SUBORDINATED DEBENTURES WILL NOT PROVIDE
FOR ANY LIQUIDATED DAMAGES THEREON. SEE "DESCRIPTION OF EXCHANGE
SECURITIES" AND "DESCRIPTION OF ORIGINAL SECURITIES." THE
EXCHANGE CAPITAL SECURITIES ARE BEING OFFERED FOR EXCHANGE IN
ORDER TO SATISFY CERTAIN OBLIGATIONS OF THE CORPORATION AND THE
TRUST UNDER THE REGISTRATION RIGHTS AGREEMENT DATED AS OF JUNE 5,
1997 (THE "REGISTRATION AGREEMENT") AMONG THE CORPORATION, THE
TRUST AND THE INITIAL PURCHASERS (AS DEFINED HEREIN). IN THE
EVENT THAT THE EXCHANGE OFFER IS CONSUMMATED, ANY ORIGINAL
CAPITAL SECURITIES WHICH REMAIN OUTSTANDING AFTER CONSUMMATION OF
THE EXCHANGE OFFER AND THE EXCHANGE CAPITAL SECURITIES ISSUED IN
THE EXCHANGE OFFER WILL VOTE TOGETHER AS A SINGLE CLASS FOR
PURPOSES OF DETERMINING WHETHER HOLDERS OF THE REQUISITE
PERCENTAGE IN OUTSTANDING LIQUIDATION AMOUNT THEREOF HAVE TAKEN
CERTAIN ACTIONS OR EXERCISED CERTAIN RIGHTS UNDER THE
DECLARATION. (CONTINUED ON THE FOLLOWING PAGE)
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ARE FIRST
BEING MAILED TO ALL HOLDERS OF ORIGINAL CAPITAL SECURITIES ON
____________, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE __ FOR CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED BY HOLDERS IN DECIDING
WHETHER TO TENDER ORIGINAL CAPITAL SECURITIES IN THE EXCHANGE
OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is _________ __, 1997.<PAGE>
(Continued from the previous page)
The Exchange Capital Securities and the Original Capital
Securities (collectively, the "Capital Securities") represent
beneficial interests in the assets of the Trust. The Corporation
is the owner of all of the beneficial interests represented by
common securities of the Trust (the "Common Securities," and
together with the Capital Securities, the "Trust Securities").
The Bank of New York is the Property Trustee of the Trust. The
Trust exists for the sole purpose of issuing the Trust Securities
and investing the proceeds thereof in the Junior Subordinated
Debentures (as defined herein). The Junior Subordinated
Debentures mature on June 1, 2027 (the "Stated Maturity"). The
Capital Securities will have a preference over the Common
Securities under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of Exchange Securities--Description
of Exchange Capital Securities--Subordination of Common
Securities."
As used herein, (i) the "Indenture" means the Indenture,
dated as of June 1, 1997, as amended and supplemented, between
the Corporation and The Bank of New York, as Debenture Trustee
(the "Debenture Trustee"), and (ii) the "Declaration" means the
Amended and Restated Declaration of Trust relating to the Trust
among the Corporation, as Sponsor, The Bank of New York as
Property Trustee (the "Property Trustee"), The Bank of New York
(Delaware) as Delaware Trustee (the "Delaware Trustee"), and the
Administrative Trustees named therein (collectively, with the
Property Trustee and Delaware Trustee, the "Issuer Trustees").
In addition, as the context may require, (i) the term "Junior
Subordinated Debentures" includes the Original Junior
Subordinated Debentures and the Exchange Junior Subordinated
Debentures and (ii) the term "Guarantee" includes the Original
Guarantee and the Exchange Guarantee.
Holders of the Trust Securities will be entitled to receive
cumulative cash distributions arising from the payment of
interest on the Junior Subordinated Debentures accruing from
June 5, 1997 and payable semi-annually in arrears on the 1st day
of June and December of each year, commencing December 1, 1997,
at the annual rate of 10.30% of the Liquidation Amount of $1,000
per Exchange Capital Security and at the annual rate of 10.30% of
the Liquidation Amount of $1,000 per Common Security
("Distributions"). Subject to certain exceptions, the
Corporation has the right to defer payments of interest on the
Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods
with respect to each deferral period (each, an "Extension
Period"); provided, however, that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures.
Upon the termination of any Extension Period and the payment of
all interest then accrued and unpaid (together with interest
thereon at the rate of 10.30%, compounded semi-annually, to the
extent permitted by applicable law), the Corporation may elect to
begin a new Extension Period, subject to the requirements set
forth herein. If interest payments on the Junior Subordinated
Debentures are so deferred, during any Extension Period,
Distributions on the Trust Securities will also be deferred and
the Corporation will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash
distributions with respect to the Corporation's capital stock
(which includes common and preferred stock) or to make any
payment with respect to debt securities of the Corporation that
rank pari passu in all respects with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on
the Junior Subordinated Debentures will continue to accrue (and
the amount of Distributions to which holders of the Trust
Securities are entitled will accumulate) at the rate of 10.30%
per annum, compounded semi-annually, and holders of Trust
Securities will be required to accrue interest income for United
States federal income tax purposes. See "Description of Exchange
Securities--Description of Exchange Junior Subordinated
Debentures--Option to Extend Interest Payment Date" and "Certain
United States Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
<PAGE>
The Corporation has, through the Guarantee, the Declaration,
the Junior Subordinated Debentures and the Indenture (each as
defined herein), taken together, fully, irrevocably and
unconditionally guaranteed, as described herein, all of the
Trust's obligations under the Capital Securities. See
"Relationship Among the Exchange Capital Securities, the Exchange
Junior Subordinated Debentures and the Exchange Guarantee--Full
and Unconditional Guarantee." Pursuant to the Exchange Guarantee,
the Corporation will guarantee the payment of Distributions and
payments on liquidation or redemption of the Exchange Capital
Securities, but only in each case to the extent of funds held by
the Trust, as described herein. See "Description of Exchange
Securities--Description of Exchange Guarantee." If the
Corporation does not make interest payments on the Junior
Subordinated Debentures held by the Trust, the Trust will have
insufficient funds to pay Distributions on the Capital
Securities. The Guarantee does not cover the payment of
Distributions when the Trust does not have sufficient funds to
pay such Distributions. In such event, a holder of Capital
Securities may institute a legal proceeding directly against the
Corporation for enforcement of payment to such holder of the
principal of or interest on Junior Subordinated Debentures having
a principal amount equal to the aggregate Liquidation Amount of
the Capital Securities held by such holder (a "Direct Action").
See "Description of Exchange Securities--Description of Exchange
Junior Subordinated Debentures--Enforcement of Certain Rights by
Holders of Exchange Capital Securities." The obligations of the
Corporation under the Guarantee and the Junior Subordinated
Debentures are subordinate and junior in right of payment to all
Senior Indebtedness (as defined in "Description of Exchange
Securities--Description of Exchange Junior Subordinated
Debentures--Subordination") of the Corporation. In addition,
because the Corporation is a holding company, the Junior
Subordinated Debentures and the Guarantee are effectively
subordinated to all existing and future liabilities of the
Corporation's subsidiaries, including deposits.
The Trust Securities will be subject to mandatory redemption
(i) in whole, but not in part, at the Stated Maturity of the
Junior Subordinated Debentures upon the redemption thereof at a
redemption price equal to the principal amount of, plus accrued
interest on, the Junior Subordinated Debentures (the "Maturity
Redemption Price"), (ii) in whole, but not in part, at any time
prior to June 1, 2007, contemporaneously with the optional
redemption of the Junior Subordinated Debentures, upon the
occurrence and continuation of a Special Event (as defined
herein) at a redemption price equal to the Special Event
Prepayment Price (as defined herein) (the "Special Event
Redemption Price"), and (iii) in whole or in part on or after
June 1, 2007 contemporaneously with any optional redemption by
the Corporation of Junior Subordinated Debentures at a redemption
price (the "Optional Redemption Price") equal to the Optional
Prepayment Price (as defined below). Any of the Maturity
Redemption Price, the Special Event Redemption Price or the
Optional Redemption Price may be referred to herein as the
"Redemption Price." See "Description of Exchange Securities--
Description of Exchange Capital Securities--Mandatory
Redemption." Subject to the Corporation having received any
required regulatory approval to do so, the Junior Subordinated
Debentures are redeemable prior to the Stated Maturity (i) at the
option of the Corporation on or after June 1, 2007, in whole or
in part at any time at a redemption price (the "Optional
Prepayment Price") equal to 105.150% of the principal amount
thereof on June 1, 2007 declining ratably on each June 1
thereafter to 100% on or after June 1, 2017, plus accrued and
unpaid interest thereon to the date of redemption or (ii) at any
time prior to June 1, 2007, in whole but not in part, upon the
occurrence and continuation of a Special Event, at a redemption
price (the "Special Event Prepayment Price" equal to the greater
of (a) 100% of the principal amount thereof or (b) the sum, as
determined by a Quotation Agent (as defined herein), of the
present values of the principal amount and premium payable as
part of the prepayment price with respect to an optional
redemption of such Junior Subordinated Debentures on June 1,
2007, together with scheduled payments of interest accruing from
the redemption date to June 1, 2007, in each case, discounted to
the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Treasury
Rate (as defined herein), plus accrued but unpaid interest
thereon to the date of redemption. See "Description of Exchange
Securities--Description of Exchange Junior Subordinated
Debentures--Optional Redemption" and "--Special Event
Prepayment."
The Corporation, as the holder of the outstanding Common
Securities, has the right at any time (including, without
limitation, upon the occurrence of a Tax Event (as defined
herein)) to terminate the Trust and cause a Like Amount (as
defined herein) of the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities upon
liquidation of the Trust, subject to (i) the Corporation having
received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital
Securities and (ii) any required regulatory approval. In the
event of such termination of the Trust, after satisfaction of
liabilities to creditors of the Trust as required by applicable
law, the holders of the Capital Securities generally will be
entitled to receive a Liquidation Amount of $1,000 per Capital
Security plus accumulated and unpaid Distributions thereon to the
date of payment, which shall be in the form of a distribution of
a Like Amount of Junior Subordinated Debentures, subject to
certain exceptions. See "Description of Exchange Securities--
Description of Exchange Capital Securities--Liquidation of the
Trust and Distribution of Junior Subordinated Debentures."
The Capital Securities, including the Exchange Capital
Securities when issued, may be transferred only in blocks having
a Liquidation Value of not less than $100,000 (100 Capital
Securities)
The Trust is making the Exchange Offer of the Exchange
Capital Securities in reliance on the position of the staff of
the Division of Corporation Finance of the Securities and
Exchange Commission (the "Commission") as set forth in certain
interpretive letters addressed to third parties in other
transactions. However, neither the Corporation nor the Trust has
sought its own interpretive letter and there can be no assurance
that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the
Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the
Division of Corporation Finance of the Commission, and subject to
the two immediately following sentences, the Corporation and the
Trust believe that Exchange Capital Securities issued pursuant to
this Exchange Offer in exchange for Original Capital Securities
may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such
Exchange Capital Securities are acquired in the ordinary course
of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of
the Securities Act) of such Exchange Capital Securities.
However, any holder of Original Capital Securities who is an
"affiliate" of the Corporation or the Trust or who intends to
participate in the Exchange Offer for the purpose of distributing
Exchange Capital Securities, or any broker-dealer who purchased
Original Capital Securities from the Trust to resell pursuant to
Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption under the Securities Act, (a) will not be
able to rely on the interpretations of the staff of the Division
of Corporation Finance of the Commission set forth in the above-
mentioned interpretive letters, (b) will not be permitted or
entitled to tender such Original Capital Securities in the
Exchange Offer and (c) must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Original
Capital Securities unless such sale is made pursuant to an
exemption from such requirements. In addition, as described
below, if any broker-dealer holds Original Capital Securities
acquired for its own account as a result of market-making or
other trading activities and exchanges such Original Capital
Securities for Exchange Capital Securities, then such broker-
dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such Exchange
Capital Securities.
<PAGE>
Each holder of Original Capital Securities who wishes to
exchange Original Capital Securities for Exchange Capital
Securities in the Exchange Offer will be required to represent
that (i) it is not an "affiliate" of the Corporation or the
Trust, (ii) any Exchange Capital Securities to be received by it
are being acquired in the ordinary course of its business,
(iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged
in, and does not intend to engage in, a distribution (within the
meaning of the Securities Act) of such Exchange Capital
Securities. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility
to participate in the Exchange Offer, to furnish to the
Corporation and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) on behalf of whom such holder holds the Capital
Securities to be exchanged in the Exchange Offer. Each broker-
dealer that receives Exchange Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it
acquired the Original Capital Securities for its own account as
the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with
any resale of such Exchange Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters
referred to above, the Corporation and the Trust believe that
broker-dealers who acquired Original Capital Securities for their
own accounts, as a result of market-making activities or other
trading activities ("Participating Broker-Dealers"), may fulfill
their prospectus delivery requirements with respect to the
Exchange Capital Securities received upon exchange of such
Original Capital Securities (other than Original Capital
Securities which represent an unsold allotment from the initial
sale of the Original Capital Securities) with a prospectus
meeting the requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it contains
a description of the plan of distribution with respect to the
resale of such Exchange Capital Securities. Each broker-dealer
that receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such
Exchange Capital Securities. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales
of Exchange Capital Securities received in exchange for Original
Capital Securities acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Trust
and the Corporation have agreed that, ending on the close of
business on the 180th day following the Expiration Date (as
described herein), it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See
"Plan of Distribution." However, a Participating Broker-Dealer
who intends to use this Prospectus in connection with the resale
of Exchange Capital Securities received in exchange for Original
Capital Securities pursuant to the Exchange Offer must notify the
Corporation or the Trust, or cause the Corporation or the Trust
to be notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or
may be delivered to the Exchange Agent at one of the addresses
set forth herein under "The Exchange Offer-- Exchange Agent."
Any Participating Broker-Dealer who is an "affiliate" of the
Corporation or the Trust may not rely on such interpretive
letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with
any resale transaction. See "The Exchange Offer--Resales of
Exchange Capital Securities."
In that regard, each Participating Broker-Dealer who
surrenders Original Capital Securities pursuant to the Exchange
Offer will be deemed to have agreed, by execution of the Letter
of Transmittal, that upon receipt of notice from the Corporation
or the Trust of the occurrence of any event or the discovery of
any fact which makes any statement contained or incorporated by
reference in this Prospectus untrue in any material respect or
which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence
of certain other events specified in the Registration Agreement,
such Participating Broker-Dealer will suspend the sale of
Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable) pursuant
to this Prospectus until the Corporation or the Trust has amended
or supplemented this Prospectus to correct such misstatement or
omission and has furnished copies of the amended or supplemented
Prospectus to such Participating Broker-Dealer, or the
Corporation or the Trust has given notice that the sale of the
Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be. If the Corporation or the Trust
gives such notice to suspend the sale of the Exchange Capital
Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable), it shall extend the
180-day period referred to above during which Participating
Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Capital Securities by the number of
days during the period from and including the date of the giving
of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the
Exchange Capital Securities or to and including the date on which
the Corporation or the Trust has given notice that the sale of
Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited
secondary market and no public market for the Original Capital
Securities. The Exchange Capital Securities will be a new issue
of securities for which there currently is no market. Although
the Initial Purchasers have informed the Corporation and the
Trust that they each currently intend to make a market in the
Exchange Capital Securities, they are not obligated to do so, and
any such market making may be discontinued at any time without
notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the Exchange Capital
Securities. The Corporation and the Trust currently do not
intend to apply for listing of the Exchange Capital Securities on
any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.
Any Original Capital Securities not tendered and accepted in
the Exchange Offer will remain outstanding and will be entitled
to all the same rights and will be subject to the same
limitations applicable thereto under the Declaration (except for
those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the
holders of Original Capital Securities will continue to be
subject to all of the existing restrictions upon transfer
thereof, and neither the Corporation nor the Trust will have any
further obligation to such holders (other than under certain
limited circumstances) to provide for registration under the
Securities Act of the Original Capital Securities held by them.
To the extent that Original Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell
untendered Original Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to
Exchange Original Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION. HOLDERS OF ORIGINAL CAPITAL
SECURITIES ARE URGED TO READ THIS PROSPECTUS AND THE RELATED
LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER
THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Original Capital Securities may be tendered for exchange on
or prior to 5:00 p.m., New York City time, on ______________,
1997 (such time on such date being hereinafter called the
"Expiration Date"), unless the Exchange Offer is extended by the
Corporation or the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange
Offer is extended). Tenders of Original Capital Securities may
be withdrawn at any time on or prior to the Expiration Date. The
Exchange Offer is not conditioned upon any minimum Liquidation
Amount of Original Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain
events and conditions which may be waived by the Corporation or
the Trust and to the terms and provisions of the Registration
Agreement. Original Capital Securities may be tendered in whole
or in part having an aggregate Liquidation Amount of not less
than $100,000 (100 Capital Securities) or any integral multiple
of $1,000 Liquidation Amount (one Capital Security) in excess
thereof. The Corporation, as Issuer of the Junior Subordinated
Debentures, has agreed to pay all expenses of the Exchange Offer.
See "The Exchange Offer--Fees and Expenses." Holders of the
Original Capital Securities whose Original Capital Securities are
accepted for exchange will not receive Distributions on such
Original Capital Securities and will be deemed to have waived the
right to receive any Distributions on such Original Capital
Securities accumulated from and after June 5, 1997. See "The
Exchange Offer--Distributions on Exchange Capital Securities."
Neither the Corporation nor the Trust will receive any cash
proceeds from the issuance of the Exchange Capital Securities
offered hereby. No dealer-manager is being used in connection
with this Exchange Offer. See "Use of Proceeds" and "Plan of
Distribution."
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THIS EXCHANGE OFFER AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR THE
TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
TABLE OF CONTENTS
Page
Available Information 14
Incorporation of Certain Documents by Reference 15
Summary 17
Risk Factors 28
Ratios of Earnings to Fixed Charges 37
Patriot Capital Trust I 39
Patriot Bank Corp. 40
Selected Financial Data 44
Capitalization 47
Accounting Treatment 48
The Exchange Offer 49
Description of Exchange Securities 64
Description of Original Securities 101
Relationship Among the Exchange Capital Securities, the
Exchange Junior Subordinated Debentures and the
Exchange Guarantee 101
Certain United States Federal Income Tax Consequences 104
ERISA Considerations 109
Plan of Distribution 111
Validity of Exchange Securities 112
Experts 112
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports, proxy
statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected
and copied at the public reference facilities of the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional offices of the Commission located at 7 World
Trade Center, 13th Floor, Suite 1300, New York, New York 10048
and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can
also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such information may also be accessed
electronically by means of the Commission's home page on the
Internet (http://www.sec.gov.). The Corporation's common stock
is traded on the NASDAQ National Market. Such reports, proxy
statements and other information concerning the Corporation can
be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street N.W., Washington, D.C.
20006.
No separate financial statements of the Trust have been
included herein. The Corporation and the Trust do not consider
that such financial statements would be material to holders of
the Capital Securities because the Trust is a newly formed
special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage
in any activity other than holding as trust assets the Junior
Subordinated Debentures and issuing the Trust Securities. See
"Patriot Capital Trust I" and "Description of Exchange
Securities." In addition, the Corporation does not expect that
the Trust will file reports under the Exchange Act with the
Commission.
This Prospectus constitutes a part of a registration
statement on Form S-4 (the "Registration Statement") filed by the
Corporation and the Trust with the Commission under the
Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and
regulations of the Commission, and reference is hereby made to
the Registration Statement and to the exhibits relating thereto
for further information with respect to the Corporation, the
Trust and the Exchange Securities. Any statements contained
herein concerning the provisions of any document are not
necessarily complete, and, in each instance, reference is made to
the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the
Commission are incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for
the year ended December 31, 1996;
2. The Corporation's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 (as amended on May 30,
1997);
3. The Corporation's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997 (as amended on
September 9, 1997); and
4. The Corporation's Current Report on Form 8-K dated
May 29, 1997.
Each document or report subsequently filed by the
Corporation pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date hereof and prior to the termination
of the offering of the Exchange Securities offered hereby shall
be deemed to be incorporated by reference into this Prospectus
and to be a part of this Prospectus from the date of filing of
such document. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean
this Prospectus including the documents incorporated or deemed to
be incorporated herein by reference, as the same may be amended,
supplemented or otherwise modified from time to time. Statements
contained in this Prospectus as to the contents of any contract
or other document referred to herein do not purport to be
complete, and where reference is made to the particular
provisions of such contract or other document, such provisions
are qualified in all respects by reference to all of the
provisions of such contract or other document. The Corporation
will provide without charge to any person to whom this Prospectus
is delivered, on the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated by
reference herein (other than exhibits not specifically
incorporated by reference into the texts of such documents).
Requests for such documents should be directed to: Patriot Bank
Corp., High and Hanover Streets, Pottstown, Pennsylvania 19464,
Attention: Diane M. Davidheiser. Telephone requests may be
directed to Ms. Davidheiser at (610) 323-1500.
<PAGE>
SUMMARY
The following is a summary of certain information contained
elsewhere in this Prospectus. Reference is made to, and this
summary is qualified in its entirety by, the more detailed
information and financial statements, including the notes
thereto, contained elsewhere in this Prospectus and in documents
incorporated by reference hereto.
PATRIOT CAPITAL TRUST I
The Trust is a statutory business trust formed under
Delaware law pursuant to (i) the Declaration and (ii) the filing
of a certificate of trust with the Delaware Secretary of State on
May 29, 1997. The Trust's business and affairs are conducted by
the Issuer Trustees: The Bank of New York, as Property Trustee,
The Bank of New York (Delaware), as Delaware Trustee, and three
individual Administrative Trustees who are employees or officers
of or affiliated with the Corporation. The Trust exists for the
exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures issued
by the Corporation and (iii) engaging in only those other
activities necessary, advisable or incidental thereto (such as
registering the transfer of the Capital Securities). The Junior
Subordinated Debentures will be the sole assets of the Trust, and
payments under the Junior Subordinated Debentures will be the
sole revenues of the Trust. All of the Common Securities will be
owned directly or indirectly by the Corporation.
PATRIOT BANK CORP.
General
The Corporation is a Delaware corporation and bank holding
company which was organized in August 1995 to acquire all of the
capital stock of Patriot Bank (the "Bank") issued in connection
with the Bank's conversion from mutual to stock form of ownership
in December 1995. The Corporation is headquartered in Pottstown,
Pennsylvania and is the holding company for the Bank and Patriot
Investment Company ("PIC"). The Corporation reported net income
of $1,647,000 or $.41 per share for the six-month period ended
June 30, 1997 and net income of $2,811,000 or $.66 per share for
the year ended December 31, 1996 (excluding a special after-tax
charge of $836,000 representing the special deposit insurance
assessment levied by the FDIC on all SAIF member institutions).
At June 30, 1997, the Corporation had total assets of
$699.0 million and total stockholders' equity of $49.5 million.
The Bank is a Pennsylvania state chartered commercial bank
which conducts business from its executive offices in Pottstown,
Pennsylvania and its 13 community banking offices located in
Montgomery, Berks, Lehigh, Northampton and Chester Counties,
Pennsylvania. The Bank is a community-oriented financial
services provider whose business primarily consists of attracting
retail deposits from the general public and small businesses and
originating mortgage, consumer and commercial loans in the Bank's
market area. The Bank also invests in investment and
mortgage-backed securities and uses advances from the Federal
Home Loan Bank of Pittsburgh and repurchase agreements as sources
of funds. At June 30, 1997, the Bank had total assets of
$665.6 million and total stockholder's equity of $34.7 million.
Prior to May 23, 1997, the Bank was a federally-chartered
savings bank. The Bank converted to a Pennsylvania-chartered
commercial bank in order to provide expanded commercial products
and services.
PIC is a Delaware investment corporation whose primary
business consists of maintaining an investment portfolio. At
June 30, 1997, PIC had total assets of $35.7 million and total
stockholder's equity of $25.1 million.
Recent Developments
On August 25, 1997, Patriot announced a 20% stock dividend
that was paid on September 22, 1997 to stockholders of record on
September 8, 1997. The earnings per share and other per share
data stated in this Prospectus have not been adjusted to reflect
such stock split.
On August 21, 1997, Patriot announced that it had entered
into a letter of intent to acquire First Nations Capital Corp., a
privately-owned small-ticket commercial leasing company
headquartered in Reading, Pennsylvania. The acquisition is
expected to be completed in the fourth quarter of 1997. Upon
completion of the acquisition, First Nations Capital Corp. will
be renamed Patriot Commercial Leasing Company.
On July 28, 1997, the Corporation completed the repurchase
of 449,537 shares of its common stock pursuant to a "Modified
Dutch Auction" self-tender offer. The shares were repurchased at
a price of $18.00 per share.
Patriot announced on August 8, 1997 that it had entered into
a nonbinding letter of intent to sell certain of the deposits and
the physical facility of the Bank's Topton, Pennsylvania branch
to National Penn Bank. The sale is subject to regulatory
approval and is expected to be completed during the fourth
quarter of 1997.
The Corporation is a legal entity separate and distinct from
its subsidiaries. The ability of holders of debt and equity
securities of the Corporation to benefit from the distribution of
assets of any subsidiary upon the liquidation or reorganization
of such subsidiary is subordinate to prior claims of creditors of
the subsidiary (including depositors in the case of banking
subsidiaries) except to the extent that a claim of the
Corporation as a creditor may be recognized.
In addition, there are regulatory limitations on the payment
of dividends directly or indirectly to the Corporation from its
existing banking subsidiaries. Under applicable banking
statutes, at June 30, 1997, the Corporation's banking subsidiary
could have declared additional dividends of approximately
$7.5 million. However, Federal and state regulatory agencies
also have the authority to limit further the Corporation's
banking subsidiaries' payment of dividends based on other
factors, such as the maintenance of adequate capital for such
subsidiary bank, which could reduce the amount of dividends
otherwise payable.
THE EXCHANGE OFFER
The Exchange Offer Up to $19,000,000 aggregate Liquidation
Amount of Exchange Capital Securities
are being offered in exchange for a like
aggregate Liquidation Amount of Original
Capital Securities. Original Capital
Securities may be tendered for exchange
in whole or in part in a Liquidation
Amount of $100,000 (100 Capital
Securities) or any integral multiple of
$1,000 (one Capital Security) in excess
thereof. The Corporation and the Trust
are making the Exchange Offer in order
to satisfy their obligations under the
Registration Agreement relating to the
Original Capital Securities. For a
description of the procedures for
tendering Original Capital Securities,
see "The Exchange Offer--Procedures for
Tendering Original Capital Securities."
Expiration Date 5:00 p.m., New York City time, on
_________, 1997, unless the Exchange
Offer is extended by the Corporation or
the Trust (in which case the Expiration
Date will be the latest date and time to
which the Exchange Offer is extended).
See "The Exchange Offer--Terms of the
Exchange Offer."
Conditions to the
Exchange Offer The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Trust in their sole
discretion. The Exchange Offer is not
conditioned upon any minimum Liquidation
Amount of Original Capital Securities
being tendered. See "The Exchange
Offer--Conditions to the Exchange
Offer."
Terms of the Exchange
Offer The Corporation and the Trust reserve
the right in their sole and absolute
discretion, subject to applicable law,
at any time and from time to time,
(i) to delay the acceptance of the
Original Capital Securities for
exchange, (ii) to terminate the Exchange
Offer if certain specified conditions
have not been satisfied, (iii) to extend
the Expiration Date of the Exchange
Offer and retain all Original Capital
Securities tendered pursuant to the
Exchange Offer, subject, however, to the
right of holders of Original Capital
Securities to withdraw their tendered
Original Capital Securities, or (iv) to
waive any condition or otherwise amend
the terms of the Exchange Offer in any
respect. See "The Exchange Offer--Terms
of the Exchange Offer."
Withdrawal Rights Tenders of Original Capital Securities
may be withdrawn at any time on or prior
to the Expiration Date by delivering a
written notice of such withdrawal to the
Exchange Agent in conformity with
certain procedures set forth below under
"The Exchange Offer--Withdrawal Rights."
Procedures for Tendering
Original Capital
Securities Tendering holders of Original Capital
Securities must complete and sign a
Letter of Transmittal in accordance with
the instructions contained therein and
forward the same by mail, facsimile or
hand delivery, together with any other
required documents, to the Exchange
Agent, either with the Original Capital
Securities to be tendered or in
compliance with the specified procedures
for guaranteed delivery of Original
Capital Securities. Certain brokers,
dealers, commercial banks, trust
companies and other nominees may also
effect tenders by book-entry transfer.
Holders of Original Capital Securities
registered in the name of a broker,
dealer, commercial bank, trust company
or other nominee are urged to contact
such person promptly if they wish to
tender Original Capital Securities
pursuant to the Exchange Offer. See
"The Exchange Offer-- Procedures for
Tendering Original Capital Securities."
Letters of Transmittal and certificates
representing Original Capital Securities
should not be sent to the Corporation or
the Trust. Such documents should only
be sent to the Exchange Agent.
Resales of Exchange
Capital Securities The Corporation and the Trust are making
the Exchange Offer in reliance on the
position of the staff of the Division of
Corporation Finance of the Commission as
set forth in certain interpretive
letters addressed to third parties in
other transactions. However, neither
the Corporation nor the Trust has sought
its own interpretive letter and there
can be no assurance that the staff of
the Division of Corporation Finance of
the Commission would make a similar
determination with respect to the
Exchange Offer as it has in such
interpretive letters to third parties.
Based on these interpretations by the
staff of the Division of Corporation
Finance of the Commission, and subject
to the two immediately following
sentences, the Corporation and the Trust
believe that Exchange Capital Securities
issued pursuant to this Exchange Offer
in exchange for Original Capital
Securities may be offered for resale,
resold and otherwise transferred by a
holder thereof (other than a holder who
is a broker-dealer) without further
compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such
Exchange Capital Securities are acquired
in the ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any person to
participate, in a distribution (within
the meaning of the Securities Act) of
such Exchange Capital Securities.
However, any holder of Original Capital
Securities who is an "affiliate" of the
Corporation or the Trust or who intends
to participate in the Exchange Offer for
the purpose of distributing the Exchange
Capital Securities, or any broker-dealer
who purchased the Original Capital
Securities from the Trust to resell
pursuant to Rule 144A or any other
available exemption under the Securities
Act, (a) will not be able to rely on the
interpretations of the staff of the
Division of Corporation Finance of the
Commission set forth in the
above-mentioned interpretive letters,
(b) will not be permitted or entitled to
tender such Original Capital Securities
in the Exchange Offer and (c) must
comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any
sale or other transfer of such Original
Capital Securities unless such sale is
made pursuant to an exemption from such
requirements. In addition, as described
below, if any broker-dealer holds
Original Capital Securities acquired for
its own account as a result of
market-making or other trading
activities and exchanges such Original
Capital Securities for Exchange Capital
Securities, then such broker-dealer must
deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such
Exchange Capital Securities.
Each holder of Original Capital
Securities who wishes to exchange
Original Capital Securities for Exchange
Capital Securities in the Exchange Offer
will be required to represent that (i)
it is not an "affiliate" of the
Corporation or the Trust, (ii) any
Exchange Capital Securities to be
received by it are being acquired in the
ordinary course of its business, (iii)
it has no arrangement or understanding
with any person to participate in a
distribution (within the meaning of the
Securities Act) of such Exchange Capital
Securities, and (iv) if such holder is
not a broker-dealer, such holder is not
engaged in, and does not intend to
engage in, a distribution (within the
meaning of the Securities Act) of such
Exchange Capital Securities. Each
broker-dealer that receives Exchange
Capital Securities for its own account
in exchange for Original Capital
Securities, where such Original Capital
Securities were acquired by such
broker-dealer as a result of
market-making activities or other
trading activities, must acknowledge
that it will deliver a prospectus
meeting the requirements of the
Securities Act in connection with any
resale of such Exchange Capital
Securities. The Letter of Transmittal
states that, by so acknowledging and by
delivering such a prospectus, a
broker-dealer will not be deemed to
admit that it is an "underwriter" within
the meaning of the Securities Act.
Based on the position taken by the staff
of the Division of Corporation Finance
of the Commission in the interpretive
letters referred to above, the
Corporation and the Trust believe that
Participating Broker-Dealers who
acquired Original Capital Securities for
their own accounts as a result of
market-making activities or other
trading activities may fulfill their
prospectus delivery requirements with
respect to the Exchange Capital
Securities received upon exchange of
such Original Capital Securities (other
than Original Capital Securities which
represent an unsold allotment from the
initial sale of the Original Capital
Securities) with a prospectus meeting
the requirements of the Securities Act,
which may be the prospectus prepared for
an exchange offer so long as it contains
a description of the plan of
distribution with respect to the resale
of such Exchange Capital Securities.
Accordingly, this Prospectus, as it may
be amended or supplemented from time to
time, may be used by a Participating
Broker-Dealer in connection with resales
of Exchange Capital Securities received
in exchange for Original Capital
Securities where such Original Capital
Securities were acquired by such
Participating Broker-Dealer for its own
account as a result of market-making or
other trading activities. Subject to
certain provisions set forth in the
Registration Agreement and to the
limitations described below under "The
Exchange Offer--Resales of Exchange
Capital Securities," the Corporation and
the Trust have agreed that this
Prospectus, as it may be amended or
supplemented from time to time, may be
used by a Participating Broker-Dealer in
connection with resales of such Exchange
Capital Securities for a period ending
180 days after the Expiration Date
(subject to extension under certain
limited circumstances) or, if earlier,
when all such Exchange Capital
Securities have been disposed of by such
Participating Broker-Dealer. See "Plan
of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of
the Corporation or the Trust may not
rely on such interpretive letters and
must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any
resale transaction. See "The Exchange
Offer--Resales of Exchange Capital
Securities."
Exchange Agent The exchange agent with respect to the
Exchange Offer is The Bank of New York
(the "Exchange Agent"). The addresses,
and telephone and facsimile numbers, of
the Exchange Agent are set forth in "The
Exchange Offer--Exchange Agent" and in
the Letter of Transmittal.
Use of Proceeds Neither the Corporation nor the Trust
will receive any cash proceeds from the
issuance of the Exchange Capital
Securities offered hereby.
Certain United States
Federal Income Tax
Consequences; ERISA
Considerations Holders of Original Capital Securities
should review the information set forth
under "Certain United States Federal
Income Tax Consequences" and "ERISA
Considerations" prior to tendering
Original Capital Securities in the
Exchange Offer.
THE EXCHANGE CAPITAL SECURITIES
Securities Offered Up to $19,000,000 aggregate Liquidation
Amount of the Trust's Exchange Capital
Securities have been registered under
the Securities Act (Liquidation Amount
$1,000 per Exchange Capital Security).
The Exchange Capital Securities will be
issued and the Original Capital
Securities were issued under the
Declaration. The Exchange Capital
Securities and any Original Capital
Securities which remain outstanding
after consummation of the Exchange Offer
will vote together as a single class for
purposes of determining whether holders
of the requisite percentage in
outstanding Liquidation Amount thereof
have taken certain actions or exercised
certain rights under the Declaration.
See "Description of Exchange
Securities--Description of Exchange
Capital Securities--Voting Rights;
Amendment of the Declaration." The terms
of the Exchange Capital Securities are
identical in all material respects to
the terms of the Original Capital
Securities, except that the Exchange
Capital Securities have been registered
under the Securities Act, will not be
subject to certain restrictions on
transfer applicable to the Original
Capital Securities and will not provide
for any increase in the Distribution
rate thereon. See "The Exchange
Offer--Purpose of the Exchange Offer,"
"Description of Exchange Securities" and
"Description of Original Securities."
Distribution Dates June 1 and December 1 of each year,
commencing December 1, 1997.
Extension Periods Distributions on the Exchange Capital
Securities will be deferred for the
duration of any Extension Period elected
by the Corporation with respect to the
payment of interest on the Exchange
Junior Subordinated Debentures. No
Extension Period will exceed
10 consecutive semi-annual periods or
extend beyond the Stated Maturity of the
Junior Subordinated Debentures. See
"Description of Exchange
Securities--Description of Exchange
Junior Subordinated Debentures--Option
to Extend Interest Payment Date" and
"Certain United States Federal Income
Tax Consequences--Interest Income and
Original Issue Discount."
Ranking The Exchange Capital Securities will
rank pari passu, and payments thereon
will be made pro rata, with the Original
Capital Securities and the Common
Securities except as described under
"Description of Exchange
Securities--Description of Exchange
Capital Securities--Subordination of
Common Securities." The Exchange Junior
Subordinated Debentures will rank pari
passu with the Original Junior
Subordinated Debentures and all other
junior subordinated debt securities to
be issued by the Corporation pursuant to
the Indenture with substantially similar
subordination terms ("Other
Debentures"), and which will be issued
and sold to other trusts to be
established by the Corporation in each
case similar to the Trust ("Other
Trusts"), and will be unsecured and
subordinate and junior in right of
payment to the extent and in the manner
set forth in the Indenture to all Senior
Debt of the Corporation. See
"Description of Exchange
Securities--Description of Exchange
Junior Subordinated Debentures." The
Exchange Guarantee will rank pari passu
with the Original Guarantee and all
other guarantees to be issued by the
Corporation with respect to capital
securities to be issued by Other Trusts
("Other Guarantees"), and will
constitute an unsecured obligation of
the Corporation and will rank
subordinate and junior in right of
payment to the extent and in the manner
set forth in the Guarantee to all Senior
Debt. See "Description of Exchange
Securities--Description of Exchange
Guarantee." In addition, because the
Corporation is a holding company, the
Junior Subordinated Debentures and the
Guarantee are effectively subordinated
to all existing and future liabilities
of the Corporation's subsidiaries,
including deposits.
Redemption The Trust Securities are subject to
mandatory redemption (i) in whole, but
not in part, at the Stated Maturity of
the Junior Subordinated Debentures upon
the redemption thereof, (ii) in whole,
but not in part, at any time prior to
June 1, 2007, contemporaneously with the
optional redemption of the Junior
Subordinated Debentures upon the
occurrence and continuation of a Special
Event (as defined herein), and (iii) in
whole or in part at any time on or after
June 1, 2007 contemporaneously with any
optional redemption by the Corporation
of Junior Subordinated Debentures, in
each case at the applicable Redemption
Price. See "Description of Exchange
Securities--Description of Exchange
Capital Securities--Mandatory
Redemption."
Transfer Restrictions The Exchange Capital Securities will be
issued, and may be transferred, only in
blocks having a Liquidation Amount of
not less than $100,000 (100 Capital
Securities).
ERISA Considerations Prospective purchasers must carefully
consider the restrictions on purchase
set forth under "ERISA Considerations."
Absence of Market for
the Exchange Capital
Securities The Exchange Capital Securities will be
a new issue of securities for which
there currently is no market.
Accordingly, there can be no assurance
as to the development or liquidity of
any market for the Exchange Capital
Securities. The Trust and the
Corporation do not intend to apply for
listing of the Exchange Capital
Securities on any securities exchange or
for quotation through the National
Association of Securities Dealers
Automated Quotation System ("NASDAQ").
See "Plan of Distribution."
Risk Factors Prospective investors should carefully
consider the matters set forth under
"Risk Factors."
<PAGE>
RISK FACTORS
Prospective investors should consider carefully, in addition
to the other information contained in this Prospectus, the
following factors in connection with the Exchange Offer and the
Exchange Capital Securities offered hereby. This Prospectus
contains certain forward-looking statements and information
relating to the Corporation that are based on the beliefs of
management as well as assumptions made by and information
currently available to management. The words "anticipate,"
"believe," "estimate," "expect," "intends" and similar
expressions, as they relate to the Corporation or the
Corporation's management, are intended to identify
forward-looking statements. Such statements reflect the current
views of the Corporation with respect to future events and are
subject to certain risks,uncertainties and assumptions, including
the risk factors described in this Prospectus. Should one or
more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed,
estimated or expected. The Corporation does not intend to update
these forward-looking statements.
Ranking of Obligations Under the Guarantee and the Junior
Subordinated Debentures
The obligations of the Corporation under the Guarantee
issued by the Corporation for the benefit of the holders of
Capital Securities and under the Junior Subordinated Debentures
are unsecured and rank subordinate and junior in right of payment
to all Senior Debt of the Corporation. At June 30, 1997, the
Corporation had no outstanding Senior Debt. Because the
Corporation is a bank holding company, the right of the
Corporation to participate in any distribution of assets of any
subsidiary, including the Bank, upon such subsidiary's
liquidation or reorganization or otherwise (and thus the ability
of holders of the Capital Securities to benefit indirectly from
such distribution), is subject to the prior claims of creditors
of such subsidiary, except to the extent that the Corporation may
itself be recognized as a creditor of such subsidiary.
Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities
of the Corporation's subsidiaries, and holders of Junior
Subordinated Debentures should look only to the assets of the
Corporation for payments on the Junior Subordinated Debentures.
Because the Corporation is a holding company with limited assets
and liabilities, a substantial portion of the consolidated
liabilities of the Corporation are liabilities of its
subsidiaries. The Guarantee will constitute an unsecured
obligation of the Corporation and will rank subordinate and
junior in right of payment to all Senior Debt in the same manner
as the Junior Subordinated Debentures. See "Patriot." None of
the Indenture, the Guarantee or the Declaration places any
limitation on the amount of secured or unsecured debt, including
Senior Debt, that may be incurred by the Corporation or any
subsidiary. See "Description of Exchange Securities--Description
of Exchange Junior Subordinated Debentures--Subordination" and
"--Description of Exchange Guarantee--Status of the Guarantee."
The ability of the Trust to pay amounts due on the Capital
Securities is solely dependent upon the Corporation making
payments on the Junior Subordinated Debentures as and when
required.
In addition, there are regulatory limitations on the payment
of dividends directly or indirectly to the Corporation from the
Bank. Under applicable banking statutes at June 30, 1997, the
Bank could have declared additional dividends of $7.5 million.
Option to Extend Interest Payment Date; Tax Consequences; Market
Price Consequences
So long as no Debenture Event of Default (as defined herein)
has occurred and is continuing, the Corporation has the right
under the Indenture to defer the payment of interest on the
Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods
with respect to each Extension Period; provided, however, that no
Extension Period shall end on a date other than an Interest
Payment Date or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of any such deferral,
semi-annual Distributions on the Trust Securities by the Trust
will also be deferred (and the amount of Distributions to which
holders of the Trust Securities are entitled will accumulate
additional Distributions thereon at the rate of 10.30% per annum,
compounded semi-annually, but not exceeding the interest rate
then accruing on the Junior Subordinated Debentures) from the
relevant payment date for such Distributions during any such
Extension Period.
Prior to the termination of any Extension Period, the
Corporation may further extend such Extension Period; provided,
however, that such extension does not cause such Extension Period
to exceed 10 consecutive semi-annual periods or to extend beyond
the Stated Maturity. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid on
the Junior Subordinated Debentures (together with interest
thereon at the annual rate of 10.30%, compounded semi-annually,
to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period, subject to the above
requirements. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period. See
"Description of Exchange Securities--Description of Exchange
Capital Securities--Distributions" and "--Description of Exchange
Junior Subordinated Debentures--Option to Extend Interest Payment
Date."
During any Extension Period, the Corporation may not
(i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of the Corporation's capital stock (which includes common and
preferred stock), (ii) make any payment of principal, interest or
premium, if any, on, or repay, repurchase or redeem any debt
securities of the Corporation (including Other Debentures) that
rank pari passu with or junior in right of payment to, the Junior
Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including Other
Guarantees) if such guarantee ranks pari passu with or junior in
right of payment to the Junior Subordinated Debentures (other
than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights
plan, or the issuance of stock under any such plan in the future,
or the redemption or repurchase of any such rights pursuant
thereto, (c) payments under the Guarantee, (d) purchases of
shares of the Corporation's common stock related to the issuance
of common stock or rights under any of the Corporation's benefit
plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans, (e) as a result of a
reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the
Corporation's capital stock or (f) the purchase of fractional
interests in shares of the Corporation's capital stock pursuant
to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged).
Because the Corporation believes that the likelihood of its
exercising its option to defer payments of interest is remote,
the Junior Subordinated Debentures will be treated under Treasury
regulations as issued without original issue discount ("OID") for
United States federal income tax purposes. As a result, holders
of Capital Securities generally will include their allocable
share of the interest on the Junior Subordinated Debentures in
taxable income under their own methods of tax accounting (i.e.,
cash or accrual). Under the Treasury regulations, however, if
the Corporation exercises its right to defer payments of
interest, the Junior Subordinated Debentures will become OID
instruments. Consequently, holders of Capital Securities will be
required to include their pro rata share of OID in gross income
as it accrues for United States federal income tax purposes in
advance of the receipt of cash attributable to such interest
income and such holders will not receive the cash related to such
income if they dispose of the Capital Securities prior to the
record date for payment of distributions thereafter. See
"Certain United States Federal Income Tax Consequences--Interest
Income and Original Issue Discount" and "--Sales of Capital
Securities."
Should the Corporation elect to exercise its right to defer
payments of interest on the Junior Subordinated Debentures in the
future, the market price of the Capital Securities is likely to
be affected. A holder that disposes of its Capital Securities
during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its
Capital Securities. In addition, merely as a result of the
existence of the Corporation's right to defer interest payments
on the Junior Subordinated Debentures, the market price of the
Capital Securities (which represent an undivided beneficial
ownership interest in the Junior Subordinated Debentures) may be
more volatile than the market prices of other securities that are
not subject to such deferrals.
Special Event Redemption; Possible Tax Law Changes Affecting the
Capital Securities
Upon the occurrence and continuation of a Special Event
prior to June 1, 2007, the Corporation may, at its option and
subject to receipt of any required regulatory approval, prepay
the Junior Subordinated Debentures in whole, but not in part, at
the Special Event Prepayment Price (as defined herein) within
90 days following the occurrence of such Special Event. In such
event, the Trust will redeem the Trust Securities on a pro rata
basis to the same extent as the Junior Subordinated Debentures
are prepaid by the Corporation. See "Description of Exchange
Securities--Description of Exchange Junior Subordinated
Debentures--Special Event Prepayment", "--Description of Exchange
Capital Securities--Mandatory Redemption" and "--Description of
Exchange Capital Securities--Liquidation of the Trust and
Distribution of Junior Subordinated Debentures."
A "Special Event" means a Tax Event or a Regulatory Capital
Event, as the case may be.
A "Tax Event" means the receipt by the Corporation and the
Trust of an opinion of counsel experienced in such matters to the
effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws or any
regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a
result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or
decision is announced on or after June 2, 1997 (the "Issue
Date"), there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Corporation on the Junior
Subordinated Debentures is not, or within 90 days of the date of
such opinion will not be, deductible by the Corporation, in whole
or in part, for United States federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
A "Regulatory Capital Event" means that the Corporation
shall have become, or pursuant to law or regulation will become
within 180 days, subject to capital requirements under which, in
the written opinion of independent bank regulatory counsel
experienced in such matters, the Capital Securities would not
constitute Tier 1 capital applied as if the Corporation (or its
successor) were a bank holding company (as that concept is used
in the guidelines or regulations issued by the Board of Governors
of the Federal Reserve System as of June 2, 1997) or its then
equivalent ("Tier I Capital").
<PAGE>
Liquidation Distribution of Junior Subordinated Debentures
The Corporation has the right at any time to distribute the
Junior Subordinated Debentures to holders of the Trust
Securities. Under current United States federal income tax law,
a distribution of Junior Subordinated Debentures upon the
dissolution of the Trust would not be a taxable event to holders
of the Capital Securities. If, however, the Trust is
characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of dissolution
of the Trust, the distribution of the Junior Subordinated
Debentures may constitute a taxable event to holders of Capital
Securities. Moreover, upon occurrence of a Special Event, a
dissolution of the Trust in which holders of the Capital
Securities receive cash would be a taxable event to such holders.
See "Certain United States Federal Income Taxation
Consequences--Distribution of Junior Subordinated Debentures or
Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for
Capital Securities or Junior Subordinated Debentures that may be
distributed in exchange for Capital Securities if a liquidation
of the Trust occurs. Accordingly, the Capital Securities or the
Junior Subordinated Debentures may trade at a discount to the
price that the investor paid to purchase the Capital Securities
offered hereby. Because holders of Capital Securities may
receive Junior Subordinated Debentures on termination of the
Trust and because Distributions are otherwise limited to payments
on the Junior Subordinated Debentures, prospective purchasers of
Exchange Capital Securities are also making an investment
decision with regard to the Exchange Junior Subordinated
Debentures and should carefully review all the information
regarding the Exchange Junior Subordinated Debentures contained
herein. See "Description of Exchange Securities--Description of
Exchange Capital Securities--Description of Liquidation of the
Trust and Distribution of Junior Subordinated Debentures" and
"--Description of Exchange Junior Subordinated
Debentures--General."
Rights Under the Guarantee
The Guarantee guarantees to the holders of the Capital
Securities the following payments, to the extent not paid by or
on behalf of the Trust: (i) any accumulated and unpaid
Distributions required to be paid on the Capital Securities, to
the extent that the Trust has funds on hand available therefor at
such time, (ii) the applicable Redemption Price with respect to
any Capital Securities called for redemption, to the extent that
the Trust has funds on hand available therefor at such time, and
(iii) upon a voluntary or involuntary termination and liquidation
of the Trust (unless the Junior Subordinated Debentures are
distributed to holders of the Capital Securities), the lesser of
(a) the aggregate of the Liquidation Amount and all accumulated
and unpaid Distributions to the date of payment, to the extent
that the Trust has funds on hand available therefor at such time,
and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Capital Securities upon a
termination and liquidation of the Trust.
The holders of a majority in aggregate Liquidation Amount of
the Capital Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available
to the Guarantee Trustee (as defined herein) in respect of the
Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of
the Capital Securities may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust,
the Guarantee Trustee or any other person or entity. If the
Corporation defaults on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust will not have
funds for the payment of Distributions or amounts payable on
redemption of the Capital Securities or otherwise, and, in such
event, holders of the Capital Securities would not be able to
rely upon the Guarantee for payment of such amounts. Instead, in
the event a Debenture Event of Default shall have occurred and be
continuing and such event is attributable to the failure of the
Corporation to pay principal of (or premium, if any) or interest
on the Junior Subordinated Debentures on the applicable payment
date, then a holder of Capital Securities may institute a Direct
Action. Notwithstanding any payments made to a holder of Capital
Securities by the Corporation in connection with a Direct Action,
the Corporation shall remain obligated to pay the principal of
(and premium, if any) and interest on the Junior Subordinated
Debentures, and the Corporation shall be subrogated to the rights
of the holder of such Capital Securities with respect to payments
on the Capital Securities to the extent of any payments made by
the Corporation to such holder in any Direct Action. Except as
described herein, holders of Capital Securities will not be able
to exercise directly any other remedy available to the holders of
the Junior Subordinated Debentures or assert directly any other
rights in respect of the Junior Subordinated Debentures. See
"Description of Exchange Securities--Description of Exchange
Junior Subordinated Debentures--Enforcement of Certain Rights by
Holders of Exchange Capital Securities," "--Description of
Exchange Junior Subordinated Debentures--Debenture Events of
Default" and "--Description of Exchange Guarantee." The
Declaration provides that each holder of Capital Securities by
acceptance thereof agrees to the provisions of the Guarantee and
the Indenture. The Bank of New York will act as Guarantee
Trustee under the Exchange Guarantee and will hold the Guarantee
for the benefit of the holders of the Capital Securities. The
Bank of New York will also act as Property Trustee under the
Declaration and as Debenture Trustee under the Indenture.
Limited Voting Rights
Holders of Capital Securities will generally have limited
voting rights relating only to the modification of the Capital
Securities, the termination or liquidation of the Trust, and the
exercise of the Trust's rights as holder of Junior Subordinated
Debentures. Holders of Capital Securities will not be entitled
to vote to appoint, remove or replace the Property Trustee or the
Delaware Trustee, and such voting rights are vested exclusively
in the holder of the Common Securities except upon the occurrence
of certain events described herein. The Property Trustee, the
Administrative Trustees and the Corporation may amend the
Declaration without the consent of holders of Capital Securities
to ensure that the Trust will be classified for United States
Federal income tax purposes as a grantor trust, even if such
action adversely affects the interests of such holders. See
"Description of Exchange Securities--Description of Exchange
Capital Securities--Removal of Issuer Trustees" and "--Voting
Rights; Amendment of the Declaration."
Consequences of a Failure to Exchange Original Capital Securities
The Original Capital Securities have not been registered
under the Securities Act or any state securities laws and
therefore may not be offered, sold or otherwise transferred
except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not
subject thereto, and in each case in compliance with certain
other conditions and restrictions. Original Capital Securities
which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer,
holders of Original Capital Securities which remain outstanding
will not be entitled to any rights to have such Original Capital
Securities registered under the Securities Act or to any similar
rights under the Registration Agreement (subject to certain
limited exceptions). The Corporation and the Trust do not intend
to register under the Securities Act any Original Capital
Securities which remain outstanding after consummation of the
Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Original Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability
to sell untendered Original Capital Securities could be adversely
affected.
The Exchange Capital Securities and any Original Capital
Securities which remain outstanding after consummation of the
Exchange Offer will vote together as a single class for purposes
of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Declaration. See
"Description of Exchange Securities--Description of Exchange
Capital Securities--Voting Rights; Amendment of the Declaration."
The Original Capital Securities provide, among other things,
that, if a registration statement relating to the Exchange Offer
has not been filed by October 30, 1997 or has not been declared
effective by November 29, 1997, then the Distribution rate borne
by the Original Capital Securities, commencing on the day after
the registration statement was required to be filed or become
effective as the case may be, will increase by 0.25% per annum
until the Exchange Offer is consummated. Upon consummation of
the Exchange Offer, holders of Original Capital Securities will
not be entitled to any increase in the Distribution rate thereon
or any further registration rights under the Registration
Agreement, except under limited circumstances. See "Description
of Original Securities."
Absence of Public Market
The Original Capital Securities were issued to, and the
Corporation believes such securities are currently owned by, a
relatively small number of beneficial owners. The Original
Capital Securities have not been registered under the Securities
Act and will be subject to restrictions on transferability if
they are not exchanged for the Exchange Capital Securities.
Although the Exchange Capital Securities may be resold or
otherwise transferred by the holders (who are not affiliates of
the Corporation or the Trust) without compliance with the
registration requirements under the Securities Act, they will
constitute a new issue of securities with no established trading
market. Capital Securities may be transferred by the holders
thereof only in blocks having a Liquidation Amount of not less
than $100,000 (100 Capital Securities).
No assurance can be given that an active public or other
market will develop for the Exchange Capital Securities or the
Original Capital Securities, or as to the liquidity of or the
trading market for the Exchange Capital Securities or the
Original Capital Securities. If an active public market does not
develop, the market price and liquidity of the Exchange Capital
Securities may be adversely affected.
If a public trading market develops for the Exchange Capital
Securities, future trading prices will depend on many factors,
including, among other things, prevailing interest rates, the
financial condition of the Corporation and the market for similar
securities. Depending on these and other factors, the Exchange
Capital Securities may trade at a discount to the purchase price
paid by the holder.
Notwithstanding the registration of the Exchange Capital
Securities in the Exchange Offer, holders who are "affiliates"
(as defined under Rule 405 of the Securities Act) of the
Corporation or the Trust may publicly offer for sale or resell
the Exchange Capital Securities only in compliance with the
provisions of Rule 144 under the Securities Act.
Each broker-dealer that receives Exchange Capital Securities
for its own account in exchange for Original Capital Securities,
where such Original Capital Securities were acquired by such
broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital
Securities. See "Plan of Distribution."
Exchange Offer Procedures
Except with respect to holders tendering Original Capital
Securities through the Automated Tender Offer Program of DTC
("ATOP"), issuance of the Exchange Capital Securities in exchange
for Original Capital Securities pursuant to the Exchange Offer
will be made only after a timely receipt by the Trust of such
Original Capital Securities, a properly completed and duly
executed Letter of Transmittal and all other required documents.
Therefore, holders of the Original Capital Securities desiring to
tender such Original Capital Securities in exchange for Exchange
Capital Securities should allow sufficient time to ensure timely
delivery. Neither the Corporation nor the Trust is under any
duty to give notification of defects or irregularities with
respect to the tenders of Original Capital Securities for
exchange.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed
charges of the Corporation for the respective periods indicated.
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Ratios of Earnings
to Fixed Charges:
Excluding interest
on deposits 2.09x 2.72x 20.17x 27.62x 60.11x 79.85x
Including interest
on deposits 1.17x 1.18x 1.20x 1.23x 1.39x 1.21x
</TABLE>
For purposes of computing the ratios of earnings to combined
fixed charges, earnings represent net income (loss) before
extraordinary items and cumulative effect of changes in
accounting principles plus applicable income taxes and fixed
charges. Fixed charges, excluding interest on deposits, include
gross interest expense (other than on deposits) and the
proportion deemed representative of the interest factor of rent
expense, net of income from subleases. Fixed charges, including
gross interest on deposits, include all interest expense and the
proportion deemed representative of the interest factor of rent
expense, net of income from subleases.
<PAGE>
PATRIOT CAPITAL TRUST I
The Trust is a statutory business trust formed under
Delaware law pursuant to (i) the original declaration of trust
executed by the Corporation, as Sponsor, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative Trustees
named therein, which original declaration of trust was amended
and restated and executed by the Corporation, as Sponsor, The
Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative Trustees
named therein (the "Declaration"), and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on
May 29, 1997. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of the Trust Securities to acquire the
Junior Subordinated Debentures and (iii) engaging in only those
other activities necessary, advisable or incidental thereto (such
as registering the transfer of the Capital Securities).
Accordingly, the Junior Subordinated Debentures are the sole
assets of the Trust, and payments under the Junior Subordinated
Debentures are the sole revenues of the Trust. All of the Common
Securities are owned directly or indirectly by the Corporation.
The Common Securities will rank pari passu, and payments are and
will be made thereon pro rata, with the Capital Securities,
except that upon the occurrence and continuance of an Event of
Default under the Declaration resulting from a Debenture Event of
Default, the rights of the Corporation as holder of the Common
Securities to payment in respect of Distributions and payments
upon liquidation, redemption or otherwise will be subordinated to
the rights of the holders of the Capital Securities. See
"Description of Exchange Securities--Description of Exchange
Capital Securities--Subordination of Common Securities." The
Corporation has acquired Common Securities in an aggregate
Liquidation Amount equal to 3% of the total capital of the Trust.
The Trust has a term of 31 years, but may terminate earlier as
provided in the Declaration. The Trust's business and affairs
are conducted by its trustees, each appointed by the Corporation
as holder of the Common Securities. 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
individual trustees as Administrative Trustees who are employees
or officers of or affiliated with the Corporation (collectively,
the "Issuer Trustees"). The Bank of New York, as Property
Trustee, currently acts as sole indenture trustee under the
Declaration. The Bank of New York also acts as trustee under the
Exchange Guarantee and the Indenture. See "--Description of
Exchange Junior Subordinated Debentures" and "--Description of
Exchange Guarantee." The holder of the Common Securities of the
Trust, or the holders of a majority in Liquidation Amount of the
Capital Securities if an Event of Default under the Declaration
resulting from a Debenture Event of Default has occurred and is
continuing, is entitled to appoint, remove or replace the
Property Trustee and/or Delaware Trustee. In no event do the
holders of the Capital Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such
voting rights are vested exclusively in the holder of the Common
Securities. The duties and obligations of each Issuer Trustee
are governed by the Declaration. Pursuant to the expense
provisions under the Indenture, the Corporation, as Issuer of the
Junior Subordinated Debentures, has and will continue to pay all
fees and expenses related to the Trust and the offering of the
Capital Securities and has and will continue to pay, directly or
indirectly, all ongoing costs, expenses and liabilities of the
Trust. See "--Description of Exchange Capital
Securities--Expenses and Taxes." The principal executive office
of the Trust is Patriot Bank Corp., High and Hanover Streets,
Pottstown, Pennsylvania 19464. Telephone inquiries may be
directed to Diane M. Davidheiser at (610) 323-1500.
<PAGE>
PATRIOT BANK CORP.
General
The Corporation is a Delaware corporation and bank holding
company which was organized in August 1995 to acquire all of the
capital stock of the Bank issued in connection with the Bank's
conversion from mutual to stock form of ownership in December
1995. The Corporation is headquartered in Pottstown, Pennsylvania
and is the holding company for the Bank and PIC. The Corporation
reported net income of $1,647,000 or $.41 per share for the six-
month period ended June 30, 1997 and net income of $2.8 million
or $.66 per share for the year ended December 31, 1996 (excluding
a special after-tax charge of $836,000 representing the special
deposit insurance assessment levied by the FDIC on all SAIF
member institutions). At June 30, 1997, the Corporation had
total assets of $699.0 million and total stockholders' equity of
$49.5 million.
The Bank is a Pennsylvania state chartered commercial bank
which conducts business from its executive offices in Pottstown,
Pennsylvania and its 13 community banking offices located in
Montgomery, Berks, Lehigh, Northampton and Chester Counties,
Pennsylvania. The Bank is a community-oriented financial
services provider whose business primarily consists of attracting
retail deposits from the general public and small businesses and
originating mortgage, consumer and commercial loans in the Bank's
market area. The Bank also invests in investment and mortgage-
backed securities and uses advances from the Federal Home Loan
Bank of Pittsburgh and repurchase agreements as sources of funds.
At June 30, 1997, the Bank had total assets of $665.6 million and
total stockholder's equity of $34.7 million.
The Bank endeavors to promote a sales culture in which
highly motivated and trained team members attract and retain
profitable customer relationships. The Bank's primary operating
strategy is to maintain a reputation as a community bank where
consumers and small business customers can obtain a wide range of
financial products and services usually associated with larger
financial institutions while providing personal attention,
service and responsiveness.
For consumers, the Bank provides deposit products which
include checking, savings and money market accounts as well as
certificates of deposit. The Bank offers numerous lending
products to consumers including residential mortgage loans, home
equity lines of credit, home equity loans, personal lines of
credit, credit cards and other consumer loans. The Bank also
offers other consumer products and services such as check cards,
safe deposit boxes, telephone banking and automated teller
services. The Bank intends to introduce annuities, mutual funds,
brokerage service as well as in-home banking via personal
computer by the end of 1997.
For small businesses, the Bank offers various deposit and
transaction services including business checking and savings
accounts, electronic banking and cash management services. The
Bank offers a full array of short-term and adjustable lending
products including loans secured by real estate and other assets,
working capital lines and other commercial loans. The Bank
generally concentrates on loans with balances of $500,000 and
less to small businesses within its local market area.
Prior to May 23, 1997, the Bank was a federally-chartered
savings bank. The Bank converted to a Pennsylvania-chartered
commercial bank in order to compete more effectively as a
community-oriented commercial bank with expanded commercial
products and services.
PIC is a Delaware investment corporation whose primary
business consists of maintaining an investment portfolio. PIC's
investment portfolio consists primarily of mortgage-backed
securities, corporate bonds and equity securities. PIC uses
repurchase agreements as a source of funds. At June 30, 1997, PIC
had total assets of $35.7 million and total stockholder's equity
of $25.1 million.
On August 25, 1997, Patriot announced a 20% stock dividend
that was paid on September 22, 1997 to stockholders of record on
September 8, 1997. The earnings per share and other per share
data stated in this Prospectus have not been adjusted to reflect
such stock split.
On August 21, 1997, Patriot announced that it had entered
into a letter of intent to acquire First Nations Capital Corp., a
privately-owned small-ticket commercial leasing company
headquartered in Reading, Pennsylvania. The acquisition is
expected to be completed in the fourth quarter of 1997. Upon
completion of the acquisition, First Nations Capital Corp. will
be renamed Patriot Commercial Leasing Company.
On July 28, 1997, the Corporation completed the repurchase
of 449,537 shares of its common stock pursuant to a "Modified
Dutch Auction" self-tender offer. The shares were repurchased at
a price of $18.00 per share.
Patriot announced on August 8, 1997 that it had entered into
a nonbinding letter of intent to sell certain of the deposits and
the physical facility of the Bank's Topton, Pennsylvania branch
to National Penn Bank. The sale is subject to regulatory
approval and is expected to be completed during the fourth
quarter of 1997.
The Corporation as a bank holding company is subject to
regulation and examination by the Federal Reserve. The Bank is
subject to regulation and examination by the state of
Pennsylvania and the FDIC. The Bank's deposits are insured by the
FDIC to the maximum extent permitted by law through the Savings
Association Insurance Fund.
The principal executive offices of the Corporation are
located at High and Hanover Streets, Pottstown, Pennsylvania
19464 and its telephone number is (610) 323-1500.
<PAGE>
Patriot is a legal entity separate and distinct from its
subsidiaries. The ability of holders of debt and equity
securities of Patriot to benefit from the distribution of assets
of any subsidiary upon the liquidation or reorganization of such
subsidiary is subordinate to prior claims of creditors of the
subsidiary (including depositors in the case of banking
subsidiaries) except to the extent that a claim of Patriot as a
creditor may be recognized.
There are various statutory and regulatory limitations on
the extent to which present and future banking subsidiaries of
Patriot can finance or otherwise transfer funds to Patriot or its
nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases.
In addition, there are regulatory limitations on the payment
of dividends directly or indirectly to Patriot from its existing
banking subsidiaries. Under applicable banking statutes, at
June 30, 1997, the Bank could have declared additional dividends
of approximately $7.5 million. However, Federal and state
regulatory agencies also have the authority to further limit
payment of dividends by the Bank based on other factors, such as
the maintenance of adequate capital by the Bank, which could
reduce the amount of dividends otherwise payable.
<PAGE>
SELECTED FINANCIAL DATA
The selected consolidated financial data should be read in
conjunction with the historical Consolidated Financial Statements
of the Corporation included in the Corporation's 1996 Annual
Report on Form 10-K and the Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997. Interim unaudited
data for the three months ended June 30, 1997 and 1996 reflect,
in the opinion of management of the Corporation, all adjustments
(consisting only of normal recurring adjustments) necessary for a
fair presentation of such data. Results for the six months ended
June 30, 1997 are not necessarily indicative of results that may
be expected for any other interim period or for the year as a
whole.
<TABLE>
<CAPTION>
At June 30, At December 31,
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Selected Financial Condition Data:
(in thousands)
Total assets $699,015 $529,165 $268,869 $221,035 $221,895 $244,171
Investments and mortgage-backed
securities available for sale(1) 259,056 159,148 47,646 33,025 - -
Investments and mortgage-backed
securities held to maturity(1) 69,134 72,710 3,917 8,669 34,436 38,148
Loans receivable 345,286 280,184 194,250 168,974 161,529 195,837
Allowance for possible loan losses (2,041) (1,830) (1,702) (1,720) (1,665) (1,450)
Deposits 283,331 239,514 201,618 189,938 198,876 207,944
Borrowings 342,416 231,595 10,000 10,000 2,000 16,100
Stockholders' equity 49,501 53,117 54,110 17,868 17,517 15,200
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Operating Data:
(in thousands except
per share data)
Interest income $21,644 $12,068 $29,594 $17,168 $15,498 $17,361 $20,298
Interest expense 14,527 6,454 17,502 9,549 8,125 9,628 12,141
Net interest income before
provision for possible
loan losses 7,117 5,614 12,092 7,619 7,373 7,733 8,157
Provision for possible loan
losses 225 115 305 60 56 1 1,115
Net interest income after
provision for possible
loan losses 6,892 5,499 11,787 7,559 7,317 7,732 7,042
Non-interest income 481 252 637 518 674 1,496 641
Non-interest expense 4,894 3,672 9,198 6,151 6,090 5,541 5,132
Income before income taxes
and cumulative effect
of change in method of
accounting for income
taxes 2,479 2,079 3,226 1,926 1,901 3,777 2,551
Income taxes 832 819 1,251 734 717 1,460 593
Income before cumulative
effect of change in
method of accounting
for income taxes 1,647 1,260 1,975 1,192 1,184 2,317 1,958
Cumulative effect of change
in method of accounting
for income taxes - - - - - - 586
Net income 1,647 1,260 1,975 1,192 1,184 2,317 2,544
Earnings per share(2) $.41 $.30 $0.46 N/A N/A N/A N/A
Net income before special
charge(3) N/A N/A $2,811 N/A N/A N/A N/A
Earnings per share before
special charge(2)(3) N/A N/A $0.66 N/A N/A N/A N/A
<CAPTION>
Six Months Ended
Performance Ratios(4): June 30, Years Ended December 31,
1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets .55% .12% 0.48% 0.50% 0.54% 0.99% 0.81%
Return on average assets before
special charge(3) - - 0.68 - - - -
Return on average equity 6.77 4.68 3.71 5.40 6.59 13.61 13.90
Return on average equity before
special charge(3) - - 5.28 - - - -
Average interest rate spread(5) 2.36 3.40 2.95 3.29 3.33 3.31 3.38
Net interest margin(6) 2.39 3.45 3.01 3.39 3.45 3.43 3.50
Average interest-earning assets
to average interest-bearing
liabilities 106.67 118.36 113.69 109.20 107.16 106.90 105.84
Total non-interest expense to
average assets(7) 1.62 2.22 1.93 2.65 2.75 2.34 2.13
Dividend payout ratio(2) 41.36 22.22 45.91 - - - -
<CAPTION>
At June 30, At December 31,
Regulatory Capital Ratios: 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Tangible capital to tangible assets 9.59% 9.97% 20.14% 8.46% 7.89% 6.23%
Leverage (core) capital to tangible
assets 9.59 9.97 20.14 8.46 7.89 6.23
Leverage (core) capital to risk-
adjusted assets 16.56 20.28 34.27 13.98 13.61 10.61
Risk-based capital to risk-adjusted
assets 17.81 20.98 35.35 15.33 14.90 11.62
<CAPTION>
At June 30, At December 31,
Asset Quality Ratios(8): 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Non-performing assets as a percent of
total assets .13% 0.12% 0.29% 0.45% 0.64% 0.86%
Non-performing loans as a percent of
loans receivable .21 0.20 0.30 0.43 0.53 0.72
Allowance for possible loan losses as a
percent of loans receivable .59 0.65 0.88 1.01 1.02 0.73
Allowance for possible loan losses as
a percent of non-performing loans 223.38 321.94 292.94 235.94 190.94 102.04
</TABLE>
___________________________
(1) Patriot has classified its investment and mortgage-backed
securities as "held to maturity" or "available for sale"
since fiscal 1994 when it adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."
(2) Patriot completed its initial public offering on December 1,
1995. Therefore, earnings per share and dividend payout
ratio are not applicable for years prior to 1996.
(3) Special charge representing the special deposit insurance
assessment levied against all SAIF member financial
institutions by the FDIC to recapitalize its SAIF fund.
(4) All ratios are based on average monthly balances during the
indicated periods. Return on average assets and return on
average equity are calculated before the cumulative effect
of change in method of accounting for income taxes.
(5) The average interest rate spread represents the difference
between the weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing
liabilities and equity.
(6) The net interest margin represents net interest income as a
percent of average interest-earning assets.
(7) Calculated prior to special charge.
(8) Non-performing assets consist of non-performing loans and
real estate owned (REO). Non-performing loans consist of
non-accrual and accruing loans 90 days or more overdue,
while REO consists of real estate acquired through
foreclosure and real estate acquired by acceptance of a deed
in lieu of foreclosure.
(9) Per share data do not reflect the 20% stock dividend paid
to the Corporation's shareholders on September 22, 1997.
<PAGE>
CAPITALIZATION
The following table sets forth the historical consolidated
capitalization of the Corporation as of June 30, 1997. The
issuance of the Exchange Capital Securities will have no effect
on the capitalization of Patriot. The following data should be
read in conjunction with the financial information included in
documents incorporated herein by reference. See "Incorporation of
Certain Documents by Reference."
<TABLE>
<CAPTION>
June 30, 1997
(In thousands)
<S> <C>
Long-term debt $101,000
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust
holding solely junior subordinated
debentures of the Corporation(1) 18,525
Stockholders' equity:
Preferred Stock, $0.01 par value,
2,000,000 shares authorized, none
issued and outstanding -
Common stock, $0.01 par; 10,000,000 shares
authorized; 4,683,594 shares issued 47
Additional Paid-in Capital 49,014
Common stock acquired by ESOP,
271,377 shares, at cost (2,571)
Common stock acquired by MRP
160,644 shares, at amortized cost (1,364)
Retained earnings 11,263
Treasury stock, 607,092 shares at cost (7,979)
Net unrealized holding loss on securities,
net of taxes 1,091
Total Stockholders' equity 49,501
Total capitalization $169,026
</TABLE>
_________________________
(1) Reflects the Capital Securities. The Trust is a subsidiary
of the Corporation and holds the Junior Subordinated
Debentures as its sole asset.<PAGE>
ACCOUNTING TREATMENT
The financial statements of the Trust are consolidated into
the Corporation's consolidated financial statements, with the
Capital Securities treated as minority interest and shown in the
Corporation's consolidated balance sheet as "Corporation-
Obligated Mandatorily Redeemable Securities of Subsidiary Trust
Holding Solely Junior Subordinated Debentures of the
Corporation." The financial statement footnotes in the Quarterly
Report of the Corporation for the quarter ended June 30, 1997
reflect that the sole asset of the Trust is approximately $19.6
million principal amount of the Junior Subordinated Debentures,
bearing interest at 10.30% and maturing on June 1, 2027. All
future reports filed by the Corporation under the Exchange Act
will present information regarding the Trust and other similar
trusts in the manner described above.
<PAGE>
THE EXCHANGE OFFER
Purpose of the Exchange Offer
In connection with the sale of the Original Capital
Securities, the Corporation and the Trust entered into the
Registration Agreement with the Initial Purchasers, pursuant to
which the Corporation and the Trust agreed to file and to use
their reasonable efforts to cause to become effective with the
Commission a registration statement with respect to the exchange
of the Original Capital Securities for capital securities with
terms identical in all material respects to the terms of the
Original Capital Securities. A copy of the Registration
Agreement has been filed as an Exhibit to the Registration
Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual
obligations of the Corporation and the Trust under the
Registration Agreement. The form and terms of the Exchange
Capital Securities are the same as the form and terms of the
Original Capital Securities except that the Exchange Capital
Securities have been registered under the Securities Act and will
not be subject to certain restrictions on transfer applicable to
the Original Capital Securities, and will not provide for any
increase in the Distribution rate thereon. In that regard, the
Original Capital Securities provide, among other things, that, if
a registration statement relating to the Exchange Offer has not
been filed by October 30, 1997 or has not been declared effective
by November 29, 1997, then the Distribution rate borne by the
Original Capital Securities, commencing on the day after the
registration statement was required to be filed or become
effective as the case may be, will increase by 0.25% per annum
until the Exchange Offer is consummated. Upon consummation of
the Exchange Offer, holders of Original Capital Securities will
not be entitled to any increase in the Distribution rate thereon
or any further registration rights under the Registration
Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Original Capital
Securities" and "Description of Original Securities."
The Exchange Offer is not being made to, nor will the Trust
accept tenders for exchange from, holders of Original Capital
Securities in any jurisdiction in which the Exchange Offer or the
acceptance thereof would not be in compliance with the securities
or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder"
with respect to the Exchange Offer means any person in whose name
the Original Capital Securities are registered on the books of
the Trust or any other person who has obtained a properly
completed bond power from the registered holder, or any person
whose Original Capital Securities are held of record by The
Depository Trust Company ("DTC") who desires to deliver such
Original Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will
exchange as soon as practicable after the date hereof the
Original Guarantee for the Exchange Guarantee and the Original
Junior Subordinated Debentures, in an amount corresponding to the
Original Capital Securities accepted for exchange, for a like
aggregate principal amount of the Exchange Junior Subordinated
Debentures. The Exchange Guarantee and Exchange Junior
Subordinated Debentures have been registered under the Securities
Act.
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal, to exchange up to $19,000,000 aggregate
Liquidation Amount of Exchange Capital Securities for a like
aggregate Liquidation Amount of Original Capital Securities
properly tendered on or prior to the Expiration Date and not
properly withdrawn in accordance with the procedures described
below. The Trust will issue, promptly after the Expiration Date,
an aggregate Liquidation Amount of up to $19,000,000 of Exchange
Capital Securities in exchange for a like principal amount of
outstanding Original Capital Securities tendered and accepted in
connection with the Exchange Offer. Holders may tender their
Original Capital Securities in whole or in part in a Liquidation
Amount of not less than $100,000 (100 Capital Securities) or any
integral multiple of $1,000 Liquidation Amount (one Capital
Security) in excess thereof.
The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Original Capital Securities being tendered.
As of the date of this Prospectus, $19,000,000 aggregate
Liquidation Amount of the Original Capital Securities is
outstanding.
Holders of Original Capital Securities do not have any
appraisal or dissenters' rights in connection with the Exchange
Offer. Original Capital Securities which are not tendered for or
are tendered but not accepted in connection with the Exchange
Offer will remain outstanding and be entitled to the benefits of
the Declaration, but will not be entitled to any further
registration rights under the Registration Agreement, except
under limited circumstances. See "Risk Factors--Consequences of
a Failure to Exchange Original Capital Securities" and
"Description of Original Securities."
If any tendered Original Capital Securities are not accepted
for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, certificates
for any such unaccepted Original Capital Securities will be
returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Original Capital Securities in connection
with the Exchange Offer will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of
Original Capital Securities in connection with the Exchange
Offer. The Corporation will pay all charges and expenses, other
than certain applicable taxes described below, in connection with
the Exchange Offer. See "--Fees and Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE
CORPORATION NOR ANY ISSUER TRUSTEE OF THE TRUST MAKES ANY
RECOMMENDATION TO HOLDERS OF ORIGINAL CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF
THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES MUST MAKE
THEIR OWN DECISIONS WHETHER TO TENDER PURSUANT TO THE EXCHANGE
OFFER AND, IF SO, THE AGGREGATE AMOUNT OF ORIGINAL CAPITAL
SECURITIES TO TENDER BASED ON SUCH HOLDERS' OWN FINANCIAL
POSITIONS AND REQUIREMENTS.
Expiration Date; Extensions; Amendments.
The term "Expiration Date" means 5:00 p.m., New York City
time, on _____________, 1997 unless the Exchange Offer is
extended by the Corporation or the Trust (in which case the term
"Expiration Date" shall mean the latest date and time to which
the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in
their sole and absolute discretion, subject to applicable law, at
any time and from time to time, (i) to delay the acceptance of
the Original Capital Securities for exchange, (ii) to terminate
the Exchange Offer (whether or not any Original Capital
Securities have theretofore been accepted for exchange) if the
Trust determines, in its sole and absolute discretion, that any
of the events or conditions referred to under "--Conditions to
the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange
Offer and retain all Original Capital Securities tendered
pursuant to the Exchange Offer, subject, however, to the right of
holders of Original Capital Securities to withdraw their tendered
Original Capital Securities as described under "--Withdrawal
Rights," and (iv) to waive any condition or otherwise amend the
terms of the Exchange Offer in any respect. If the Exchange
Offer is amended in a manner determined by the Corporation and
the Trust to constitute a material change, or if the Corporation
and the Trust waive a material condition of the Exchange Offer,
the Corporation and the Trust will promptly disclose such
amendment by means of a prospectus supplement that will be
distributed to the holders of the Original Capital Securities,
and the Corporation and the Trust will extend the Exchange Offer
to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or
amendment will be followed promptly by oral or written notice
thereof to the Exchange Agent and by making a public announcement
thereof, and such announcement in the case of an extension will
be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
Without limiting the manner in which the Corporation and the
Trust may choose to make any public announcement and subject to
applicable law, the Corporation and the Trust shall have no
obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a release to an
appropriate news agency.
Acceptance for Exchange and Issuance of Exchange Capital
Securities
Upon the terms and subject to the conditions of the Exchange
Offer, the Trust will exchange, and will issue to the Exchange
Agent, promptly after the Expiration Date, Exchange Capital
Securities for Original Capital Securities validly tendered and
not withdrawn.
In all cases, delivery of Exchange Capital Securities in
exchange for Original Capital Securities tendered and accepted
for exchange pursuant to the Exchange Offer will be made only
after timely receipt by the Exchange Agent of (i) the book-entry
confirmation described below under "-- Procedures for Tendering
Original Capital Securities -- Book-Entry Transfer" or
(ii) certificates representing such Original Capital Securities,
the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature
guarantees, and any other documents required by the Letter of
Transmittal.
Subject to the terms and conditions of the Exchange Offer,
the Trust will be deemed to have accepted for exchange, and
thereby exchanged, Original Capital Securities validly tendered
and not withdrawn as, if and when the Trust gives oral or written
notice to the Exchange Agent of the Trust's acceptance of such
Original Capital Securities for exchange pursuant to the Exchange
Offer. The Exchange Agent will act as agent for the Trust for
the purpose of receiving tenders of book-entry confirmations or
certificates representing Original Capital Securities, Letters of
Transmittal and related documents, and as agent for tendering
holders for the purpose of receiving book-entry confirmations or
certificates representing Original Capital Securities, Letters of
Transmittal and related documents and transmitting Exchange
Capital Securities to validly tendering holders. Such exchange
will be made promptly after the Expiration Date. If for any
reason whatsoever, acceptance for exchange or the exchange of any
Original Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Trust's acceptance
for exchange of Original Capital Securities) or the Trust extends
the Exchange Offer or is unable to accept for exchange or
exchange Original Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Trust's rights set
forth herein, the Exchange Agent may, nevertheless, on behalf of
the Trust and subject to Rule 14e-1(c) under the Exchange Act,
retain tendered Original Capital Securities and such Original
Capital Securities may not be withdrawn except to the extent
tendering holders are entitled to withdrawal rights as described
under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Original
Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender,
exchange, sell, assign and transfer Original Capital Securities,
that the Trust will acquire good, marketable and unencumbered
title to the tendered Original Capital Securities, free and clear
of all liens, restrictions, charges and encumbrances, and the
Original Capital Securities tendered for exchange are not subject
to any adverse claims or proxies. The holder also will warrant
and agree that it will, upon request, execute and deliver any
additional documents deemed by the Trust or the Exchange Agent to
be necessary or desirable to complete the exchange, sale,
assignment, and transfer of the Original Capital Securities
tendered pursuant to the Exchange Offer. Tendering holders of
Original Capital Securities that use ATOP will, by so doing,
acknowledge that they are bound by the terms of the Letter of
Transmittal.
Procedures for Tendering Original Capital Securities
Book-Entry Transfer. For purposes of the Exchange Offer,
the Exchange Agent will establish an account with respect to the
Original Capital Securities at DTC within two business days after
the date of this Prospectus. Any tendering financial institution
that is a participant in DTC's book-entry transfer facility
system may make a book-entry delivery of the Original Capital
Securities by causing DTC to transfer such Original Capital
Securities into the Exchange Agent's account at DTC in accordance
with DTC's ATOP procedures for transfers. Such holder of
Original Capital Securities using ATOP should transmit its
acceptance to DTC on or prior to the Expiration Date (or comply
with the guaranteed delivery procedures set forth below). DTC
will verify such acceptance, execute a book-entry transfer of the
tendered Original Capital Securities into the Exchange Agent's
account at DTC and then send to the Exchange Agent confirmation
of such book-entry transfer, including an agent's message
confirming that DTC has received an express acknowledgement from
such holder that such holder has received and agrees to be bound
by the Letter of Transmittal and that the Trust and the
Corporation may enforce the Letter of Transmittal against such
holder (a "book-entry confirmation").
A beneficial owner of Original Capital Securities that are
held by or registered in the name of a broker, dealer, commercial
bank, trust company or other nominee or custodian is urged to
contact such entity promptly if such beneficial owner wishes to
participate in the Exchange Offer.
Certificates. If the tender is not made through ATOP,
certificates representing Original Capital Securities, as well as
the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature
guarantees, and any other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at its
address set forth under "-- Exchange Agent" on or prior to the
Expiration Date in order for such tender to be effective (or the
guaranteed delivery procedures set forth below must be complied
with).
If less than all of the Original Capital Securities are
tendered, a tendering holder should fill in the amount of
Original Capital Securities being tendered in the appropriate box
on the Letter of Transmittal. The entire amount of Original
Capital Securities delivered to the Exchange Agent will be deemed
to have been tendered unless otherwise indicated.
Signature Guarantees. Certificates for the Original Capital
Securities need not be endorsed and signature guarantees on the
Letter of Transmittal are unnecessary unless (a) a certificate
for the Original Capital Securities is registered in a name other
than that of the person surrendering the certificate or (b) such
holder completes the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Original
Capital Securities must be duly endorsed or accompanied by a
properly executed bond power, with the endorsement or signature
on the bond power and on the Letter of Transmittal guaranteed by
a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including
(as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government
securities broker or dealer; (iii) a credit union; (iv) a
national securities exchange, registered securities association
or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association (an "Eligible
Institution"), unless surrendered on behalf of such Eligible
Institution. See Instruction 1 to the Letter of Transmittal.
Delivery. The method of delivery of the book-entry
confirmation or certificates representing tendered Original
Capital Securities, the Letter of Transmittal, and all other
required documents is at the option and sole risk of the
tendering holder, and delivery will be deemed made only when
actually received by the Exchange Agent. If delivery is by mail,
registered mail, return receipt requested, properly insured, or
an overnight delivery service is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
Notwithstanding any other provision hereof, the delivery of
Exchange Capital Securities in exchange for Original Capital
Securities tendered and accepted for exchange pursuant to the
Exchange Offer will in all cases be made only after timely
receipt by the Exchange Agent of (i) a book-entry confirmation
with respect to such Original Capital Securities or
(ii) certificates representing Original Capital Securities and a
properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature
guarantees and any other documents required by the Letter of
Transmittal. Accordingly, the delivery of Exchange Capital
Securities might not be made to all tendering holders at the same
time, and will depend upon when book-entry confirmations with
respect to Original Capital Securities or certificates
representing Original Capital Securities and other required
documents are received by the Exchange Agent.
Guaranteed Delivery. If a holder desires to tender Original
Capital Securities pursuant to the Exchange Offer and the
certificates for such Original Capital Securities are not
immediately available or time will not permit all required
documents to reach the Exchange Agent on or prior to the
Expiration Date, or the procedure for book-entry transfer cannot
be completed on a timely basis, such Original Capital Securities
may nevertheless be tendered, provided that all of the following
guaranteed delivery procedures are complied with:
(1) such tenders are made by or through an Eligible
Institution;
(2) a properly completed and duly executed notice to the
Exchange Agent guaranteeing delivery to the Exchange Agent of
either certificates representing the Original Capital Securities
or a book-entry confirmation in compliance with the requirements
set forth herein (the "Notice of Guaranteed Delivery")
substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior
to the Expiration Date;
(3) (a) a book-entry confirmation or (b) the certificates
representing all tendered Original Capital Securities, in proper
form for transfer, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other documents required by
the Letter of Transmittal, are, in any case, received by the
Exchange Agent within three New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand,
or transmitted by facsimile or mail to the Exchange Agent and
must include a guarantee by an Eligible Institution in the form
set forth in such notice.
The Trust's acceptance for exchange of Original Capital
Securities tendered pursuant to any of the procedures described
above will constitute a binding agreement between the tendering
holder and the Trust upon the terms and subject to the conditions
of the Exchange Offer.
Determination of Validity. All questions as to the form of
documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tendered Original Capital
Securities will be determined by the Corporation and the Trust,
in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Trust reserve
the absolute right, in their sole and absolute discretion, to
reject any and all tenders determined by them not to be in proper
form or the acceptance of which, or exchange for, may, in the
opinion of counsel to the Corporation and the Trust, be unlawful.
The Corporation and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the
Exchange Offer as set forth under "--Conditions to the Exchange
Offer" or any condition or irregularity in any tender of Original
Capital Securities of any particular holder whether or not
similar conditions or irregularities are waived in the case of
other holders.
The interpretation by the Corporation and the Trust of the
terms and conditions of the Exchange Offer (including the Letter
of Transmittal and the instructions thereto) will be final and
binding. No tender of Original Capital Securities will be deemed
to have been validly made until all irregularities with respect
to such tender have been cured or waived. Neither the
Corporation, the Trust, any affiliates or assigns of the
Corporation or the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any
irregularities in tenders or incur any liability for failure to
give any such notification.
If any Letter of Transmittal, endorsement, bond power, power
of attorney, or any other document required by the Letter of
Transmittal is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such
person should so indicate when signing, and unless waived by the
Corporation and the Trust, proper evidence satisfactory to the
Corporation and the Trust, in their sole discretion, of such
person's authority to so act must be submitted.
Resales of Exchange Capital Securities
The Trust is making the Exchange Offer for the Exchange
Capital Securities in reliance on the position of the staff of
the Division of Corporation Finance of the Commission as set
forth in certain interpretive letters addressed to third parties
in other transactions. However, neither the Corporation nor the
Trust sought its own interpretive letter and there can be no
assurance that the staff of the Division of Corporation Finance
of the Commission would make a similar determination with respect
to the Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the staff of
the Division of Corporation Finance of the Commission, and
subject to the two immediately following sentences, the
Corporation and the Trust believe that Exchange Capital
Securities issued pursuant to this Exchange Offer in exchange for
Original Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder
who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Capital Securities
are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such Exchange
Capital Securities. However, any holder of Original Capital
Securities who is an "affiliate" of the Corporation or the Trust
or who intends to participate in the Exchange Offer for the
purpose of distributing Exchange Capital Securities, or any
broker-dealer who purchased Original Capital Securities from the
Trust to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will not be able to rely
on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted
or entitled to tender such Original Capital Securities in the
Exchange Offer and (c) must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Original
Capital Securities unless such sale is made pursuant to an
exemption from such requirements. In addition, as described
below, if any broker-dealer holds Original Capital Securities
acquired for its own account as a result of market-making or
other trading activities and exchanges such Original Capital
Securities for Exchange Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements
of the Securities Act in connection with any resales of such
Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to
exchange Original Capital Securities for Exchange Capital
Securities in the Exchange Offer will be required to represent
that (i) it is not an "affiliate" of the Corporation or the
Trust, (ii) any Exchange Capital Securities to be received by it
are being acquired in the ordinary course of its business,
(iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged
in, and does not intend to engage in, a distribution (within the
meaning of the Securities Act) of such Exchange Capital
Securities. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility
to participate in the Exchange Offer, to furnish to the
Corporation and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the
meaning of Rule 13d-3 under the Exchange Act) on behalf of whom
such holder holds the Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that receives Exchange
Capital Securities for its own account pursuant to the Exchange
Offer must acknowledge that it acquired the Original Capital
Securities for its own account as the result of market-making
activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange
Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on the position taken
by the staff of the Division of Corporation Finance of the
Commission in the interpretive letters referred to above, the
Corporation and the Trust believe that Participating
Broker-Dealers who acquired Original Capital Securities for their
own accounts as a result of market-making activities or other
trading activities may fulfill their prospectus delivery
requirements with respect to the Exchange Capital Securities
received upon exchange of such Original Capital Securities (other
than Original Capital Securities which represent an unsold
allotment from the initial sale of the Original Capital
Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan
of distribution with respect to the resale of such Exchange
Capital Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a
Participating Broker-Dealer during the period referred to below
in connection with resales of Exchange Capital Securities
received in exchange for Original Capital Securities where such
Original Capital Securities were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set
forth in the Registration Agreement, the Corporation and the
Trust have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Capital
Securities for a period ending 180 days after the Expiration Date
(subject to extension under certain limited circumstances
described below) or, if earlier, when all such Exchange Capital
Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of Exchange Capital Securities
received in exchange for Original Capital Securities pursuant to
the Exchange Offer must notify the Corporation or the Trust, or
cause the Corporation or the Trust to be notified, on or prior to
the Expiration Date, that it is a Participating Broker-Dealer.
Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange
Agent at one of the addresses set forth herein under "--Exchange
Agent." Any Participating Broker-Dealer who is an "affiliate" of
the Corporation or the Trust may not rely on such interpretive
letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with
any resale transaction.
In that regard, each Participating Broker-Dealer who
surrenders Original Capital Securities pursuant to the Exchange
Offer will be deemed to have agreed, by execution of the Letter
of Transmittal, that upon receipt of notice from the Corporation
or the Trust of the occurrence of any event or the discovery of
(i) any fact which makes any statement contained or incorporated
by reference in this Prospectus untrue in any material respect or
(ii) any fact which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained
or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading, or
(iii) of the occurrence of certain other events specified in the
Registration Agreement, such Participating Broker-Dealer will
suspend the sale of Exchange Capital Securities (or the Exchange
Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) pursuant to this Prospectus until the Corporation or
the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the
amended or supplemented Prospectus to such Participating
Broker-Dealer, or the Corporation or the Trust has given notice
that the sale of the Exchange Capital Securities (or the Exchange
Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be. If the
Corporation or the Trust gives such notice to suspend the sale of
the Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable), it shall
extend the 180-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus
in connection with the resale of Exchange Capital Securities by
the number of days during the period from and including the date
of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the
amended or supplemented Prospectus necessary to permit resales of
the Exchange Capital Securities or to and including the date on
which the Corporation or the Trust has given notice that the sale
of Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Original
Capital Securities may be withdrawn at any time on or prior to
the Expiration Date.
In order for a withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission of such notice of
withdrawal must be timely received by the Exchange Agent at one
of its addresses set forth under "--Exchange Agent" on or prior
to the Expiration Date. Any such notice of withdrawal must
specify the name of the person who tendered the Original Capital
Securities to be withdrawn, the aggregate principal amount of
Original Capital Securities to be withdrawn, and (if certificates
for such Original Capital Securities have been tendered) the name
of the registered holder of the Original Capital Securities as
set forth on the Original Capital Securities, if different from
that of the person who tendered such Original Capital Securities.
If certificates representing Original Capital Securities have
been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such certificates, the
tendering holder must submit the serial numbers shown on the
particular Original Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Original Capital
Securities tendered for the account of an Eligible Institution.
If Original Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "--Procedures for
Tendering Original Capital Securities -- Book-Entry Transfer,"
the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Original
Capital Securities. Withdrawals of tenders of Original Capital
Securities may not be rescinded. Original Capital Securities
properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any
subsequent time on or prior to the Expiration Date by following
any of the procedures described above under "--Procedures for
Tendering Original Capital Securities."
All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be
determined by the Trust, in its sole discretion, whose
determination shall be final and binding on all parties. Neither
the Corporation, the Trust, any affiliates or assigns of the
Corporation or the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification. Any Original Capital
Securities which have been tendered but which are withdrawn will
be returned to the holder thereof promptly after withdrawal.
Distributions on Exchange Capital Securities
Holders of Original Capital Securities whose Original
Capital Securities are accepted for exchange will not receive
Distributions on such Original Capital Securities and will be
deemed to have waived the right to receive any Distributions on
such Original Capital Securities accumulated from and after
June 5, 1997. Accordingly, holders of Exchange Capital
Securities as of the record date for the payment of Distributions
on December 1, 1997 will be entitled to receive Distributions
accumulated from and after June 5, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer,
or any extension of the Exchange Offer, the Corporation and the
Trust will not be required to accept for exchange, or to
exchange, any Original Capital Securities for any Exchange
Capital Securities, and, as described below, may terminate the
Exchange Offer (whether or not any Original Capital Securities
have theretofore been accepted for exchange) or may waive any
conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been
satisfied:
(a) there shall occur a change in the current
interpretation by the staff of the Commission which permits the
Exchange Capital Securities issued pursuant to the Exchange Offer
in exchange for Original Capital Securities to be offered for
resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an
"affiliate" of the Corporation or the Trust within the meaning of
Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities
Act, provided that such Exchange Capital Securities are acquired
in the ordinary course of such holders' business and such holders
have no arrangement or understanding with any person to
participate in the distribution of such Exchange Capital
Securities; or
(b) any law, statute, rule or regulation shall have been
adopted or enacted which, in the judgment of the Corporation or
the Trust, would reasonably be expected to impair its ability to
proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission
or any state securities authority suspending the effectiveness of
the Registration Statement, or proceedings shall have been
initiated or, to the knowledge of the Corporation or the Trust,
threatened for that purpose, or any governmental approval has not
been obtained, which approval the Corporation or the Trust shall,
in its sole discretion, deem necessary for the consummation of
the Exchange Offer as contemplated hereby, or
(d) the Corporation determines in good faith (i) that there
is a reasonable likelihood that, or a material uncertainty exists
as to whether, consummation of the Exchange Offer would result in
an adverse tax consequence to the Trust or the Corporation and
(ii) that such condition exists on January 31, 1998.
If the Corporation or the Trust determines in its sole and
absolute discretion that any of the foregoing events or
conditions has occurred or exists or has not been satisfied, it
may, subject to applicable law, terminate the Exchange Offer
(whether or not any Original Capital Securities have theretofore
been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect.
If such waiver or amendment constitutes a material change to the
Exchange Offer, the Corporation or the Trust will promptly
disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of
the Original Capital Securities and will extend the Exchange
Offer to the extent required by Rule 14e-1 under the Exchange
Act.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent
for the Exchange Offer. Delivery of the Letters of Transmittal
and any other required documents, questions, requests for
assistance, and requests for additional copies of this Prospectus
or of the Letter of Transmittal should be directed to the
Exchange Agent as follows:
BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York
Floor 7E, 101 Barclay Street
New York, New York 10286
Attention: Enrique Lopez, Reorganization Section
Confirm By Telephone:
(212) 815-2742
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
(212) 815-6639
BY HAND OR OVERNIGHT DELIVERY:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
Attention: Enrique Lopez, Reorganization Section
Confirm by Telephone:
(212) 815-2742
Delivery to other than the above addresses or facsimile
number will not constitute a valid delivery.
Fees and Expenses
The Corporation has agreed to pay the Exchange Agent
reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection
therewith. The Corporation will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of
this Prospectus and related documents to the beneficial owners of
Original Capital Securities, and in handling or tendering for
their customers.
Holders who tender their Original Capital Securities for
exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, Exchange Capital Securities
are to be delivered to, or are to be issued in the name of, any
person other than the registered holder of the Original Capital
Securities tendered, or if a transfer tax is imposed for any
reason other than the exchange of Original Capital Securities in
connection with the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such
tendering holder.
Neither the Corporation nor the Trust will make any payment
to brokers, dealers or other nominees soliciting acceptances of
the Exchange Offer.
<PAGE>
DESCRIPTION OF EXCHANGE SECURITIES
Description of Exchange Capital Securities
Pursuant to the terms of the Declaration, the Issuer
Trustees on behalf of the Trust will issue the Exchange Capital
Securities. The Exchange Capital Securities will represent
beneficial ownership interests in the Trust and the holders
thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption
of the Trust Securities or liquidation of the Trust over the
Common Securities, as well as other benefits as described in the
Declaration. See "--Subordination of Common Securities." The
Declaration has been qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). This summary of
certain provisions of the Exchange Capital Securities, the Common
Securities and the Declaration does not purport to be complete
and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Declaration, including the
definitions therein of certain terms. The form of the
Declaration is available upon request from the Issuer Trustees
and has been filed as an exhibit to the Registration Statement,
of which this Prospectus is a part.
General. The Exchange Capital Securities will be limited to $100
million aggregate Liquidation Amount at any one time outstanding.
The Capital Securities will rank pari passu, and payments will be
made thereon pro rata, with the Common Securities except as
described under "--Subordination of Common Securities." Legal
title to the Junior Subordinated Debentures will be held by the
Property Trustee on behalf of the Trust in trust for the benefit
of the holders of the Trust Securities. The Exchange Guarantee
executed by the Corporation for the benefit of the holders of the
Exchange Capital Securities (the "Exchange Guarantee") will not
guarantee payment of Distributions or amounts payable on
redemption of the Exchange Capital Securities or on liquidation
of the Trust when the Trust does not have funds on hand available
to make such payments. See "--Description of Exchange
Guarantee."
Distributions. The Exchange Capital Securities represent
beneficial ownership interests in the Trust, and Distributions on
each Capital Security will be payable at the annual rate of
10.30% of the stated Liquidation Amount of $1,000, and will be
payable semi-annually in arrears on June 1 and December 1 of each
year to the holders of the Exchange Capital Securities at the
close of business on the May 15 or November 15 (each, a "Record
Date"), as the case may be, next preceding the relevant
Distribution Date (as defined herein). Distributions on the
Exchange Capital Securities will be cumulative. Distributions
will accumulate from June 5, 1997. The first Distribution Date
for the Exchange Capital Securities will be December 1, 1997.
The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which Distributions are payable on
the Exchange Capital Securities is not a Business Day (as defined
herein), payment of the Distributions payable on such date will
be made on the next succeeding day that is a Business Day (and
without any additional Distributions or other payments in respect
to any such delay), except that if such next succeeding Business
Day falls in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the date such
payment was originally payable (each date on which Distributions
are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in
The City of New York are authorized or required by law or
executive order to remain closed.
So long as no Debenture Event of Default has occurred and is
continuing, the Corporation has the right under the Indenture to
defer the payment of interest on the Exchange Junior Subordinated
Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such election, semi-annual Distributions on
the Trust Securities by the Trust will be deferred during any
such Extension Period. Distributions to which holders of the
Trust Securities are entitled during any such Extension Period
will accumulate additional Distributions thereon at the rate per
annum of 10.30% thereof, compounded semi-annually from the
relevant Distribution Date, but not exceeding the interest rate
then accruing on the Junior Subordinated Debentures. The term
"Distributions" as used herein shall include any such additional
Distributions.
Prior to the termination of any such Extension Period, the
Corporation may further extend such Extension Period, provided
that such extension does not cause such Extension Period to
exceed 10 consecutive semi-annual periods, end on a date other
than an Interest Payment Date, or to extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all
amounts then due, and subject to the foregoing limitations, the
Corporation may elect to begin a new Extension Period. The
Corporation must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of any
such Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the
Distributions on the Capital Securities would have been payable
except for the election to begin such Extension Period or
(ii) the date the Administrative Trustees are required to give
notice to any securities exchange or to holders of such Exchange
Capital Securities of the Record Date for the date such
Distributions are payable, but in any event not less than five
Business Days prior to such Record Date. There is no limitation
on the number of times that the Corporation may elect to begin an
Extension Period. See "--Description of Exchange Junior
Subordinated Debentures--Option to Extend Interest Payment Date"
and "Certain United States Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not
(i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of the Corporation's capital stock (which includes common and
preferred stock), (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt
securities of, the Corporation (including Other Debentures) that
rank pari passu with or junior in right of payment to the Junior
Subordinated Debentures, or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including Other
Guarantees) if such guarantee ranks pari passu with or junior in
right of payment to the Junior Subordinated Debentures (other
than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights
plan, or the issuance of stock under any such plan in the future,
or the redemption or repurchase of any such rights pursuant
thereto, (c) payments under the Guarantee, (d) purchases of
shares of the Corporation's common stock related to the issuance
of common stock or rights under any of the Corporation's benefit
plans for its directors, officers, or employees or any of the
Corporation's dividend reinvestment plans, (e) as a result of a
reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the
Corporation's capital stock or, (f) the purchase of fractional
interests in shares of the Corporation's capital stock pursuant
to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged).
The Corporation has no current intention of exercising its
right to defer payments of interest on the Exchange Junior
Subordinated Debentures.
The revenue of the Trust available for distribution to
holders of the Trust Securities will be limited to payments under
the Exchange Junior Subordinated Debentures. See "--Description
of Exchange Junior Subordinated Debentures--General." If the
Corporation does not make interest payments on the Exchange
Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay Distributions on the Trust
Securities. The payment of Distributions (if and to the extent
the Trust has funds legally available for the payment of such
Distributions and cash sufficient to make such payments) is
guaranteed by the Corporation on a limited basis as set forth
herein under "--Description of Exchange Guarantee."
Mandatory Redemption. Upon the repayment on the Stated Maturity
Date or prepayment prior to the Stated Maturity Date of the
Junior Subordinated Debentures (other than following the
distribution of the Junior Subordinated Debentures to the holders
of the Trust Securities), the proceeds from such repayment or
redemption shall be applied by the Property Trustee to redeem a
Like Amount of Trust Securities, upon not less than 30 nor more
than 60 days' notice of a date of redemption (the "Redemption
Date"), at the applicable Redemption Price, which shall be equal
to (i) in the case of the repayment of the Exchange Junior
Subordinated Debentures at the Stated Maturity, the Maturity
Redemption Price (equal to the principal of, and accrued but
unpaid interest on, the Junior Subordinated Debentures), (ii) in
the case of the redemption of the Junior Subordinated Debentures
prior to June 1, 2007 in connection with the occurrence of a
Special Event, the Special Event Redemption Price (equal to the
Special Event Prepayment Price (as defined under "--Description
of the Exchange Junior Subordinated Debentures--Special Event
Prepayment")), and (iii) in the case of the optional redemption
of the Junior Subordinated Debentures on or after June 1, 2007,
the Optional Redemption Price (equal to the Optional Prepayment
Price (as defined under "--Description of Exchange Junior
Subordinated Debentures--Optional Prepayment")).
"Like Amount" means (i) with respect to a redemption of the
Trust Securities, Trust Securities having a Liquidation Amount
equal to the principal amount of Junior Subordinated Debentures
to be paid in accordance with their terms and (ii) with respect
to a distribution of Junior Subordinated Debentures upon the
liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
The Corporation will have the option to prepay the Junior
Subordinated Debentures, (i) in whole or in part, on or after
June 1, 2007, at the applicable Optional Prepayment Price and
(ii) in whole but not in part, at any time prior to June 1, 2007,
upon the occurrence of a Special Event, at the Special Event
Prepayment Price, in each case subject to receipt of any required
regulatory approval. See "Description of Exchange Junior
Subordinated Debentures--Optional Prepayment" and "--Special
Event Prepayment." If less than all of the Junior Subordinated
Debentures are to be repaid or redeemed on a Redemption Date,
then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the Trust Securities.
Redemption of the Junior Subordinated Debentures prior to
Stated Maturity may be subject to receipt of prior regulatory
approval if then required under applicable capital guidelines or
policies.
If the Trust is required to pay any additional taxes, duties
or other governmental charges as a result of a Tax Event, the
Corporation will pay as additional amounts on the Junior
Subordinated Debentures the Additional Sums.
"Additional Sums" means the additional amounts as may be
necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust Securities shall
not be reduced as a result of any additional taxes, duties and
other governmental charges to which the Trust has become subject
as a result of a Tax Event.
Redemption Procedures. Trust Securities shall be redeemed, if at
all, at the applicable Redemption Price with the proceeds from
the contemporaneous repayment or redemption of the Exchange
Junior Subordinated Debentures. Redemptions of the Trust
Securities shall be made and the applicable Redemption Price
shall be payable on each Redemption Date only to the extent that
the Trust has funds on hand available for the payment of such
applicable Redemption Price. See also "--Subordination of Common
Securities."
If the Trust gives a notice of redemption in respect of the
Exchange Capital Securities, then, by 12:00 noon, New York City
time, on the Redemption Date, to the extent funds are available,
with respect to the Exchange Capital Securities held in global
form, the Property Trustee will deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price and will
give DTC irrevocable instructions and authority to pay the
applicable Redemption Price to the holders of the Capital
Securities. See "--Form, Denomination, Book-Entry Procedures and
Transfer." With respect to the Exchange Capital Securities held
in certificated form, the Property Trustee, to the extent funds
are available, will irrevocably deposit with the paying agent for
the Exchange Capital Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent
irrevocable instructions and authority to pay the applicable
Redemption Price to the holders thereof upon surrender of their
certificates evidencing the Exchange Capital Securities. See
"--Payment and Paying Agency." Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date shall be
payable to the holders of the Exchange Capital Securities on the
relevant Record Dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of the
holders of the Exchange Capital Securities will cease, except the
right of the holders of the Exchange Capital Securities to
receive the applicable Redemption Price, but without interest on
such Redemption Price, and the Exchange Capital Securities will
cease to be outstanding. In the event that any date fixed for
redemption of Capital Securities is not a Business Day, then
payment of the applicable Redemption Price payable on such date
will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the
applicable Redemption Price is improperly withheld or refused and
not paid either by the Trust or by the Corporation pursuant to
the Exchange Guarantee as described under "--Description of
Exchange Guarantee," Distributions on Exchange Capital Securities
will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Trust to the date
such applicable Redemption Price is actually paid, in which case
the actual payment date will be the date fixed for redemption for
purposes of calculating the applicable Redemption Price.
In the event that fewer than all of the outstanding Capital
Securities are to be redeemed, the Capital Securities will be
redeemed in accordance with the customary procedures of DTC.
Subject to applicable law (including, without limitation,
United States federal securities law), the Corporation or its
subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or
by private agreement.
Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the Redemption Date to each holder
of Trust Securities at its registered address. Unless the
Corporation defaults in payment of the applicable Prepayment
Price on, or in the repayment of, the Junior Subordinated
Debentures, on and after the Redemption Date Distributions will
cease to accrue on the Trust Securities called for redemption.
Liquidation of the Trust and Distribution of Junior Subordinated
Debentures. The Corporation will have the right at any time to
terminate the Trust and cause the Junior Subordinated Debentures
to be distributed to the holders of the Trust Securities in
liquidation of the Trust. Such right is subject to (i) the
Corporation having received an opinion of counsel to the effect
that such distribution will not be a taxable event to holders of
Capital Securities and (ii) any required regulatory approval.
Upon liquidation of the Trust and certain other events, the
Junior Subordinated Debentures may be distributed to holders of
the Trust Securities. Under current United States federal income
tax law, a distribution of Junior Subordinated Debentures upon
the dissolution of the Trust would not be a taxable event to
holders of the Capital Securities. If, however, the Trust is
characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of dissolution
of the Trust, the distribution of the Junior Subordinated
Debentures would constitute a taxable event to holders of Capital
Securities. Moreover, upon the occurrence of a Tax Event, a
dissolution of the Trust in which holders of the Capital
Securities receive cash would be a taxable event to such holders.
See "Certain United States Federal Income Tax
Consequences--Distribution of Junior Subordinated Debentures or
Cash Upon Liquidation of the Trust."
The Trust shall automatically terminate upon the first to
occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the Corporation; (ii) the distribution of a Like
Amount of the Junior Subordinated Debentures to the holders of
the Trust Securities if the Corporation, as Sponsor, has given
written direction to the Property Trustee to terminate the Trust
(which direction is optional and, except as described above,
wholly within the discretion of the Corporation, as Sponsor);
(iii) redemption of all of the Trust Securities as described
under "--Mandatory Redemption" above; (iv) expiration of the term
of the Trust; and (v) the entry of an order for the dissolution
of the Trust by a court of competent jurisdiction.
If a termination occurs as described in clause (i), (ii),
(iv) or (v) above, the Trust shall be liquidated by the Issuer
Trustees as expeditiously as the Issuer Trustees determine to be
possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities a Like Amount of the Junior
Subordinated Debentures, unless such distribution is determined
by the Property Trustee not to be practicable, in which event
such holders will be entitled to receive out of the assets of the
Trust legally available for distribution to holders, after
satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to the aggregate of the
Liquidation Amount plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Trust has insufficient
assets on hand legally available to pay in full the aggregate
Liquidation Distribution or if a Debenture Event of Default has
occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities. See "--Subordination of
Common Securities."
If the Corporation elects not to prepay the Junior
Subordinated Debentures prior to maturity in accordance with
their terms and either elects not to or is unable to liquidate
the Trust and distribute the Junior Subordinated Debentures to
holders of the Trust Securities, the Trust Securities will remain
outstanding until the repayment of the Junior Subordinated
Debentures at the Stated Maturity.
After the liquidation date is fixed for any distribution of
Junior Subordinated Debentures to holders of the Trust Securities
(i) the Trust Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee will receive in respect of
each global certificate, if any, representing Trust Securities
and held by it, a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered
upon such distribution, and (iii) any certificates representing
Trust Securities not held by DTC or its nominee will be deemed to
represent Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of such Trust Securities,
and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on such Trust Securities
until such certificates are presented to the Administrative
Trustees or their agent for cancellation, whereupon the
Corporation will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the
Capital Securities or the Junior Subordinated Debentures that may
be distributed in exchange for the Trust Securities if a
dissolution and liquidation of the Trust were to occur.
Accordingly, the Capital Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor
may receive on dissolution and liquidation of the Trust, may
trade at a discount to the price that the investor paid to
purchase the Capital Securities offered hereby.
Subordination of Common Securities. Payment of Distributions on,
and the Redemption Price of, the Trust Securities, as applicable,
shall be made pro rata to the holders of Trust Securities based
on the Liquidation Amount of the Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default shall have occurred and be continuing,
no payment of any Distribution on, or applicable Redemption Price
of, any of the Common Securities, and no other payment on account
of the redemption, liquidation or other acquisition of the Common
Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding
Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the applicable
Redemption Price the full amount of such Redemption Price, shall
have been made or provided for, and all funds available to the
Property Trustee shall first be applied to the payment in full in
cash of all Distributions on, or the Redemption Price of, the
Capital Securities then due and payable.
In the case of any Event of Default, the Corporation as
holder of the Common Securities will be deemed to have waived any
right to act with respect to any such Event of Default until the
effect of all such Events of Default have been cured, waived or
otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee
shall act solely on behalf of the holders of the Capital
Securities and not on behalf of the Corporation as holder of the
Common Securities, and only the holders of the Capital Securities
will have the right to direct the Property Trustee to act on
their behalf.
Events of Default; Notice. The occurrence of a Debenture Event
of Default (see "Description of Exchange Junior Subordinated
Debentures - Debenture Events of Default") constitutes an "Event
of Default" under the Declaration.
Within five Business Days after the occurrence of any Event
of Default actually known to the Property Trustee, the Property
Trustee shall transmit notice of such Event of Default to the
holders of the Capital Securities, the Administrative Trustees
and the Corporation, as Sponsor, unless such Event of Default
shall have been cured or waived. The Corporation, as Sponsor,
and the Administrative Trustees are required to file annually
with the Property Trustee a certificate as to whether or not they
are in compliance with all the conditions and covenants
applicable to them under the Declaration.
If a Debenture Event of Default or an Event of Default under
the Declaration has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities as
described above. See "--Liquidation of the Trust and
Distribution of Junior Subordinated Debentures" and
"--Subordination of Common Securities."
Removal of Issuer Trustees. Unless a Debenture Event of Default
shall have occurred and be continuing, any Issuer Trustee may be
removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such
time by the holders of a majority in Liquidation Amount of the
outstanding Capital Securities. In no event will the holders of
the Capital Securities have the right to vote to appoint, remove
or replace the Administrative Trustees, which voting rights are
vested exclusively in the Corporation as the holder of the Common
Securities. No resignation or removal of an Issuer Trustee and
no appointment of a successor trustee shall be effective until
the acceptance of appointment by the successor trustee in
accordance with the provisions of the Declaration.
Co-Trustees and Separate Property Trustee. Unless an Event of
Default shall have occurred and be continuing, at any time or
times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of
the Trust's property may at the time be located, the Corporation,
as the holder of the Common Securities, and the Administrative
Trustees shall have power to appoint one or more persons either
to act as a co-trustee, jointly with the Property Trustee, of all
or any part of such Trust's property, or to act as separate
trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in
such person or persons in such capacity any property, title,
right or power deemed necessary or desirable, subject to the
provisions of the Declaration. In case a Debenture Event of
Default has occurred and is continuing, the Property Trustee
alone shall have power to make such appointment.
Merger or Consolidation of Issuer Trustees. Any Person into
which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged
or converted or with which it may be consolidated or any Person
resulting from any merger, conversion or consolidation to which
such Issuer Trustee shall be a party, or any Person succeeding to
all or substantially all the corporate trust business of such
Issuer Trustee, shall be the successor of such Issuer Trustee
under the Declaration, provided such Person shall be otherwise
qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the
Trust. The Trust may not merge with or into, consolidate,
amalgamate or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an
entirety to any corporation or other Person, except as described
below or as otherwise set forth in the Declaration. The Trust
may, at the request of the Corporation, as Sponsor, with the
consent of the Administrative Trustees but without the consent of
the holders of the Capital Securities, the Property Trustee or
the Delaware Trustee, merge with or into, consolidate, amalgamate
or be replaced by, or convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to, a
trust organized as such under the laws of any State; provided,
that (i) such successor entity either (a) expressly assumes all
of the obligations of the Trust with respect to the Capital
Securities or (b) substitutes for the Capital Securities other
securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Capital Securities rank in
priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Corporation
expressly appoints a trustee of such successor entity possessing
the same powers and duties as the Property Trustee as the holder
of the Junior Subordinated Debentures, (iii) the Successor
Securities are listed or traded, or any Successor Securities will
be listed or traded upon notification of issuance, on any
national securities exchange or other organization on which the
Capital Securities are then listed or traded, if any, (iv) if the
Capital Securities (including any Successor Securities) are rated
by any nationally recognized statistical rating organization
prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities)
to be downgraded by any such nationally recognized statistical
rating organization, (v) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor
Securities) in any material respect, (vi) such successor entity
has a purpose identical to that of the Trust, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Corporation has received an opinion from
independent counsel to the Trust experienced in such matters to
the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of
the Capital Securities (including any Successor Securities) in
any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease, neither the Trust nor such successor entity will be
required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment
Company Act"), and (viii) the Corporation or any permitted
successor or assignee owns all of the common securities of such
successor entity and guarantees the obligations of such successor
entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the
Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets as an entirety or
substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or
replace it, if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust
or the successor entity to be classified as other than a grantor
trust for United States federal income tax purposes.
Voting Rights; Amendment of the Declaration. Except as provided
below and under "--Mergers, Consolidations, Amalgamations or
Replacements of the Trust" and "Description of Exchange
Guarantee--Amendments and Assignment" and as otherwise required
by law and the Declaration, the holders of the Capital Securities
will have no voting rights.
The Declaration may be amended from time to time by the
Corporation, the Property Trustee and the Administrative
Trustees, without the consent of the holders of the Trust
Securities, (i) to cure any ambiguity, correct or supplement any
provision in the Declaration that may be inconsistent with any
other provision, or to make any other provisions with respect to
matters or questions arising under the Declaration, which shall
not be inconsistent with the other provisions of the Declaration,
or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that
the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust
Securities are outstanding or to ensure that the Trust will not
be required to register as an "investment company" under the
Investment Company Act; provided, however, that in the case of
clause (i), such action shall not adversely affect in any
material respect the interests of the holders of the Trust
Securities, and any amendments of the Declaration shall become
effective when notice thereof is given to the holders of the
Trust Securities. The Declaration may be amended by the Issuer
Trustees and the Corporation with (i) the consent of holders
representing a majority (based upon Liquidation Amount) of the
outstanding Trust Securities, and (ii) upon receipt by the Issuer
Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Issuer
Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal
income tax purposes or the Trust's exemption from status as an
"investment company" under the Investment Company Act. In
addition, without the consent of each holder of Trust Securities,
the Declaration may not be amended to (i) change the amount or
timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be
made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or
after such date. The Exchange Capital Securities and any
Original Capital Securities which remain outstanding after
consummation of the Exchange Offer will vote together as a single
class for purposes of determining whether holders of the
requisite percentage in outstanding Liquidation Amount thereof
have taken certain actions or exercised certain rights under the
Declaration.
So long as any Junior Subordinated Debentures are held by
the Property Trustee, the Issuer Trustees shall not (i) direct
the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or executing any trust
or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive certain past defaults
under the Indenture, (iii) exercise any right to rescind or annul
a declaration of acceleration of the maturity of the principal of
the Junior Subordinated Debentures or (iv) consent to any
amendment, modification or termination of the Indenture or the
Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of
the holders of a majority in aggregate Liquidation Amount of all
outstanding Capital Securities; provided, however, that where a
consent under the Indenture would require the consent of each
holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the
prior approval of each holder of the Capital Securities. The
Issuer Trustees shall not revoke any action previously authorized
or approved by a vote of the holders of the Capital Securities
except by subsequent vote of such holders. The Property Trustee
shall notify each holder of Capital Securities of any notice of
default with respect to the Junior Subordinated Debentures. In
addition to obtaining the foregoing approvals of such holders of
the Capital Securities, prior to taking any of the foregoing
actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not
be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such
action.
Any required approval of holders of Capital Securities may
be given at a meeting of such holders convened for such purpose
or pursuant to written consent. The Property Trustee will cause
a notice of any meeting at which holders of Capital Securities
are entitled to vote, or of any matter upon which action by
written consent of such holders is to be taken, to be given to
each holder of record of Capital Securities in the manner set
forth in the Declaration.
No vote or consent of the holders of Capital Securities will
be required for the Trust to redeem and cancel the Capital
Securities in accordance with the Declaration.
Notwithstanding that holders of the Capital Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Capital Securities that are owned by
the Corporation, the Issuer Trustees or any affiliate of the
Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
Expenses and Taxes. In the Indenture, the Corporation, as issuer
of the Junior Subordinated Debentures, has agreed to pay all
debts and other obligations (other than with respect to payments
of Distributions, amounts payable upon redemption and the
Liquidation Amount of the Trust Securities) and all costs and
expenses of the Trust (including costs and expenses relating to
the organization of the Trust, the fees and expenses of the
Issuer Trustees and the costs and expenses relating to the
operation of the Trust) and the offering of the Capital
Securities, and to pay any and all taxes and all costs and
expenses with respect to the foregoing (other than United States
withholding taxes) to which the Trust might become subject.
Form, Denomination, Book-Entry Procedures and Transfer. The
Exchange Capital Securities initially will be represented by one
or more Capital Securities in registered, global form
(collectively, the "Global Capital Securities"). The Global
Capital Securities will be deposited upon issuance with the
Property Trustee as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant in DTC
as described below.
Except as set forth below, the Global Capital Securities may
be transferred, in whole and not in part, only to another nominee
of DTC or to a successor of DTC or its nominee. Beneficial
interests in the Global Capital Securities may not be exchanged
for Capital Securities in certificated form except in the limited
circumstances described below. See "--Exchange of Book-Entry
Capital Securities for Certificated Capital Securities."
Depositary Procedures. DTC has advised the Trust and the
Corporation as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of
the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its
participating organizations (collectively, the "Participants")
and to facilitate the clearance and settlement of transactions in
those securities between Participants through electronic
book-entry changes to accounts of its Participants, thereby
eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers (including
the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Indirect access to
DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The
ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Trust and the Corporation that,
pursuant to procedures established by it, (i) upon deposit of the
Global Capital Securities, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions
of the Liquidation Amount of the Global Capital Securities and
(ii) ownership of such interests in the Global Capital Securities
will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to
the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial
interests in the Global Capital Securities).
Investors in the Global Capital Securities may hold their
interests therein directly through DTC, if they are Participants
in such system, or indirectly through organizations which are
Participants in such system. All interests in a Global Capital
Security will be subject to the procedures and requirements of
DTC. The laws of some states require that certain persons take
physical delivery in certificated form of securities that they
own. Consequently, the ability to transfer beneficial interests
in a Global Capital Security to such persons will be limited to
that extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a
Global Capital Security to pledge such interests to persons or
entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests. For
certain other restrictions on the transferability of the Capital
Securities, see "--Exchange of Book-Entry Capital Securities for
Certificated Capital Securities" and "--Exchange of Certificated
Capital Securities for Book-Entry Capital Securities."
EXCEPT AS DESCRIBED BELOW, OWNERS OF BENEFICIAL INTERESTS IN
THE GLOBAL CAPITAL SECURITIES WILL NOT BE ENTITLED TO HAVE
CAPITAL SECURITIES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE OR
BE ENTITLED TO RECEIVE PHYSICAL DELIVERY OF CAPITAL SECURITIES IN
CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR HOLDERS THEREOF UNDER THE DECLARATION FOR ANY PURPOSE.
Payments in respect of the Global Capital Security
registered in the name of DTC or its nominee will be payable by
the Property Trustee to DTC in its capacity as the registered
holder under the Declaration. Under the terms of the
Declaration, the Property Trustee will treat the persons in whose
names the Capital Securities, including the Global Capital
Securities, are registered as the owners thereof for the purpose
of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Property Trustee nor any
agent thereof has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or
Indirect Participant's records relating to, or payments made on
account of, beneficial ownership interests in the Global Capital
Securities, or for maintaining, supervising or reviewing any of
DTC's records or any Participant's or Indirect Participant's
records relating to the beneficial ownership interests in the
Global Capital Securities, or (ii) any other matter relating to
the actions and practices of DTC or any of its Participants or
Indirect Participants.
DTC has advised the Trust and the Corporation that its
current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the
accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective
holdings in Liquidation Amount of beneficial interests in the
Global Capital Security, as shown on the records of DTC, unless
DTC has reason to believe it will not receive payment on such
payment date. Payments by the Participants and the Indirect
Participants to the beneficial owners of Capital Securities
represented by Global Capital Securities held through such
Participants will be governed by standing instructions and
customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the
responsibility of DTC, the Property Trustee, the Trust, or the
Corporation. Neither the Trust or the Corporation nor the
Property Trustee will be liable for any delay by DTC or any of
its Participants in identifying the beneficial owners of the
Capital Securities, and the Trust or the Corporation and the
Property Trustee may conclusively rely on and will be protected
in relying on instructions from DTC or its nominee for all
purposes.
Interests in the Global Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market
trading activity in such interests will therefore settle in
immediately available funds, subject in all cases to the rules
and procedures of DTC and its Participants. Transfers between
Participants in DTC will be effected in accordance with DTC's
procedures, and will settle in same-day funds.
DTC has advised the Trust and the Corporation that it will
take any action permitted to be taken by a holder of Exchange
Capital Securities (including, without limitation, the
presentation of Capital Securities for exchange as described
below) only at the direction of one or more Participants to whose
account with DTC interests in the Global Capital Securities are
credited and only in respect of such portion of the aggregate
Liquidation Amount of the Capital Securities as to which such
Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Declaration,
DTC reserves the right to exchange the Global Capital Securities
for legended Exchange Capital Securities in certificated form and
to distribute such Exchange Capital Securities to its
Participants.
So long as DTC or its nominee is the registered owner of the
Global Capital Securities, DTC or such nominee, as the case may
be, will be considered the sole owner or holder of the Capital
Securities represented by the Global Capital Security for all
purposes under the Declaration. The information in this section
concerning DTC and its book-entry system has been obtained from
sources that the Trust and the Corporation believe to be
reliable, but neither the Trust nor the Corporation takes
responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to
facilitate transfers of interest in the Global Capital Securities
among Participants in DTC, it is under no obligation to perform
or to continue to perform such procedures, and such procedures
may be discontinued at any time. Neither the Trust or the
Corporation nor the Property Trustee will have any responsibility
for the performance by DTC or its Participants or Indirect
Participants of their respective obligations under the rules and
procedures governing their operations.
Exchange of Book-Entry Capital Securities for Certificated
Capital Securities. A Global Capital Security is exchangeable
for Exchange Capital Securities in registered certificated form
if (i) DTC (x) notifies the Trust that it is no longer willing or
able to continue as Depositary for the Global Capital Security
and the Trust fails to appoint a successor Depositary within
90 days, or (y) has ceased to be a "clearing agency" registered
under the Exchange Act; (ii) the Corporation at its option elects
to cause the issuance of Capital Securities in certificated form;
or (iii) there shall have occurred and be continuing a Debenture
Event of Default or any event which, after notice or lapse of
time or both, would be an Event of Default under the Declaration.
In addition, beneficial interests in a Global Capital Security
may be exchanged for certificated Exchange Capital Securities
upon request, but only upon at least 20 days prior written notice
given to the Property Trustee by or on behalf of DTC in
accordance with DTC's customary procedures. In all cases,
certificated Capital Securities delivered in exchange for any
Global Capital Security or beneficial interests therein will be
registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures).
Exchange of Certificated Capital Securities for Book-Entry
Capital Securities. Capital Securities issued in certificated
form may not be exchanged for beneficial interests in any Global
Capital Security unless such exchange occurs in connection with a
transfer of such Capital Securities and the transferor first
delivers to the Property Trustee a written certificate (in the
form provided in the Declaration) to the effect that such
transfer will comply with the appropriate transfer restrictions
applicable to such Capital Securities.
Payment and Paying Agency. Payments in respect of the Exchange
Capital Securities held in global form shall be made to the
Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates or in respect of
the Capital Securities that are not held by the Depositary, such
payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the
register. The paying agent (the "Paying Agent") shall initially
be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees
and the Corporation. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees
shall appoint a successor (which shall be a bank or trust company
acceptable to the Administrative Trustees and the Corporation) to
act as Paying Agent.
The Bank of New York has informed the Trust that so long as
it serves as paying agent for the Capital Securities, it
anticipates that information regarding Distributions on the
Capital Securities, including payment date, Record Date and
redemption information, will be made available through The Bank
of New York at 1-800-524-4458.
Restrictions on Transfer. The Exchange Capital Securities will
be issued, and may be transferred, only in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital
Securities). Any such transfer of Exchange Capital Securities in
a block having a Liquidation Amount of less than $100,000 shall
be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Exchange
Capital Securities for any purpose, including but not limited to
the receipt of Distributions on such Exchange Capital Securities,
and such transferee shall be deemed to have no interest
whatsoever in such Exchange Capital Securities.
Registrar and Transfer Agent. The Property Trustee will act as
registrar and transfer agent for the Exchange Capital Securities.
Registration of transfers of the Exchange Capital Securities will
be effected without charge by or on behalf of the Trust, but upon
payment of any tax or other governmental charges that may be
imposed in connection with any transfer or exchange. The Trust
will not be required to register or cause to be registered the
transfer of the Exchange Capital Securities after they have been
called for redemption.
Information Concerning the Property Trustee. The Property
Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are
specifically set forth in the Declaration and, during the
existence of an Event of Default, must exercise the same degree
of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the
request of any holder of Trust Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required
to decide between alternative causes of action, construe
ambiguous provisions in the Declaration or is unsure of the
application of any provision of the Declaration, and the matter
is not one on which holders of the Capital Securities or the
Common Securities are entitled under the Declaration to vote,
then the Property Trustee shall take such action as is directed
by the Corporation and, if not so directed, shall take such
action as it deems advisable and in the best interests of the
holders of the Trust Securities and will have no liability except
for its own bad faith, negligence or willful misconduct.
Miscellaneous. The Administrative Trustees are authorized and
directed to conduct the affairs of and to operate the Trust in
such a way that the Trust will not be deemed to be an "investment
company" required to be registered under the Investment Company
Act or classified as an association taxable as a corporation for
United States federal income tax purposes, and so that the Junior
Subordinated Debentures will be treated as indebtedness of the
Corporation for United States federal income tax purposes. In
this connection, the Corporation and the Administrative Trustees
are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the Trust or the
Declaration, that the Corporation and the Administrative Trustees
determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust
Securities.
Holders of the Trust Securities have no preemptive or
similar rights.
The Trust may not borrow money, issue debt, execute
mortgages or pledge any of its assets.
Description of Exchange Junior Subordinated Debentures
The Junior Subordinated Debentures were issued as a separate
series under an Indenture, as supplemented from time to time (as
so supplemented, the "Indenture"), between the Corporation and
The Bank of New York, as trustee (the "Debenture Trustee"). The
Indenture has been qualified under the Trust Indenture Act. This
summary of certain terms and provisions of the Junior
Subordinated Debentures and the Indenture does not purport to be
complete, and where reference is made to particular provisions of
the Indenture, such provisions, including the definitions of
certain terms, some of which are not otherwise defined herein,
are qualified in their entirety by reference to all of the
provisions of the Indenture and those terms made a part of the
Indenture by the Trust Indenture Act.
General. Concurrently with the issuance of the Trust Securities,
the Trust invested the proceeds thereof in the Original Junior
Subordinated Debentures issued by the Corporation. The Exchange
Junior Subordinated Debentures, similarly to the Original Junior
Subordinated Debentures, will bear interest from June 5, 1997 at
the annual rate of 10.30% of the principal amount thereof,
payable semi-annually in arrears on June 1 and December 1 of each
year (each, an "Interest Payment Date"), commencing December 1,
1997, to the person in whose name each Junior Subordinated
Debenture is registered, subject to certain exceptions, at the
close of business on the 15th day of the month preceding the
month in which the relevant Interest Payment Date falls. It is
anticipated that, until the liquidation, if any, of the Trust,
each Exchange Junior Subordinated Debenture will be held in the
name of the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The amount of interest payable
for any period will be computed on the basis of a 360-day year of
twelve 30-day months. In the event that any date on which
interest is payable on the Exchange Junior Subordinated
Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in
respect of any such delay), except that if such next succeeding
Business Day falls in the next succeeding calendar year, then
such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on
the date such payment was originally payable. Accrued interest
that is not paid on the applicable Interest Payment Date will
bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 10.30% thereof,
compounded semi-annually from the relevant Interest Payment Date.
The term "interest" as used herein shall include semi-annual
interest payments, interest on semi-annual interest payments not
paid on the applicable Interest Payment Date and Additional Sums
(as defined herein), as applicable.
The Exchange Junior Subordinated Debentures will be issued
pursuant to the Indenture and will be issued in denominations of
$1,000 and integral multiples thereof. Unless previously
redeemed or repurchased, the Junior Subordinated Debentures will
mature on June 1, 2027.
The Exchange Junior Subordinated Debentures will rank pari
passu with the Original Junior Subordinated Debentures and all
Other Debentures issued under the Indenture and will be unsecured
and subordinate and junior in right of payment to the extent and
in the manner set forth in the Indenture to all Senior
Indebtedness of the Corporation. See "--Subordination."
The Corporation is a non-operating holding company and
almost all of the operating assets of the Corporation are owned
by the Corporation's subsidiaries. The Corporation relies
primarily on dividends from such subsidiaries to meet its
obligations for payment of principal and interest on its
outstanding debt obligations and corporate expenses. The
Corporation is a legal entity separate and distinct from its
banking and non-banking affiliates. The principal sources of the
Corporation's income are dividends, interest, and fees from its
banking and nonbanking affiliates. The Bank is subject to
certain restrictions imposed by federal law on any extensions of
credit to, and certain other transactions with, the Corporation
and certain other affiliates, and on investments in stock or
other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the
Bank unless the loans are secured by various types of collateral.
Further, such secured loans, other transactions and investments
by the Bank are generally limited in amount as to the Corporation
and as to each of such other affiliates to 10% of such Bank's
capital and surplus and as to the Corporation and all of such
other affiliates to an aggregate of 20% of such Bank's capital
and surplus. In addition, payment of dividends to the
Corporation by the subsidiary banks is subject to ongoing review
by banking regulators and is subject to various statutory
limitations and in certain circumstances requires approval by
banking regulatory authorities. Under applicable banking
statutes, at June 30, 1997, the Bank could have declared
additional dividends of approximately $7.5 million. However,
federal and state regulatory agencies also have the authority to
limit further the Bank's payment of dividends based on other
factors, such as the maintenance of adequate capital for the
Bank, which could reduce the amount of dividends otherwise
payable.
Because the Corporation is a holding company, the right of
the Corporation to participate in any distribution of assets of
any subsidiary, upon such subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of
creditors of the subsidiary (including depositors, in the case of
the Bank), except to the extent that the Corporation may itself
be recognized as a creditor of that subsidiary. At June 30,
1997, the subsidiaries of the Corporation had total liabilities
(excluding liabilities owed to the Corporation) of approximately
$625.7 million. Accordingly, the Exchange Junior Subordinated
Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders
of Exchange Junior Subordinated Debentures should look only to
the assets of the Corporation for payments on the Exchange Junior
Subordinated Debentures. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Indebtedness.
Denominations, Registration and Transfer. The Exchange Junior
Subordinated Debentures will be represented by one or more global
certificates registered in the name of Cede & Co. as the nominee
of DTC if, and only if, distributed to the holders of the Trust
Securities. Until such time, the Exchange Junior Subordinated
Debentures will be registered in the name of the Trust and held
by the Property Trustee. Should the Exchange Junior Subordinated
Debentures be distributed to holders of the Trust Securities,
beneficial interests in the Exchange Junior Subordinated
Debentures will be shown on, and transfers thereof will be
effected only through, records maintained by Participants in DTC.
A global security shall be exchangeable for Exchange Junior
Subordinated Debentures registered in the names of persons other
than Cede & Co. only if (i) DTC notifies the Corporation that it
is unwilling or unable to continue as a depositary for such
global security and no successor depositary shall have been
appointed, or if at any time DTC ceases to be a "clearing agency"
registered under the Exchange Act, at a time when DTC is required
to be so registered to act as such depositary, (ii) the
Corporation in its sole discretion determines that such global
security shall be so exchangeable, or (iii) there shall have
occurred and be continuing a Debenture Event of Default. Any
global security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for certificates registered in
such names as DTC shall direct. It is expected that such
instructions will be based upon directions received by DTC from
its Participants with respect to ownership of beneficial
interests in such global security. In the event that Exchange
Junior Subordinated Debentures are issued in certificated form,
such Exchange Junior Subordinated Debentures will be in minimum
denominations of $100,000 and integral multiples of $1,000 in
excess thereof and may be transferred or exchanged only in such
minimum denominations and in the manner and at the offices
described below.
Payments on Exchange Junior Subordinated Debentures
represented by a global security will be made to DTC, as the
depositary for the Exchange Junior Subordinated Debentures. In
the event Exchange Junior Subordinated Debentures are issued in
certificated form, principal and interest will be payable, the
transfer of the Exchange Junior Subordinated Debentures will be
registrable, and Exchange Junior Subordinated Debentures will be
exchangeable for Exchange Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the
corporate office of the Debenture Trustee in New York, New York,
or at the offices of any paying agent or transfer agent appointed
by the Corporation, provided that payment of interest may be made
at the option of the Corporation by check mailed to the address
of the persons entitled thereto or by wire transfer. In
addition, if the Exchange Junior Subordinated Debentures are
issued in certificated form, the record dates for payment of
interest will be the fifteenth day of the month preceding each
Payment Date.
For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Description
of Exchange Securities--Description of Exchange Capital
Securities--Form, Denomination, Book-Entry Procedures and
Transfer." If the Exchange Junior Subordinated Debentures are
distributed to the holders of the Trust Securities upon the
termination of the Trust, the form, denomination, book-entry and
transfer procedures with respect to the Capital Securities as
described under "Description of Exchange Securities--Description
of Exchange Capital Securities--Form, Denomination, Book-Entry
Procedures and Transfer," shall apply to the Exchange Junior
Subordinated Debentures.
Payment and Paying Agents. Payment of principal of (and premium,
if any) and any interest on Exchange Junior Subordinated
Debentures will be made at the office of the Debenture Trustee in
the City of New York or at the office of such Paying Agent or
Paying Agents as the Corporation may designate from time to time,
except that at the option of the Corporation payment of any
interest may be made (except in the case of Exchange Junior
Subordinated Debentures in global form), (i) by check mailed to
the address of the Person entitled thereto as such address shall
appear in the register for Exchange Junior Subordinated
Debentures or (ii) by transfer to an account maintained by the
person entitled thereto as specified in such register, provided
that proper transfer instructions have been received by the
relevant Record Date. Payment of any interest on any Exchange
Junior Subordinated Debenture will be made to the person in whose
name such Exchange Junior Subordinated Debenture is registered at
the close of business on the Record Date for such interest,
except in the case of defaulted interest. The Corporation may at
any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however the Corporation will at
all times be required to maintain a Paying Agent in each Place of
Payment for the Exchange Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any
Paying Agent, or then held by the Corporation in trust, for the
payment of the principal of (and premium, if any) or interest on
any Exchange Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if
any) or interest has become due and payable shall, at the request
of the Corporation, be repaid to the Corporation and the holder
of such Exchange Junior Subordinated Debenture shall thereafter
look, as a general unsecured creditor, only to the Corporation
for payment thereof.
Option to Extend Interest Payment Date. So long as no Debenture
Event of Default has occurred and is continuing, the Corporation
has the right under the Indenture at any time or from to time
during the term of the Exchange Junior Subordinated Debentures to
defer the payment of interest for a period not exceeding
10 consecutive semi-annual periods with respect to each Extension
Period; provided, however, that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. At the end of an Extension Period, the
Corporation must pay all interest then accrued and unpaid
(together with interest thereon at the annual rate of 10.30%,
compounded semi-annually from the relevant Interest Payment Date,
to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Exchange
Junior Subordinated Debentures (and holders of the Exchange
Capital Securities while Exchange Capital Securities are
outstanding) will be required to accrue such deferred interest
income for United States federal income tax purposes prior to
receipt of the cash attributable to such income. See "Certain
United States Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
During any Extension Period, the Corporation may not
(i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of the Corporation's capital stock (which includes common and
preferred stock), (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including any Other Debentures)
that rank pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures or (iii) make any
guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the
Corporation (including any Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures (other than (a) dividends
or distributions in shares of, or options, warrants, or rights to
subscribe for or purchase shares of, common stock of the
Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee, (d) purchases of common stock
related to the issuance of common stock or rights under any of
the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment
plans, (e) as a result of a reclassification of the Corporation's
capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or
series of the Corporation's capital stock, and (f) the purchase
of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged).
Prior to the termination of any Extension Period, the
Corporation may further extend such Extension Period, provided
that such extension does not cause such Extension Period to
exceed 10 consecutive semi-annual periods, end on a date other
than an Interest Payment Date or extend beyond the Stated
Maturity Date. Upon the termination of any Extension Period and
the payment of all amounts then due on any Interest Payment Date,
the Corporation may elect to begin a new Extension Period,
subject to the above requirements. No interest shall be due and
payable during an Extension Period, except at the end thereof.
The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its
election of any Extension Period (or an extension thereof) at
least five Business Days prior to the earlier of (i) the date the
Distributions on the Trust Securities would have been payable
except for the election to begin or extend such Extension Period
or (ii) the date the Administrative Trustees are required to give
notice to any securities exchange or to holders of Exchange
Capital Securities of the Record Date for the date such
Distributions are payable, but in any event not less than five
Business Days prior to such Record Date. The Debenture Trustee
shall give notice of the Corporation's election to begin or
extend a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period.
Optional Prepayment. The Exchange Junior Subordinated Debentures
will be prepayable, in whole or in part, at the option of the
Corporation on or after June 1, 2007, subject to the Corporation
having received any required regulatory approval, at a prepayment
price (the "Optional Prepayment Price") equal to the percentage
of the outstanding principal amount of the Exchange Junior
Subordinated Debentures specified below, plus, in each case,
accrued interest thereon to but excluding the date fixed for
prepayment if redeemed during the 12-month period beginning
June 1 of the years listed below:
Year Percentage
2007 105.150%
2008 104.635%
2009 104.120%
2010 103.605%
2011 103.090%
2012 102.575%
2013 102.060%
2014 101.545%
2015 101.030%
2016 100.515%
2017 100.0000%
Special Event Prepayment. If, prior to June 1, 2007, a Special
Event shall occur and be continuing, the Corporation may, at its
option and subject to receipt of any required regulatory
approval, prepay the Exchange Junior Subordinated Debentures in
whole (but not in part) at any time within 90 days after the
occurrence of such Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the greater of
(i) 100% of the principal amount of such Exchange Junior
Subordinated Debentures or (ii) the sum, as determined by a
Quotation Agent, of the present values of the principal amount
and premium payable with respect to an optional redemption of
such Exchange Junior Subordinated Debentures on June 1, 2007,
together with scheduled payments of interest on the Exchange
Junior Subordinated Debentures from the prepayment date to and
including June 1, 2007, discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate, plus, in each case,
accrued but unpaid interest thereon to the date of prepayment.
See "--Description of Exchange Capital Securities--Liquidation of
the Trust and Distribution of Junior Subordinated Debentures."
"Special Event" means a Tax Event or a Regulatory Capital
Event (as defined below), as the case may be.
"Tax Event" means the receipt by the Corporation and the
Trust of an opinion of counsel experienced in such matters to the
effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws or any
regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a
result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or
decision is announced on or after June 2, 1997, there is more
than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United
States federal income tax with respect to income received or
accrued on the Exchange Junior Subordinated Debentures,
(ii) interest payable by the Corporation on the Exchange Junior
Subordinated Debentures is not, or within 90 days of the date of
such opinion, will not be, deductible by the Corporation, in
whole or in part, for United States federal income tax purposes,
or (iii) the Trust is, or will be within 90 days of the date of
such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Corporation
shall have become, or pursuant to law or regulation will become
within 180 days, subject to capital requirements under which, in
the written opinion of independent bank regulatory counsel
experienced in such matters, the Capital Securities would not
constitute Tier 1 Capital applied as if the Corporation (or its
successor) were a bank holding company (as that concept is used
in the guidelines or regulations issued by the Board of Governors
of the Federal Reserve System as of June 2, 1997) or its then
equivalent ("Tier 1 Capital").
"Adjusted Treasury Rate" means, with respect to any
prepayment date, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date, plus (i) 3.30% if such
prepayment date occurs on or prior to June 1, 1998 and (ii) 2.75%
in all other cases.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity
comparable to the remaining term of the Exchange Junior
Subordinated Debt Debentures to be prepaid that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of
the Exchange Junior Subordinated Debentures.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Corporation. "Reference Treasury Dealer" means:
a nationally recognized U.S. Government Securities Dealer in New
York City selected by the Corporation.
"Comparable Treasury Price" means, with respect to any
prepayment date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third Business Day
preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite
3:30 p.m. Quotations for U.S. Government Securities" or (ii) if
such release (or any successor release) is not published or does
not contain such prices on such Business Day, (A) the average of
Reference Treasury Dealer Quotations for such prepayment date,
after excluding the highest and lowest of such Reference Treasury
Dealer Quotations, or (B) if the Debenture Trustee obtains fewer
than three such Reference Treasury Dealer Quotations, the average
of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any prepayment date, the
average, as determined by the Debenture Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing
to the Debenture Trustee by such Reference Treasury Dealer at
5:00 p.m., New York City time, on the third Business Day
preceding such prepayment date.
"Additional Sums" means the additional amounts as may be
necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Capital Securities and
Common Securities shall not be reduced as a result of any such
additional taxes, duties or other governmental charges to which
the Trust has become subject as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder
of Exchange Junior Subordinated Debentures to be prepaid at its
registered address. Unless the Corporation defaults in payment
of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Exchange Junior Subordinated
Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties
or other governmental charges as a result of a Tax Event, the
Corporation will pay as additional amounts on the Exchange Junior
Subordinated Debentures the Additional Sums.
Restrictions on Certain Payments. The Corporation will also
covenant that it will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's
capital stock (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any,
on or repay or repurchase or redeem any debt securities of the
Corporation (including Other Debentures) that rank pari passu
with or junior in right of payment to the Exchange Junior
Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including under
Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the Exchange Junior Subordinated
Debentures (other than (a) dividends or distributions in shares
of, or options, warrants, or rights to subscribe for or purchase
shares of, common stock of the Corporation, (b) any declaration
of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under the Guarantee,
(d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's benefit plans for
its directors, officers, or employees or any of the Corporation's
dividend reinvestment plans, (e) as a result of a
reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the
Corporation's capital stock or (f) the purchase of fractional
interests in shares of the Corporation's capital stock pursuant
to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged), if at such time
(1) there shall have occurred any event of which the Corporation
has actual knowledge that (a) is, or with the giving of notice or
lapse of time, or both, would be a Debenture Event of Default,
and (b) in respect of which the Corporation shall not have taken
reasonable steps to cure, (2) if such Exchange Junior
Subordinated Debentures are held by the Trust, the Corporation
shall be in default with respect to its payment of any
obligations under the Exchange Guarantee, or (3) the Corporation
shall have given notice of its election of an Extension Period as
provided in the Indenture and shall not have rescinded such
notice, and such Extension Period, or any extension thereof,
shall be continuing.
For so long as the Trust Securities remain outstanding, the
Corporation will covenant (i) to directly or indirectly maintain
100% direct or indirect ownership of the Common Securities of the
Trust; provided, however, that any permitted successor of the
Corporation under the Indenture may succeed to the Corporation's
ownership of such Common Securities, (ii) not to cause, as
Sponsor of the Trust, or to permit, as holder of the Common
Securities, the dissolution, winding-up or termination of the
Trust, except in connection with a distribution of the Exchange
Junior Subordinated Debentures as provided in the Declaration and
in connection with certain mergers, consolidations or
amalgamations and (iii) to use its reasonable efforts to cause
the Trust (a) to remain a business trust, except in connection
with the distribution of Exchange Junior Subordinated Debentures
to the holders of Trust Securities in liquidation of the Trust,
the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, and (b) to otherwise continue to be
classified as a grantor trust for United States federal income
tax purposes.
Modification of Indenture. From time to time the Corporation and
the Debenture Trustee may, without the consent of the holders of
Exchange Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among
other things, curing ambiguities, defects or inconsistencies
(provided that any such action does not materially adversely
affect the interest of the holders of Exchange Junior
Subordinated Debentures) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Corporation and
the Debenture Trustee, with the consent of the holders of a
majority in principal amount of Exchange Junior Subordinated
Debentures, to modify the Indenture in a manner affecting the
rights of the holders of Exchange Junior Subordinated Debentures;
provided, that no such modification may, without the consent of
the holder of each outstanding Exchange Junior Subordinated
Debenture so affected, (i) change the Stated Maturity, or reduce
the principal amount of the Exchange Junior Subordinated
Debentures, or reduce the rate or extend the time of payment of
interest thereon except pursuant to the Corporation's right under
the Indenture to defer the payment of interest as provided
therein (see "--Option to Extend Interest Payment Date") or
(ii) reduce the percentage of principal amount of Exchange Junior
Subordinated Debentures, the holders of which are required to
consent to any such modification of the Indenture.
In addition, the Corporation and the Debenture Trustee may
execute, without the consent of any holder of Exchange Junior
Subordinated Debentures, any supplemental Indenture for the
purpose of creating any Other Debentures.
Debenture Events of Default. The Indenture provides that any one
or more of the following described events with respect to the
Exchange Junior Subordinated Debentures that has occurred and is
continuing constitutes a "Debenture Event of Default" (whatever
the reason for such Debenture Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body):
(i) failure for 30 days to pay any interest on the
Exchange Junior Subordinated Debentures or any Other
Debentures when due (subject to the deferral of any due date
in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any,
on the Exchange Junior Subordinated Debentures or any Other
Debentures when due, whether at maturity, upon redemption,
by declaration of acceleration of maturity or otherwise; or
(iii) failure to observe or perform in any material
respect certain other covenants contained in the Indenture
for 90 days after written notice to the Corporation from the
Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the Exchange
Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or
reorganization of the Corporation.
The holders of a majority in aggregate outstanding principal
amount of the Exchange Junior Subordinated Debentures have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee.
The Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the Exchange Junior
Subordinated Debentures may declare the principal due and payable
immediately upon a Debenture Event of Default. The holders of a
majority in aggregate outstanding principal amount of the
Exchange Junior Subordinated Debentures may annul such
declaration and waive the default if the default (other than the
non-payment of the principal of the Exchange Junior Subordinated
Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal
amount of the Exchange Junior Subordinated Debentures affected
thereby may, on behalf of the holders of all the Exchange Junior
Subordinated Debentures, waive any past default, except a default
in the payment of principal of (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay
all matured installments of interest (and premium, if any) and
principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Indenture cannot be modified or
amended without the consent of the holder of each outstanding
Exchange Junior Subordinated Debenture. The Corporation is
required to file annually with the Debenture Trustee a
certificate as to whether or not the Corporation is in compliance
with all the conditions and covenants applicable to it under the
Indenture.
Enforcement of Certain Rights by Holders of Exchange Capital
Securities. If a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the
Corporation to pay interest (or premium, if any) on or principal
of the Exchange Junior Subordinated Debentures on the due date, a
holder of Exchange Capital Securities may institute a Direct
Action. The Corporation may not amend the Indenture to remove
the foregoing right to bring a Direct Action without the prior
written consent of the holders of all of the Exchange Capital
Securities. Notwithstanding any payments made to a holder of
Exchange Capital Securities by the Corporation in connection with
a Direct Action, the Corporation shall remain obligated to pay
the principal of (or premium, if any) or interest on the Exchange
Junior Subordinated Debentures, and the Corporation shall be
subrogated to the rights of the holder of such Capital Securities
with respect to payments on the Exchange Capital Securities to
the extent of any payments made by the Corporation to such holder
in any Direct Action.
The holders of the Exchange Capital Securities will not be
able to exercise directly any remedies, other than those set
forth in the preceding paragraph, available to the holders of the
Exchange Junior Subordinated Debentures unless there shall have
been an Event of Default under the Declaration. See
"--Description of Exchange Capital Securities--Events of Default;
Notice."
Consolidation, Merger, Sale of Assets and Other Transactions.
The Indenture provides that the Corporation shall not consolidate
with or merge into any other Person or convey, transfer or lease
its properties and assets as an entirety or substantially as an
entirety to any Person, and no Person shall consolidate with or
merge into the Corporation or convey, transfer or lease its
properties and assets as an entirety or substantially as an
entirety to the Corporation, unless (i) in case the Corporation
consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety
to any Person, the successor Person is organized under the laws
of the United States or any state or the District of Columbia,
and such successor Person expressly assumes the Corporation's
obligations on the Exchange Junior Subordinated Debentures;
(ii) immediately after giving effect thereto, no Debenture Event
of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have
occurred and be continuing; and (iii) certain other conditions as
prescribed in the Indenture are met.
The general provisions of the Indenture do not afford
holders of the Exchange Junior Subordinated Debentures protection
in the event of a highly leveraged or other transaction involving
the Corporation that may adversely affect holders of the Exchange
Junior Subordinated Debentures.
Satisfaction and Discharge. The Indenture provides that when,
among other things, all Exchange Junior Subordinated Debentures
not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become
due and payable at maturity within one year, and the Corporation
deposits or causes to be deposited with the Debenture Trustee
funds, in trust, for the purpose and in an amount sufficient to
pay and discharge the entire indebtedness on the Exchange Junior
Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any)
and interest to the date of the deposit or to the Stated Maturity
Date, as the case may be, then the Indenture will cease to be of
further effect (except as to the Corporation's obligations to pay
all other sums due pursuant to the Indenture and to provide the
officers' certificates and opinions of counsel described
therein), and the Corporation will be deemed to have satisfied
and discharged the Indenture.
Subordination. In the Indenture, the Corporation has covenanted
and agreed that any Exchange Junior Subordinated Debentures
issued thereunder shall be subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors,
marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Corporation, all
Senior Indebtedness must be paid in full before the holders of
Exchange Junior Subordinated Debentures will be entitled to
receive or retain any payment or distribution in respect thereof.
In the event of the acceleration of the maturity of the
Exchange Junior Subordinated Debentures, the holders of all
Senior Indebtedness outstanding at the time of such acceleration
will first be entitled to receive payment in full of all such
Senior Indebtedness before the holders of the Exchange Junior
Subordinated Debentures will be entitled to receive or retain any
payment in respect of the Exchange Junior Subordinated
Debentures.
No payments on account of principal (or premium, if any) or
interest, if any, in respect of the Exchange Junior Subordinated
Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior
Indebtedness resulting in the acceleration of the maturity
thereof, or if any judicial proceeding shall be pending with
respect to any such default.
"Senior Indebtedness" shall mean all Indebtedness for Money
Borrowed, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, except
Indebtedness Ranking on a Parity with the Exchange Junior
Subordinated Debentures or Indebtedness Ranking Junior to the
Exchange Junior Subordinated Debentures, and any deferrals,
renewals or extensions of such Senior Indebtedness.
"Indebtedness for Money Borrowed" shall mean any obligation
of, or any obligation guaranteed by, the Corporation for the
repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments.
"Indebtedness Ranking on a Parity with the Exchange Junior
Subordinated Debentures" shall mean (i) Indebtedness for Money
Borrowed, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, which
specifically by its terms ranks equally with and not prior to the
Exchange Junior Subordinated Debentures in the right of payment
upon the happening of the dissolution or winding-up or
liquidation or reorganization of the Corporation and (ii) all
other debt securities, and guarantees in respect of those debt
securities, issued to any other trust, partnership or other
entity affiliated with the Corporation that is a financing
vehicle of the Corporation (a "financing entity") in connection
with the issuance by such financing entity of equity securities
or other securities guaranteed by the Corporation pursuant to an
instrument that ranks pari passu with our junior in right of
payment to the Guarantee.
"Indebtedness Ranking Junior to the Exchange Junior
Subordinated Debentures" shall mean any Indebtedness for Money
Borrowed, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, which
specifically by its terms ranks junior to and not equally with or
prior to the Exchange Junior Subordinated Debentures (and any
other Indebtedness Ranking on a Parity with the Exchange Junior
Subordinated Debentures) in right of payment upon the happening
of the dissolution or winding-up or liquidation or reorganization
of the Corporation. The securing of any Indebtedness for Money
Borrowed, otherwise constituting Indebtedness Ranking on a Parity
with the Exchange Junior Subordinated Debentures or Indebtedness
Ranking Junior to the Exchange Junior Subordinated Debentures, as
the case may be, shall not be deemed to prevent such Indebtedness
for Money Borrowed from constituting Indebtedness Ranking on a
Parity with the Exchange Junior Subordinated Debentures or
Indebtedness Ranking Junior to the Exchange Junior Subordinated
Debentures, as the case may be.
The Corporation is a non-operating holding company and
almost all of the operating assets of the Corporation are owned
by the Corporation's subsidiaries. The Corporation relies
primarily on dividends from such subsidiaries to meet its
obligations for payment of principal and interest on its
outstanding debt obligations and corporate expenses. The
Corporation is a legal entity separate and distinct from its
banking and non-banking affiliates. The principal sources of the
Corporation's income are dividends, interest and fees from its
banking and non-banking affiliates. The Bank is subject to
certain restrictions imposed by federal law on any extensions of
credit to, and certain other transactions with, the Corporation
and certain other affiliates, and on investments in stock or
other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the
Bank unless the loans are secured by various types of collateral.
Further, such secured loans, other transactions and investments
by the Bank are generally limited in amount as to the Corporation
and as to each of such other affiliates to 10% of such Bank's
capital and surplus and as to the Corporation and all of such
other affiliates to an aggregate of 20% of such Bank's capital
and surplus. In addition, payment of dividends to the
Corporation by the subsidiary banks is subject to ongoing review
by banking regulators and is subject to various statutory
limitations and in certain circumstances requires approval by
banking regulatory authorities. Accordingly, the Exchange Junior
Subordinated Dentures will be effectively subordinated to all
existing and future liabilities of the Corporation's
subsidiaries. Holders of Exchange Junior Subordinated Debentures
should look only to the assets of the Corporation for payments of
interest and principal and premium, if any.
The Indenture places no limitation on the amount of Senior
Indebtedness that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional
indebtedness constituting Senior Indebtedness. At June 30, 1997,
the Corporation had no outstanding Senior Indebtedness.
Restrictions on Transfer. The Exchange Junior Subordinated
Debentures will be issued, and may be transferred only, in blocks
having an aggregate principal amount of not less than $100,000
(100 Exchange Junior Subordinated Debentures). Any such transfer
of Exchange Junior Subordinated Debentures in a block having an
aggregate principal amount of less than $100,000 shall be deemed
to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Exchange
Junior Subordinated Debentures for any purpose, including but not
limited to the receipt of payments on such Exchange Junior
Subordinated Debentures, and such transferee shall be deemed to
have no interest whatsoever in such Exchange Junior Subordinated
Debentures.
Governing Law. The Indenture and the Exchange Junior
Subordinated Debentures will be governed by and construed in
accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee. Following the
Exchange Offer and the qualification of the Indenture under the
Trust Indenture Act, the Debenture Trustee shall have and be
subject to all the duties and responsibilities specified with
respect to an indenture trustee under the Trust Indenture Act.
Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Exchange Junior
Subordinated Debentures, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which
might be incurred thereby. The Debenture Trustee is not required
to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the
Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
Description of Exchange Guarantee
The Exchange Guarantee will be executed and delivered by the
Corporation concurrently with the issuance by the Trust of the
Exchange Capital Securities for the benefit of the holders from
time to time of such Exchange Capital Securities. The Bank of
New York will act as trustee (the "Guarantee Trustee") under the
Exchange Guarantee. The Exchange Guarantee has been qualified
under the Trust Indenture Act. This summary of certain
provisions of the Exchange Guarantee does not purport to be
complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Exchange Guarantee,
including the definitions therein of certain terms, and the Trust
Indenture Act. The Guarantee Trustee will hold the Exchange
Guarantee for the benefit of the holders of the Exchange Capital
Securities.
General. The Corporation will irrevocably agree to pay in full
on a subordinated basis, to the extent set forth herein, the
Guarantee Payments (as defined herein) to the holders of the
Exchange Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have
or assert other than the defense of payment. The following
payments with respect to the Exchange Capital Securities, to the
extent not paid by or on behalf of the Trust (the "Guarantee
Payments"), will be subject to the Exchange Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the
Exchange Capital Securities, to the extent that the Trust has
funds on hand legally available therefor at such time, (ii) the
applicable Redemption Price with respect to Exchange Capital
Securities called for redemption, to the extent that the Trust
has funds on hand legally available therefor at such time, and
(iii) upon a voluntary or involuntary termination and liquidation
of the Trust (other than in connection with the distribution of
Exchange Junior Subordinated Debentures to the holders of the
Exchange Capital Securities or the redemption of all of the
Exchange Capital Securities) the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Exchange Capital
Securities. The Corporation's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required
amounts by the Corporation to the holders of the Exchange Capital
Securities or by causing the Trust to pay such amounts to such
holders.
The Exchange Guarantee will rank subordinate and junior in
right of payment to all Senior Indebtedness to the extent
provided therein. See "--Status of the Exchange Guarantee."
Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization
or otherwise, is subject to the prior claims of creditors of such
subsidiary, except to the extent the Corporation may itself be
recognized as a creditor of that subsidiary. Accordingly, the
Corporation's obligations under the Exchange Guarantee will be
effectively subordinated to all existing and future liabilities
of the Corporation's subsidiaries, including deposits, and
claimants should look only to the assets of the Corporation for
payments thereunder. See "Description of the Exchange Junior
Subordinated Debentures - General." The Guarantee does not limit
the incurrence or issuance of other secured or unsecured debt of
the Corporation, including Senior Indebtedness, whether under the
Indenture or any other indenture that the Corporation may enter
into in the future or otherwise.
The Corporation has, through the Exchange Guarantee, the
Declaration, the Exchange Junior Subordinated Debentures and the
Indenture, taken together, fully, irrevocably and unconditionally
guaranteed all of the Trust's obligations under the Exchange
Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's
obligations under the Exchange Capital Securities. See
"Relationship Among the Exchange Capital Securities, the Exchange
Junior Subordinated Debentures and the Exchange Guarantee."
Status of the Exchange Guarantee. The Exchange Guarantee will
constitute an unsecured obligation of the Corporation and will
rank subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as Exchange Junior Subordinated
Debentures, except in the case of a bankruptcy or insolvency
proceeding in respect of the Corporation, in which case the
Exchange Guarantee will rank subordinate and junior in right of
payment to all liabilities (other than Other Guarantees) of the
Corporation.
The Exchange Guarantee will rank pari passu with all Other
Guarantees issued by the Corporation. The Exchange Guarantee
will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding
directly against the Corporation to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding
against any other person or entity). The Exchange Guarantee will
be held for the benefit of the holders of the Exchange Capital
Securities. The Exchange Guarantee will not be discharged except
by payment of the Guarantee Payments in full to the extent not
paid by the Trust or upon distribution to the holders of the
Exchange Capital Securities of the Exchange Junior Subordinated
Debentures. The Guarantee does not place a limitation on the
amount of additional Senior Indebtedness that may be incurred by
the Corporation. The Corporation expects from time to time to
incur additional indebtedness constituting Senior Indebtedness.
Amendments and Assignment. Except with respect to any changes
which do not materially adversely affect the rights of holders of
the Exchange Capital Securities (in which case no vote will be
required), the Exchange Guarantee may not be amended without the
prior approval of the holders of a majority of the aggregate
Liquidation Amount of such outstanding Exchange Capital
Securities. The manner of obtaining any such approval will be as
set forth under "--Description of Exchange Capital
Securities--Voting Rights; Amendment of the Declaration." All
guarantees and agreements contained in the Exchange Guarantee
shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit
of the holders of the Exchange Capital Securities then
outstanding.
Events of Default. An event of default under the Exchange
Guarantee will occur upon the failure of the Corporation to
perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate Liquidation Amount of the
Exchange Capital Securities will have the right to direct the
time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the
Exchange Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Exchange
Guarantee.
Any holder of the Exchange Capital Securities may institute
a legal proceeding directly against the Corporation to enforce
its rights under the Exchange Guarantee without first instituting
a legal proceeding against the Trust, the Guarantee Trustee or
any other person or entity.
The Corporation, as guarantor, is required to file annually
with the Guarantee Trustee a certificate as to whether or not the
Corporation is in compliance with all the conditions and
covenants applicable to it under the Exchange Guarantee.
Information Concerning the Guarantee Trustee. The Guarantee
Trustee, other than during the occurrence and continuance of a
default by the Corporation in performance of the Guarantee, will
undertake to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to the
Guarantee, must exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her
own affairs. Subject to this provision, the Guarantee Trustee
will be under no obligation to exercise any of the powers vested
in it by the Guarantee at the request of any holder of the
Capital Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be
incurred thereby.
Termination of the Exchange Guarantee. The Exchange Guarantee
will terminate and be of no further force and effect upon full
payment of the applicable Redemption Price of the Exchange
Capital Securities, upon full payment of the Liquidation Amount
payable upon liquidation of the Trust or upon distribution of
Exchange Junior Subordinated Debentures to the holders of the
Exchange Capital Securities. The Exchange Guarantee will
continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the Exchange Capital Securities
must restore payment of any sums paid under the Exchange Capital
Securities or the Exchange Guarantee.
Governing Law. The Exchange Guarantee will be governed by and
construed in accordance with the laws of the State of New York.
DESCRIPTION OF ORIGINAL SECURITIES
The terms of the Original Securities are identical in all
materials respects to the Exchange Securities, except that
(i) the Original Securities have not been registered under the
Securities Act, are subject to certain restrictions on transfer
and are entitled to certain rights under the applicable
Registration Agreement (which rights will terminate upon
consummation of the Exchange Offer, except under limited
circumstances), (ii) the Exchange Capital Securities will not
provide for any increase in the Distribution rate thereon and
(iii) the Exchange Junior Subordinated Debentures will not
provide for any liquidated damages thereon. The Original
Securities provide that, in the event that a registration
statement relating to the Exchange Offer has not been filed by
October 30, 1997 and been declared effective by November 29,
1997, or, in certain limited circumstances, in the event a shelf
registration statement (the "Shelf Registration Statement") with
respect to the resale of the Original Capital Securities is not
declared effective by October 30, 1997, then liquidated damages
will accrue at the rate of 0.25% per annum on the principal
amount of the Original Junior Subordinated Debentures and
Distributions will accrue at the rate of 0.25% per annum on the
Liquidation Amount of the Original Capital Securities, for the
period from the occurrence of such event until such time as such
required Exchange Offer is consummated or any required Shelf
Registration Statement is effective. The Exchange Securities are
not, and upon consummation of the Exchange Offer the Original
Securities will not be, entitled to any such additional interest
or Distributions. Accordingly, holders of Original Capital
Securities should review the information set forth under "Risk
Factors--Consequences of a Failure to Exchange Original Capital
Securities" and "Description of Exchange Securities."
RELATIONSHIP AMONG THE EXCHANGE CAPITAL SECURITIES,
THE EXCHANGE JUNIOR
SUBORDINATED DEBENTURES AND THE EXCHANGE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the
Exchange Capital Securities (to the extent the Trust has funds on
hand legally available for the payment of such Distributions) are
irrevocably guaranteed by the Corporation as and to the extent
set forth under "--Description of Exchange Guarantee." Taken
together, the Corporation's obligations under the Exchange Junior
Subordinated Debentures, the Indenture, the Declaration and the
Exchange Guarantee provide, in the aggregate, a full, irrevocable
and unconditional guarantee of payments of Distributions and
other amounts due on the Exchange Capital Securities. No single
document standing alone or operating in conjunction with fewer
than all of the other documents constitutes such guarantee. It
is only the combined operation of these documents that has the
effect of a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Exchange Capital Securities. If
and to the extent that the Corporation does not make payments on
the Exchange Junior Subordinated Debentures, the Trust will not
have sufficient funds to make the related payments, including
Distributions, on the Exchange Capital Securities. The Guarantee
does not cover any such payment when the Trust does not have
sufficient funds on hand legally available therefor. In such
event, the remedy of a holder of Exchange Capital Securities is
to institute a Direct Action. The obligations of the Corporation
under the Exchange Guarantee are subordinate and junior in right
of payment to all Senior Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made
when due on the Exchange Junior Subordinated Debentures, such
payments will be sufficient to cover Distributions and other
payments due on the Exchange Capital Securities, primarily
because (i) the aggregate principal amount or Prepayment Price of
the Exchange Junior Subordinated Debentures will be equal to the
sum of the aggregate Liquidation Amount or Redemption Price, as
applicable, of the Trust Securities; (ii) the interest rate and
interest and other payment dates on the Exchange Junior
Subordinated Debentures will match the Distribution rate and
Distribution and other payment dates for the Trust Securities;
(iii) the Corporation, as Sponsor, shall pay for all costs,
expenses and liabilities of the Trust except the Trust's
obligations to holders of Trust Securities under such Trust
Securities; and (iv) the Declaration further provides that the
Trust is not authorized to engage in any activity that is not
consistent with the limited purposes thereof.
Enforcement Rights of Holders of Exchange Capital Securities
A holder of any Exchange Capital Security may institute a
legal proceeding directly against the Corporation to enforce its
rights under the Exchange Guarantee without first instituting a
legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Senior Indebtedness
would not constitute a default or Event of Default under the
Declaration. However, in the event of payment defaults under, or
acceleration of, Senior Indebtedness, the subordination
provisions of the Indenture provide that no payments may be made
in respect of the Exchange Junior Subordinated Debentures until
such Senior Indebtedness has been paid in full or any payment
default thereunder has been cured or waived. Failure to make
required payments on Exchange Junior Subordinated Debentures
would constitute an Event of Default under the Declaration.
Limited Purpose of the Trust
The Capital Securities evidence a beneficial interest in the
Trust, and the Trust exists for the sole purpose of issuing and
selling the Trust Securities, using the proceeds from the sale of
the Trust Securities to acquire the Junior Subordinated
Debentures, and engaging in only those other activities
necessary, advisable or incidental thereto. A principal
difference between the rights of a holder of an Exchange Capital
Security and a holder of an Exchange Junior Subordinated
Debenture is that a holder of an Exchange Junior Subordinated
Debenture will be entitled to receive from the Corporation the
principal amount (and premium, if any) and interest on Exchange
Junior Subordinated Debentures held, while a holder of Exchange
Capital Securities is entitled to receive Distributions from the
Trust (or, in certain circumstances from the Corporation under
the Guarantee) if and to the extent the Trust has funds on hand
legally available for the payment of such Distributions.
Rights Upon Termination
Unless the Exchange Junior Subordinated Debentures are
distributed to holders of the Trust Securities, upon any
voluntary or involuntary termination and liquidation of the
Trust, after satisfaction of the liabilities of creditors of the
Trust as required by applicable law, the holders of the Trust
Securities will be entitled to receive, out of assets held by the
Trust, the Liquidation Distribution in cash. See "Description of
Exchange Securities--Description of Exchange Capital
Securities--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures." Upon any voluntary or involuntary
liquidation or bankruptcy of the Corporation, the Property
Trustee, as holder of the Exchange Junior Subordinated
Debentures, would be a subordinated creditor of the Corporation,
subordinated in right of payment to all Senior Indebtedness as
set forth in the Indenture, but entitled to receive payment in
full of principal (and premium, if any) and interest, before any
stockholders of the Corporation receive payments or
distributions. Since the Corporation is the guarantor under the
Exchange Guarantee and has agreed to pay for all costs, expenses
and liabilities of the Trust (other than the Trust's obligations
to the holders of its Trust Securities), the positions of a
holder of Exchange Capital Securities and a holder of Exchange
Junior Subordinated Debentures relative to other creditors and to
stockholders of the Corporation in the event of liquidation or
bankruptcy of the Corporation are expected to be substantially
the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of certain of the material United
States federal income tax consequences of the purchase, ownership
and disposition of Capital Securities held as capital assets
(generally, assets held for investment) by a holder who purchases
such Capital Securities upon original issuance. The tax
treatment of a holder of Capital Securities may vary depending
upon his particular situation. This summary does not address all
of the tax consequences that may be relevant to holders who may
be subject to special tax treatment such as, for example, banks,
thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, or, except to the extent
described below, foreign taxpayers. This summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder and the administrative and judicial
interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis. Each
investor is urged to consult his tax advisor as to the particular
tax consequences of purchasing, owning and disposing of Capital
Securities, including the application and effect of United States
federal, state, local, foreign, and other tax laws.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN,
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE
POSSIBLE REDEMPTION OF THE CAPITAL SECURITIES UPON THE OCCURRENCE
OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF EXCHANGE
SECURITIES--DESCRIPTION OF EXCHANGE CAPITAL
SECURITIES--LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR
SUBORDINATED DEBENTURES."
Exchange of Capital Securities
The exchange of Original Securities for Exchange Securities
should not be a taxable event to holders for United States
federal income tax purposes. The exchange of Original Securities
for Exchange Securities pursuant to the Exchange Offer should not
be treated as an "exchange" for United States federal income tax
purposes because the Exchange Securities should not be considered
to differ materially in kind or extent from the Original
Securities and because the exchange will occur by operation of
the terms of the Original Securities. Accordingly, the Exchange
Capital Securities should have the same issue price as the
Original Capital Securities, and a holder should have the same
adjusted tax basis and holding period in the Exchange Capital
Securities as the holder had in the Original Capital Securities
immediately before the exchange. Moreover, a holder which had
acquired Original Capital Securities with either market discount
or bond premium will be treated as holding Exchange Capital
Securities with the same amount of market discount or bond
premium and will be required to include such market discount in
or deduct such bond premium from their income in the same manner
as on the Original Capital Securities. Holders are urged to
consult their tax advisors regarding the applicability of the
market discount and bond premium rules.
Classification of the Junior Subordinated Debentures
The Corporation intends to take the position that the
Exchange Junior Subordinated Debentures will be classified for
United States federal income tax purposes as indebtedness of the
Corporation under current law and, by acceptance of Capital
Securities, each holder covenants to treat the Exchange Junior
Subordinated Debentures as indebtedness and the Capital
Securities as evidence of an indirect beneficial ownership
interest in the Exchange Junior Subordinated Debentures. No
assurance can be given, however, that the IRS will not challenge
such position or, if challenged, that such a challenge will not
be successful. The remainder of this discussion assumes that the
Exchange Junior Subordinated Debentures will be treated as
indebtedness of the Corporation for United States federal income
tax purposes.
Classification of the Trust
In connection with the issuance of the Capital Securities,
Stevens & Lee, P.C., special tax counsel to the Corporation and
the Trust ("Tax Counsel") is of the opinion that, under current
law and assuming full compliance with the terms of the
Declaration, the Indenture, and other documents, and based upon
certain facts and assumptions contained in such opinion, the
Trust will be classified as a grantor trust for United States
federal income tax purposes and not as an association taxable as
a corporation. Accordingly, for United States federal income tax
purposes, each holder of Capital Securities will generally be
treated as the owner of an undivided interest in the Junior
Subordinated Debentures and, as further discussed below, each
holder will be required to include in ordinary income his
allocable share of interest (or original issue discount ("OID"))
paid or accrued on the Junior Subordinated Debentures.
Interest Income and Original Issue Discount
Under recently issued Treasury regulations (the
"Regulations"), a debt instrument will be deemed to be issued
with OID if there is more than a "remote" contingency that
periodic stated interest payments due on the instrument will not
be timely paid. Because the exercise by the Corporation of its
option to defer the payment of stated interest on the Exchange
Junior Subordinated Debentures would prevent the Corporation from
declaring dividends on any class of equity, the Corporation
believes that the likelihood of its exercising the option is
"remote" within the meaning of such regulations. As a result,
the Corporation intends to take the position, based on the advice
of Tax Counsel, that the Junior Subordinated Debentures will not
be deemed to be issued with OID. Accordingly, based upon this
position, and except as set forth below, stated interest payments
on the Junior Subordinated Debentures generally will be
includible in the ordinary income of a holder of Capital
Securities at the time that such payments are paid or accrued in
accordance with such holder's regular method of accounting.
Because the Regulations have not yet been addressed in any
published rulings or other published interpretations issued by
the Internal Revenue Service, it is possible that the Internal
Revenue Service could take a position contrary to the position
taken by the Corporation.
Exercise of Deferral Option. If the Corporation were to
exercise its option to defer the payment of stated interest on
the Junior Subordinated Debentures, the Junior Subordinated
Debentures would be treated, solely for purposes of the OID
rules, as being "re-issued" at such time with OID. Under these
rules, a holder of the Junior Subordinated Debentures would be
required to include OID in ordinary income, on a current basis,
over the period that the instrument is held even though the
Corporation would not be making any actual cash payments during
the extended interest payment period. The amount of interest
income includible in the taxable income of a holder of the Junior
Subordinated Debentures would be determined on the basis of a
constant yield method over the remaining term of the instrument
and the actual receipt of future payments of stated interest on
the Junior Subordinated Debentures would no longer be separately
reported as taxable income. The amount of OID that would accrue,
in the aggregate, during the extended interest payment period
would be approximately equal to the amount of the cash payment
due at the end of such period. Any OID included in income would
increase the holder's adjusted tax basis in the Junior
Subordinated Debentures and the holder's actual receipt of
interest payments would reduce such basis.
Because income on the Capital Securities will constitute
interest for United States federal income tax purposes, corporate
holders of Capital Securities will not be entitled to a
dividends-received deduction in respect of such income.
Receipt of Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust
If the Corporation exercises its right to liquidate the
Trust and cause the Exchange Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities, such
distribution would be treated as a nontaxable event to the
holders of Capital Securities. In such event, each holder of
Capital Securities would have an adjusted tax basis in the
Exchange Junior Subordinated Debentures, received in the
liquidation, equal to such holder's adjusted tax basis in his
Capital Securities surrendered therefor, and the holding period
of the Exchange Junior Subordinated Debentures would include the
period during which the holder had held the Capital Securities.
If, however, the Trust is characterized, for United States
federal income tax purposes, as an association taxable as a
corporation at the time of such liquidation, the distribution of
the Exchange Junior Subordinated Debentures would constitute a
taxable event to holders of Capital Securities.
If the Exchange Junior Subordinated Debentures are redeemed
for cash and the proceeds of such redemption are distributed to
holders in redemption of their Capital Securities, the redemption
would for United States federal income tax purposes be treated as
a sale of the Capital Securities, in which gain or loss would be
recognized, as described immediately below. See "--Sales of
Capital Securities."
Sales of Capital Securities
Upon the sale of Capital Securities (including a redemption
of Capital Securities) a holder will recognize gain or loss in an
amount equal to the difference between the amount realized by the
holder on the sale of the Capital Securities (except to the
extent that such amount realized is characterized as a payment in
respect of accrued but unpaid interest on such holder's allocable
share of the Junior Subordinated Debentures that the holder had
not included in gross income previously) and the holder's
adjusted tax basis in the Capital Securities sold or redeemed. A
holder's adjusted tax basis in the Capital Securities will
generally be its initial purchase price increased by OID (if any)
previously includible in such holder's gross income to the date
of disposition and decreased by payments (if any) received on the
Capital Securities in respect of OID. Such gain or loss
generally will be a capital gain or loss, and generally will be a
long-term capital gain or loss if the Capital Securities have
been held for more than one year. Under the Taxpayer Relief Act
of 1997, for noncorporate taxpayers, such gain is taxed at
different rates, which vary with the taxpayer's holding period
for the capital asset. Generally, for capital assets held for
more than one year but not more than eighteen months, the maximum
rate is twenty-eight percent. For capital assets held for more
than eighteen months, the maximum rate is twenty percent.
Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal
income tax purposes.
The Capital Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest (or
OID if the Junior Subordinated Debentures are treated as having
been issued, or reissued with OID) with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual
method of accounting for tax purposes (and a cash method holder,
if the Junior Subordinated Debentures are deemed to have been
issued with OID) who disposes of his Capital Securities will be
required to include in ordinary income (i) any portion of the
amount realized that is attributable to such accrued but unpaid
interest to the extent not previously included in income or
(ii) any OID, in either case that has accrued on his pro rata
share of the underlying Junior Subordinated Debentures during the
taxable year of sale through the date of disposition. Any such
income inclusion will increase the holder's adjusted tax basis in
his Capital Securities disposed of. To the extent the amount
realized in the sale is less than the holder's adjusted tax basis
a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
United States Alien Holders
For purposes of this discussion, a "United States Alien
Holder" is any corporation, individual, partnership, estate or
trust that is not a U.S. Holder for United States federal income
tax purposes.
A "U.S. Holder" is a holder of Capital Securities who or
which is (i) a citizen or individual resident (or is treated as a
citizen or individual resident) of the United States for federal
income tax purposes, (ii) a corporation or partnership created or
organized (or treated as created or organized for federal income
tax purposes) in or under the laws of the United States or any
political subdivision thereof, (iii) an estate the income of
which is includible in its gross income for federal income tax
purposes without regard to its source, or (iv) 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 United
States persons have the authority to control all substantial
decisions of the trust.
Under present United States federal income tax laws:
(i) payments by the Trust or any of its paying agents to any
holder of a Capital Security who or which is a United States
Alien Holder will not be subject to United States federal
withholding tax; provided that, (a) the beneficial owner of the
Capital Security does not actually or constructively own 10
percent or more of the total combined voting power of all classes
of stock of the Corporation entitled to vote, (b) the beneficial
owner of the Capital Security is not a controlled foreign
corporation that is related to the Corporation through stock
ownership, and (c) either (A) the beneficial owner of the Capital
Security certifies to the Trust or its agent, under penalties of
perjury, that it is not a United States holder and provides its
name and address or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities
in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Capital Security in such capacity,
certifies to the Trust or its agent, under penalties of perjury,
that such statement has been received from the beneficial owner
by it or by a Financial Institution between it and the beneficial
owner and furnishes the Trust or its agent with a copy thereof;
and (ii) a United States Alien Holder of a Capital Security will
not be subject to United States federal withholding tax on any
gain realized upon the sale or other disposition of a Capital
Security.
Information Reporting to Holders
Generally, income on the Capital Securities will be reported
to holders on Forms 1099, which forms should be mailed to holders
of Capital Securities by January 31 following each calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the Capital
Securities may be subject to a "backup" withholding tax of 31
percent unless the holder complies with certain identification
requirements. Any withheld amounts will be allowed as a credit
against the holder's United States federal income tax, provided
the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH
ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE
APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGE IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Corporation, the obligor with respect to the Junior
Subordinated Debentures held by the Trust, and its affiliates and
the Property Trustee may be considered a "party in interest"
(within the meaning of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to
many employee benefit plans ("Plans") that are subject to ERISA.
Any purchaser proposing to acquire Capital Securities with assets
of any Plan should consult with its counsel. The purchase and/or
holding of Capital Securities by a Plan that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including
individual retirement arrangements and other plans described in
Section 4975(e)(1) of the Code) and with respect to which the
Corporation, the Property Trustee or any affiliate is a service
provider (or otherwise is a party in interest or a disqualified
person) may constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code, unless such Capital
Securities are acquired pursuant to and in accordance with an
applicable exemption, such as Prohibited Transaction Class
Exemption ("PTCE") 84-14 (an exemption for certain transactions
determined by an independent qualified professional asset
manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an
exemption for certain transactions involving insurance company
pooled separate accounts), PTCE 95-60 (an exemption for certain
transactions involving certain insurance company general
accounts) or PTCE 96-23 (an exemption for certain transactions
determined by an in-house asset manager). In addition, a Plan
fiduciary considering the purchase of Capital Securities should
be aware that the assets of the Trust may be considered "plan
assets" for ERISA purposes. Therefore, to avoid certain
prohibited transactions under ERISA and the Code that could
thereby result, each investing Plan, by purchasing the Capital
Securities, will be deemed to have directed the Trust to invest
in the Junior Subordinated Debentures and to have appointed the
Property Trustee.
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Capital Securities
for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with
any resale of such Exchange Capital Securities. This Prospectus,
as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange
Capital Securities received in exchange for Capital Securities
where such Capital Securities were acquired by such broker-dealer
as a result of market-making activities or other trading
activities. The Trust and the Corporation have agreed that,
starting on the Expiration Date and ending on the close of
business on the 180th day following the Expiration Date, it will
make this Prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale. In
addition, until ________, 1997, all dealers effecting
transactions in the Exchange Securities may be required to
deliver a prospectus.
The Trust and the Corporation will not receive any proceeds
from any sale of Exchange Capital Securities by broker-dealers.
Exchange Capital Securities received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time
to time in one or more transactions, in the over-the-counter
market, in negotiated transactions, through the writing of
options on the Exchange Capital Securities or a combination of
such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or
at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such Exchange
Capital Securities. Any broker-dealer that resells Exchange
Capital Securities that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Capital
Securities may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit of any such resale
of Exchange Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the Expiration Date, the
Trust and the Corporation will promptly send additional copies of
this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in
the Letter of Transmittal. The Trust and the Corporation have
agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the holders of the
Capital Securities) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Capital
Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
VALIDITY OF EXCHANGE SECURITIES
The validity of the Exchange Guarantee and the Exchange
Junior Subordinated Debentures will be passed upon for the
Corporation by Stevens & Lee, P.C., Reading, Pennsylvania.
Certain matters relating to United States federal income tax
consequences will be passed upon for the Corporation by Stevens &
Lee, P.C., Reading, Pennsylvania.
Certain matters of Delaware law relating to the validity of
the Exchange Capital Securities will be passed upon on behalf of
the Trust by Richards, Layton & Finger, special Delaware counsel
to the Trust.
EXPERTS
The consolidated financial statements of Patriot, as of
December 31, 1996 and 1995 and for each of the three years in the
period ended December 31, 1996, appearing in the 1996 Annual
Report of the Corporation to its shareholders and included in the
Annual Report on Form 10-K for the year ended December 31, 1996,
are incorporated by reference in this Prospectus and in the
Registration Statement of which this Prospectus forms a part,
have been audited by Grant Thornton LLP, independent certified
public accountants, whose reports thereon appear herein, and in
reliance upon such reports of Grant Thornton LLP, given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER INDIVIDUAL HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THIS EXCHANGE OFFER AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR THE
TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
<PAGE>
TABLE OF CONTENTS
PAGE
Available Information .............
Incorporation of Certain Documents
by Reference ....................
Summary ...........................
Risk Factors ......................
Ratios of Earnings to Fixed
Charges .........................
Patriot Capital Trust I ...........
Patriot Bank Corp..................
Selected Financial Data............
Capitalization ....................
Accounting Treatment ..............
The Exchange Offer ................
Description of Exchange
Securities ......................
Description of Original
Securities ......................
Relationship Among the Exchange
Capital Securities, the
Exchange Junior Subordinated
Debentures and the Exchange
Guarantee .......................
Certain United States Federal
Income Tax Consequences .........
ERISA Considerations ..............
Plan of Distribution ..............
Validity of Exchange Securities ...
Experts ...........................
<PAGE>
$19,000,000
PATRIOT CAPITAL TRUST I
OFFER TO EXCHANGE ITS
10.30% EXCHANGE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000
PER EXCHANGE CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
FOR ANY AND
ALL OF ITS OUTSTANDING
10.30% ORIGINAL CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000
PER ORIGINAL CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
PATRIOT BANK CORP.
_______________________________
PROSPECTUS
_______________________________
___________, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by Section 145 of the General Corporation Law
of the State of Delaware, each director and officer of the
Corporation may be indemnified by the Corporation against
expenses (including attorney's fees, judgments, fines and amounts
paid in settlement) actually and reasonably incurred in
connection with the defense or settlement of any threatened,
pending or completed legal proceedings in which he is involved by
reason of the fact that he is or was a director or officer of the
Company if he acted in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests
of the Corporation and, with respect to any criminal action or
proceeding, if he had no reasonable cause to believe that his
conduct was unlawful. If the legal proceeding, however, is by or
in the right of the Corporation, the director or officer may not
be indemnified in respect of any claim, issue or matter as to
which he shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation
unless a court determines otherwise.
In addition, the Corporation maintains a directors' and
officers' liability policy.
Article Eleventh of the Certificate of Incorporation of the
Corporation provides that, to the fullest extent permitted by
law, directors of the Corporation will not be liable for monetary
damages to the Corporation or its stockholders for breaches of
their fiduciary duties.
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT NO.
4.1 Indenture of Patriot Bank Corp. relating to the Junior
Subordinated Debentures
4.2 Form of Certificate of Exchange Junior Subordinated
Debentures*
4.3 Certificate of Trust of Patriot Capital Trust I
4.4 Declaration of Trust of Patriot Capital Trust I
4.5 Amended and Restated Declaration of Trust for Patriot
Capital Trust I
4.6 Form of Exchange Capital Security Certificate for Patriot
Capital Trust I*
4.7 Form of Exchange Guarantee Agreement of Patriot Bank Corp.
relating to the Exchange Capital Securities*
4.8 Registration Rights Agreement
5.1 Opinion and consent of Stevens & Lee, P.C. to Patriot Bank
Corp. as to legality of the Exchange Junior Subordinated
Debentures and the Exchange Guarantee to be issued by
Patriot Bank Corp.*
5.2 Opinion of Richards, Layton & Finger special Delaware
counsel, as to legality of the Exchange Capital Securities
to be issued by Patriot Capital Trust I*
8 Opinion of Stevens & Lee, P.C., special tax counsel, as to
certain federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges (excluding
interest on deposits)*
12.2 Computation of ratio of earnings to fixed charges (including
interest on deposits)*
23.1 Consent of Grant Thornton LLP
23.2 Consent of Stevens & Lee, P.C. (included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger (included in
Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of
Patriot Bank Corp.
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Amended and Restated Declaration of
Trust of Patriot Capital Trust I*
25.2 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Indenture*
25.3 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Exchange Guarantee for the benefit
of the holders of Exchange Capital Securities of Patriot
Capital Trust I*
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees*
99.5 Form of Letter to Clients*
* To be filed by amendment.
<PAGE>
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, as amended, each filing of a Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of each undersigned Registrant pursuant
to the foregoing provisions, or otherwise, each Registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by each undersigned Registrant of
expenses incurred or paid by a director, officer of controlling
person of each Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being
registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrants hereby undertake to respond to
requests for information that is incorporated by reference into
the Prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration
statement through the date of responding to the request.
The undersigned Registrants hereby undertake to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired or involved therein,
that was not the subject of and included in the registration
statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Patriot Bank Corp., Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-4 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pottstown, in the Commonwealth of
Pennsylvania, on the 25th day of September, 1997.
PATRIOT BANK CORP.
By /s/ Joseph W. Major
Joseph W. Major
President and Chief
Operating Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ John H. Diehl Director September 25, 1997
John H. Diehl
/s/ James B. Elliott Director September 25, 1997
James B. Elliott
/s/ Gary N. Gieringer Chairman of Board, September 25, 1997
Gary N. Gieringer Chief Executive
Officer and
Director
/s/ Leonard A. Huff Director September 25, 1997
Leonard A. Huff
/s/Samuel N. Landis Director September 25, 1997
Samuel N. Landis
/s/ Joseph W. Major Director, September 25, 1997
Joseph W. Major President and
Chief Operating
Officer (Principal
Executive Officer)
/s/ Larry V. Thren Director September 25, 1997
Larry V. Thren
/s/ Richard A. Elko Chief Financial September 25, 1997
Richard A. Elko Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
Patriot Capital Trust I certifies that it has reasonable grounds
to believe that it meets all the requirements for filing on Form
S-4 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Pottstown, and Commonwealth of Pennsylvania, on
September 25, 1997.
PATRIOT CAPITAL TRUST I
By: /s/ Richard A. Elko
Richard A. Elko
as Administrative Trustee
By: /s/ Joseph W. Major
Joseph W. Major
as Administrative Trustee
By: /s/ Gary N. Gieringer
Gary N. Gieringer
as Administrative Trustee
=================================================================
PATRIOT BANK CORP.
______________________________
______________________________
INDENTURE
Dated as of June 1, 1997
______________________________
THE BANK OF NEW YORK
as Trustee
______________________________
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
=================================================================
<PAGE>
TIE-SHEET
Reconciliation and tie of provisions of Trust Indenture Act
of 1939 with Indenture dated as of June 1, 1997 between Patriot
Bank Corp. and The Bank of New York, Trustee:
ACT SECTION INDENTURE Section
310(a)(1)...................................................6.09
(a)(2)...................................................6.09
310(a)(3)....................................................N/A
(a)(4)....................................................N/A
310(a)(5).............................................6.10, 6.11
310(b).......................................................N/A
310(c)......................................................6.13
311(a) and (b)...............................................N/A
311(c).............................................4.01, 4.02(a)
312(a)......................................................4.02
312(b) and (c)..............................................4.04
313(a)......................................................4.04
313(b)(1)...................................................4.04
313(b)(2)...................................................4.04
313(c)......................................................4.04
313(d)......................................................4.04
314(a)......................................................4.03
314(b).......................................................N/A
314(c)(1) and (2)...........................................6.07
314(c)(3)....................................................N/A
314(d) ......................................................N/A
314(e)......................................................6.07
314(f) ......................................................N/A
315(a)(c) and (d)...........................................6.01
315(b) .....................................................5.08
315(e) .....................................................5.09
316(a)(1) ..................................................5.07
316(a)(2) ...................................................N/A
316(a) last sentence .......................................2.09
316(b) .....................................................9.02
317(a) .....................................................5.05
317(b) .....................................................6.05
318(a) ....................................................13.08
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................... 1
Additional Sums.......................................... 2
Adjusted Treasury Rate................................... 2
Affiliate................................................ 2
Authenticating Agent..................................... 3
Bankruptcy Law........................................... 3
Board of Directors....................................... 3
Board Resolution......................................... 3
Business Day............................................. 3
Capital Securities....................................... 3
Capital Securities Guarantee............................. 4
Commission............................................... 4
Common Securities........................................ 4
Common Securities Guarantee.............................. 5
Common Stock............................................. 5
Company.................................................. 5
Company Request.......................................... 5
Company Order............................................ 5
Comparable Treasury Issue................................ 5
Comparable Treasury Price................................ 5
Compounded Interest...................................... 6
Custodian................................................ 6
Default.................................................. 6
Deferred Interest........................................ 6
Definitive Securities.................................... 6
Depositary............................................... 6
Dissolution Event........................................ 7
Event of Default......................................... 7
Exchange Act............................................. 7
Exchange Offer........................................... 7
Extended Interest Payment Period......................... 7
Federal Reserve.......................................... 7
Global Security.......................................... 7
Indebtedness for Money Borrowed.......................... 8
Indebtedness Ranking on a Parity with the Securities..... 8
Indebtedness Ranking Junior to the Securities............ 8
Indenture................................................ 9
Initial Optional Redemption Date......................... 9
____________________
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED
TO BE A PART OF THE INDENTURE.
<PAGE>
Interest Payment Date.................................... 9
Liquidated Damages....................................... 9
Maturity Date............................................ 9
Mortgage................................................. 9
Non Book-Entry Capital Securities........................ 9
Officers................................................. 9
Officers' Certificate.................................... 9
Opinion of Counsel....................................... 10
Optional Redemption Price................................ 10
Other Debentures......................................... 10
Other Guarantees......................................... 10
Outstanding.............................................. 10
Patriot Capital Trust.................................... 11
Person................................................... 11
Predecessor Security..................................... 11
Principal Office of the Trustee.......................... 11
Purchase Agreement....................................... 12
Property Trustee......................................... 12
Quotation Agent.......................................... 12
Redemption Price......................................... 12
Reference Treasury Dealer................................ 12
Reference Treasury Dealer Quotations..................... 12
Registration Rights Agreement............................ 12
Regulatory Capital Event................................. 13
Responsible Officer...................................... 13
Restricted Security...................................... 13
Rule 144A................................................ 14
Securities............................................... 14
Securities Act........................................... 14
Securityholder........................................... 14
Holder of Securities..................................... 14
Security Register........................................ 14
Senior Indebtedness...................................... 14
Series A Securities...................................... 14
Series B Securities...................................... 15
Special Event............................................ 15
Special Event Redemption Price........................... 15
Subsidiary............................................... 15
Trust Agreement.......................................... 16
Tax Event................................................ 16
Trustee.................................................. 17
Trust Indenture Act of 1939.............................. 17
Trust Securities......................................... 17
U.S. Government Obligations.............................. 17
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally................................ 18
SECTION 2.02. Execution and Authentication................... 18
SECTION 2.03. Form and Payment............................... 19
SECTION 2.04. Legends........................................ 19
SECTION 2.05. Global Security................................ 20
SECTION 2.06. Interest....................................... 23
SECTION 2.07. Transfer and Exchange.......................... 24
SECTION 2.08. Replacement Securities......................... 27
SECTION 2.09. Temporary Securities........................... 28
SECTION 2.10. Cancellation................................... 29
SECTION 2.11. Defaulted Interest............................. 29
SECTION 2.12. CUSIP Numbers.................................. 31
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and
Interest....................................... 31
SECTION 3.02. Offices for Notices and Payments, etc.......... 32
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office......................................... 33
SECTION 3.04. Provision as to Paying Agent................... 33
SECTION 3.05. Certificate to Trustee......................... 35
SECTION 3.06. Compliance with Consolidation
Provisions..................................... 35
SECTION 3.07. Limitation on Dividends........................ 36
SECTION 3.08. Covenants as to Patriot Capital Trust.......... 37
SECTION 3.09. Payment of Expenses............................ 38
SECTION 3.10. Payment Upon Resignation or Removal............ 39
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists........................ 39
SECTION 4.02. Preservation and Disclosure of Lists.......... 40
SECTION 4.03. Reports by Company............................ 43
SECTION 4.04. Reports by the Trustee........................ 45
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default............................. 46
SECTION 5.02. Payment of Securities on Default; Suit
Therefor...................................... 49
SECTION 5.03. Application of Moneys Collected by Trustee.... 53
SECTION 5.04. Proceedings by Securityholders................ 54
SECTION 5.05. Proceedings by Trustee........................ 55
SECTION 5.06. Remedies Cumulative and Continuing............ 56
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders....... 56
SECTION 5.08. Notice of Defaults............................ 58
SECTION 5.09. Undertaking to Pay Costs...................... 59
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee........ 60
SECTION 6.02. Reliance on Documents, Opinions, etc.......... 62
SECTION 6.03. No Responsibility for Recitals, etc........... 64
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own
Securities.................................... 65
SECTION 6.05. Moneys to be Held in Trust.................... 65
SECTION 6.06. Compensation and Expenses of Trustee.......... 66
SECTION 6.07. Officers' Certificate as Evidence............. 67
SECTION 6.08. Conflicting Interest of Trustee............... 67
SECTION 6.09. Eligibility of Trustee........................ 68
SECTION 6.10. Resignation or Removal of Trustee............. 68
SECTION 6.11. Acceptance by Successor Trustee............... 71
SECTION 6.12. Succession by Merger, etc..................... 72
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor...................................... 73
SECTION 6.14. Authenticating Agents......................... 73
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders..................... 75
SECTION 7.02. Proof of Execution by Securityholders......... 77
SECTION 7.03. Who Are Deemed Absolute Owners................ 77
SECTION 7.04. Securities Owned by Company Deemed
Not Outstanding............................... 78
SECTION 7.05. Revocation of Consents; Future Holders
Bound......................................... 78
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.......................... 79
SECTION 8.02. Call of Meetings by Trustee................... 80
SECTION 8.03. Call of Meetings by Company or
Securityholders............................... 80
SECTION 8.04. Qualifications for Voting..................... 81
SECTION 8.05. Regulations................................... 81
SECTION 8.06. Voting........................................ 82
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders............ 83
SECTION 9.02. With Consent of Securityholders............... 86
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures............. 88
SECTION 9.04. Notation on Securities........................ 88
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee............. 89
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on
Certain Terms................................. 89
SECTION 10.02. Successor Corporation to be Substituted for
Company....................................... 90
SECTION 10.03. Opinion of Counsel to be Given Trustee........ 91
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture........................ 91
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by Trustee.... 93
SECTION 11.03. Paying Agent to Repay Moneys Held............. 93
SECTION 11.04. Return of Unclaimed Moneys.................... 94
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations........................ 94
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations................................... 97
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.................................... 98
SECTION 13.02. Official Acts by Successor Corporation........ 98
SECTION 13.03. Surrender of Company Powers................... 98
SECTION 13.04. Addresses for Notices, etc.................... 98
SECTION 13.05. Governing Law................................. 99
SECTION 13.06. Evidence of Compliance with Conditions
Precedent..................................... 99
SECTION 13.07. Business Days.................................100
SECTION 13.08. Trust Indenture Act to Control................100
SECTION 13.09. Table of Contents, Headings, etc..............101
SECTION 13.10. Execution in Counterparts.....................101
SECTION 13.11. Separability..................................101
SECTION 13.12. Assignment....................................101
SECTION 13.13. Acknowledgement of Rights.....................102
<PAGE>
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Redemption......................103
SECTION 14.02. Optional Redemption by Company................103
SECTION 14.03. No Sinking Fund...............................105
SECTION 14.04. Notice of Redemption; Selection of
Securities....................................105
SECTION 14.05. Payment of Securities Called for
Redemption....................................107
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate......................108
SECTION 15.02. Default on Senior Indebtedness................108
SECTION 15.03. Liquidation; Dissolution; Bankruptcy..........109
SECTION 15.04. Subrogation...................................112
SECTION 15.05. Trustee to Effectuate Subordination...........114
SECTION 15.06. Notice by the Company.........................114
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness..................................116
SECTION 15.08. Subordination May Not Be Impaired.............117
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period..........118
SECTION 16.02. Notice of Extension...........................119
EXHIBIT A....................................................A-1
Testimonium
Signatures
Acknowledgements<PAGE>
THIS INDENTURE, dated as of June 1, 1997, between
Patriot Bank Corp., a Delaware corporation (hereinafter sometimes
called the "Company"), and The Bank of New York, a New York
banking corporation, as trustee (hereinafter sometimes called the
"Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of
the Securities by the holders thereof, the Company covenants and
agrees with the Trustee for the equal and proportionate benefit
of the respective holders from time to time of the Securities, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as
herein otherwise expressly provided or unless the context
otherwise requires) for all purposes of this Indenture shall have
the respective meanings specified in this Section 1.01. All
other terms used in this Indenture which are defined in the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or
which are by reference therein defined in the Securities Act,
shall (except as herein otherwise expressly provided or unless
the context otherwise requires) have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act
as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Trust
Agreement: (i) Clearing Agency; (ii) Delaware Trustee;
(iii) Capital Security Certificate; (iv) Property Trustee;
(v) Administrative Trustees; (vi) Series A Capital Securities;
(vii) Series B Capital Securities; (viii) Direct Action; and
(ix) Distributions. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms
in accordance with generally accepted accounting principles and
the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of
any computation. The words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision. Headings are used for convenience of reference only
and do not affect interpretation. The singular includes the
plural and vice versa.
"Additional Sums" shall have the meaning set forth in
Section 2.06(c).
"Adjusted Treasury Rate" means, with respect to any
redemption date pursuant to Section 14.01, the rate per annum
equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such
redemption date plus (i) 3.30% if such redemption date occurs on
or prior to June 1, 1998 and (ii) 2.75% in all other cases.
"Affiliate" means, with respect to a specified Person,
(a) any Person directly or indirectly owning, controlling or
holding the power to vote 10% or more of the outstanding voting
securities or other ownership interests of the specified Person,
(b) any Person 10% or more of whose outstanding voting securities
or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person,
(c) any Person directly or indirectly controlling, controlled by,
or under common control with the specified Person, (d) a
partnership in which the specified Person is a general partner,
(e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the
specified Person is an officer, director or general partner.
"Authenticating Agent" shall mean any agent or agents
of the Trustee which at the time shall be appointed and acting
pursuant to Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of
Directors of the Company or any duly authorized committee of that
board.
"Board Resolution" shall mean a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" shall mean, with respect to any series
of Securities, any day other than a Saturday or a Sunday or a day
on which banking institutions in The City of New York are
authorized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial
interests in the assets of Patriot Capital Trust which rank pari
passu with the Common Securities issued by Patriot Capital Trust;
provided, however, that if an Event of Default has occurred and
is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect
to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and
the liquidation, redemption and other payments to which they are
entitled. References to "Capital Securities" shall include
collectively any Series A Capital Securities and Series B Capital
Securities.
"Capital Securities Guarantee" shall mean any guarantee
that the Company may enter into with The Bank of New York or
other Persons that operates directly or indirectly for the
benefit of holders of Capital Securities of Patriot Capital Trust
and shall include a Series A Capital Securities Guarantee and a
Series B Capital Securities Guarantee with respect to the
Series A Capital Securities and the Series B Capital Securities,
respectively.
"Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act, or if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" shall mean undivided beneficial
interests in the assets of Patriot Capital Trust which rank pari
passu with Capital Securities issued by Patriot Capital Trust;
provided, however, that if an Event of Default has occurred and
is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect
to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and
the liquidation, redemption and other payments to which they are
entitled.
"Common Securities Guarantee" shall mean any guarantee
that the Company may enter into with any Person or Persons that
operates directly or indirectly for the benefit of holders of
Common Securities of Patriot Capital Trust.
"Common Stock" shall mean the Common Stock, no par
value, of the Company or any other class of stock resulting from
changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par
value, or from no par value to par value.
"Company" shall mean Patriot Bank Corp., a Delaware
corporation, and, subject to the provisions of Article X, shall
include its successors and assigns.
"Company Request" or "Company Order" shall mean a
written request or order signed in the name of the Company by the
Chairman, the Chief Executive Officer, the President, a Vice
Chairman, an Executive Vice President, a Vice President, the
Treasurer, the Comptroller, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"Comparable Treasury Issue" means the United States
Treasury security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the Securities to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the
remaining term of the Securities.
"Comparable Treasury Price" means, with respect to any
redemption date pursuant to Section 14.01, (i) the average of the
bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth
in the daily statistical release (or any successor
release) published by the Federal Reserve Bank of New York and
designated "Composite 3:30 p.m. Quotations for U.S. Government
Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business
Day, (A) the average of the Reference Treasury Dealer Quotations
for such redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (B) if the Trustee
obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Compounded Interest" shall have the meaning set forth
in Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Default" means any event, act or condition that with
notice or lapse of time, or both, would constitute an Event of
Default.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those securities
issued in fully registered certificated form not otherwise in
global form.
"Depositary" shall mean, with respect to Securities of
any series, for which the Company shall determine that such
Securities will be issued as a Global Security, The Depository
Trust Company, New York, New York, another clearing agency, or
any successor registered as a clearing agency under the Exchange
Act or other applicable statute or regulation, which, in each
case, shall be designated by the Company pursuant to
Section 2.05(d).
"Dissolution Event" means the liquidation of Patriot
Capital Trust pursuant to the Trust Agreement, and the
distribution of the Securities held by the Property Trustee to
the holders of the Trust Securities issued by Patriot Capital
Trust pro rata in accordance with the Trust Agreement.
"Event of Default" shall mean any event specified in
Section 5.01, continued for the period of time, if any, and after
the giving of the notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Exchange Offer" means the offer that may be made
pursuant to the Registration Rights Agreement (i) by the Company
to exchange Series B Securities for Series A Securities and to
exchange a Series B Capital Securities Guarantee for a Series A
Capital Securities Guarantee and (ii) by Patriot Capital Trust to
exchange Series B Capital Securities for Series A Capital
Securities.
"Extended Interest Payment Period" shall have the
meaning set forth in Section 16.01.
"Federal Reserve" shall mean the Board of Governors of
the Federal Reserve System.
"Global Security" means, with respect to the
Securities, a Security executed by the Company and delivered by
the Trustee to the Depositary or pursuant to the Depositary's
instruction, all in accordance with the Indenture, which shall be
registered in the name of the Depositary or its nominee.
"Indebtedness for Money Borrowed" shall mean any
obligation of, or any obligation guaranteed by, the Company for
the repayment of borrowed money, whether or not evidenced by
bonds, debentures, notes or other written instruments.
"Indebtedness Ranking on a Parity with the Securities"
shall mean (i) Indebtedness for Money Borrowed, whether
outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, which specifically by its
terms ranks equally with and not prior to the Securities in the
right of payment upon the happening of any dissolution or winding
up or liquidation or reorganization of the Company, (ii) all
other debt securities, and guarantees in respect of those debt
securities, issued to any trust other than Patriot Capital Trust,
or a partnership or other entity affiliated with the Company that
is a financing vehicle of the Company (a "financing entity") in
connection with the issuance by such financing entity of equity
securities or other securities guaranteed by the Company pursuant
to an instrument that ranks pari passu with or junior in right of
payment to the Capital Securities Guarantee.
"Indebtedness Ranking Junior to the Securities" shall
mean any Indebtedness for Money Borrowed, whether outstanding on
the date of execution of this Indenture or hereafter created,
assumed or incurred, which specifically by its terms ranks junior
to and not equally with or prior to the Securities (and any other
Indebtedness Ranking on a Parity with the Securities) in right of
payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company. The securing of
any Indebtedness for Money Borrowed of the Company, otherwise
constituting Indebtedness Ranking on a Parity with the Securities
or Indebtedness Ranking Junior to the Securities, as the case may
be, shall not be deemed to prevent such Indebtedness for Money
Borrowed from constituting Indebtedness Ranking on a Parity with
the Securities or Indebtedness Ranking Junior to the Securities,
as the case may be.
"Indenture" shall mean this instrument as originally
executed or, if amended as herein provided, as so amended.
"Initial Optional Redemption Date" means June 1, 2007.
"Interest Payment Date" shall have the meaning set
forth in Section 2.06.
"Liquidated Damages" shall have the meaning set forth
in the Registration Rights Agreement.
"Maturity Date" shall mean June 1, 2027.
"Mortgage" shall mean and include any mortgage, pledge,
lien, security interest, conditional sale or other title
retention agreement or other similar encumbrance.
"Non Book-Entry Capital Securities" shall have the
meaning set forth in Section 2.05.
"Officers" shall mean any of the Chairman, a Vice
Chairman, the Chief Executive Officer, the President, an
Executive Vice President, a Vice President, the Treasurer, the
Comptroller, the Secretary or an Assistant Secretary of the
Company.
"Officers' Certificate" shall mean a certificate signed
by two Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of
counsel, who may be an employee of the Company, and who shall be
acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set
forth in Section 14.02.
"Other Debentures" means all junior subordinated
debentures issued by the Company from time to time and sold to
trusts to be established by the Company (if any), in each case
similar to the Trust.
"Other Guarantees" means all guarantees to be issued by
the Company with respect to capital securities (if any) and
issued to other trusts to be established by the Company (if any),
in each case similar to the Trust.
The term "Outstanding" when used with reference to
Securities, shall, subject to the provisions of Section 7.04,
mean, as of any particular time, all Securities authenticated and
delivered by the Trustee or the Authenticating Agent under this
Indenture, except
(a) Securities theretofore cancelled by the Trustee or
the Authenticating Agent or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment
or redemption of which moneys in the necessary
amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the
Company) or shall have been set aside and
segregated in trust by the Company (if the Company
shall act as its own paying agent); provided that,
if such Securities, or portions thereof, are to be
redeemed prior to maturity thereof, notice of such
redemption shall have been given as in Article XIV
provided or provision satisfactory to the Trustee
shall have been made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the
Trustee is presented that any such Securities are
held by bona fide holders in due course.
"Patriot Capital Trust" or the "Trust" shall mean
Patriot Capital Trust I, a Delaware business trust created for
the purpose of issuing its undivided beneficial interests in
connection with the issuance of Securities under this Indenture.
"Person" shall mean any individual, corporation,
estate, partnership, joint venture, association, joint-stock
company, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt and as that evidenced by such particular Security; and, for
the purposes of this definition, any Security authenticated and
delivered under Section 2.08 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar
term, shall mean the office of the Trustee, at which at any
particular time its corporate trust business shall be
administered.
"Purchase Agreement" shall mean the Purchase Agreement
dated June 2, 1997 among the Company, Patriot Capital Trust and
the Initial Purchasers named therein.
"Property Trustee" shall have the same meaning as set
forth in the Trust Agreement.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Company.
"Redemption Price" means the Special Event Redemption
Price or the Optional Redemption Price, as the context requires.
"Reference Treasury Dealer" means a nationally
recognized U.S. Government securities dealer in New York City
selected by the Company.
"Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date
pursuant to Section 14.01, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. New York City time on the third
Business Day preceding such redemption date.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated as of June 5, 1997, by and among the
Company, the Trust and the Initial Purchasers named therein as
such agreement may be amended, modified or supplemented from time
to time.
"Regulatory Capital Event" means that the Company shall
have become, or pursuant to law or regulation will become within
180 days, subject to capital requirements under which, in the
written opinion of independent bank regulatory counsel
experienced in such matters, the Capital Securities would not
constitute Tier 1 Capital applied as if the Company (or its
successor) were a bank holding company (as that concept is used
in the guidelines or regulations issued by the Federal Reserve as
of June 1, 1997) or its then equivalent; provided, however, that
the distribution of the Securities in connection with the
liquidation of Patriot Capital Trust by the Company, as sponsor,
shall not in and of itself constitute a Regulatory Capital Event
unless such liquidation shall have occurred in connection with a
Tax Event.
"Responsible Officer" shall mean the chairman or any
vice chairman of the board of directors, the chairman or any vice
chairman of the executive committee of the board of directors,
the chairman of the trust committee, the president, any vice
president, the cashier, any assistant cashier, the secretary, the
treasurer, any assistant treasurer, any trust officer or
assistant trust officer, the controller or any assistant
controller or any other officer or assistant officer of the
Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge
of and familiarity with the particular subject.
"Restricted Security" shall mean Securities that bear
or are required to bear the legends relating to transfer
restrictions under the Securities Act set forth in Exhibit A
hereto.
"Rule 144A" means Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or under any
similar rule or regulation hereafter adopted by the Commission.
"Securities" means, collectively, the Series A
Securities and the Series B Securities.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Securityholder", or "Holder of Securities", or other
similar terms, shall mean any Person in whose name at the time a
particular Security is registered on the register kept by the
Company or the Trustee for that purpose in accordance with the
terms hereof.
"Security Register" shall mean (i) prior to a
Dissolution Event, the list of holders provided to the Trustee
pursuant to Section 4.01, and (ii) following a Dissolution Event,
any security register maintained by a security registrar for the
Securities appointed by the Company following the execution of a
supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness for
Money Borrowed, whether outstanding on the date of execution of
this Indenture or hereafter created, assumed or incurred, except
Indebtedness Ranking on a Parity with the Securities or
Indebtedness Ranking Junior to the Securities, and any deferrals,
renewals or extensions of such Senior Indebtedness.
"Series A Securities" means the Company's Series A
10.30% Junior Subordinated Deferrable Interest Debentures due
June 1, 2027, as authenticated and issued under this Indenture.
"Series B Securities" means the Company's Series B
10.30% Junior Subordinated Deferrable Interest Debentures due
June 1, 2027, as authenticated and issued under this Indenture.
"Special Event" means either a Regulatory Capital Event
or a Tax Event.
"Special Event Redemption Price" shall mean, with
respect to any redemption of the Securities pursuant to
Section 14.01 hereof, an amount in cash equal to the greater of
(i) 100% of the principal amount to be redeemed or (ii) as
determined by a Quotation Agent, the sum of the present values of
the principal amount and premium payable with respect to an
Optional Redemption of the Securities on the Initial Optional
Redemption Date, together with scheduled payments of interest on
the Securities from the prepayment date to and including the
Initial Optional Redemption Date, discounted to the prepayment
date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Adjusted Treasury Rate, plus, in
the case of each of clauses (i) and (ii), accumulated but unpaid
interest thereon, including Compounded Interest and Additional
Sums, if any, to the date of such redemption.
"Subsidiary" shall mean with respect to any Person,
(i) any corporation at least a majority of the outstanding voting
stock of which is owned, directly or indirectly, by such Person
or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be
owned by such Person, or by one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries and (iii) any
limited partnership of which such Person or any of its
Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests,
participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by
reason of the occurrence of a contingency.
"Trust Agreement" means the Amended and Restated
Declaration of Trust of Patriot Capital Trust, dated as of
June 5, 1997.
"Tax Event" shall mean the receipt by Patriot Capital
Trust and the Company of an opinion of counsel experienced in
such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein or
as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after June 5, 1997,
there is more than an insubstantial risk that (i) Patriot Capital
Trust is, or will be within 90 days of the date of such opinion,
subject to United States Federal income tax with respect to
income received or accrued on the Securities, (ii) interest
payable by the Company on the Securities is not, or within 90
days of the date of such opinion, will not be, deductible by the
Company, in whole or in part, for United States Federal income
tax purposes, or (iii) Patriot Capital 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.
"Trustee" shall mean the Person identified as "Trustee"
in the first paragraph hereof, and, subject to the provisions of
Article VI hereof, shall also include its successors and assigns
as Trustee hereunder. The term "Trustee" as used with respect to
a particular series of the Securities shall mean the trustee with
respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust
Indenture Act of 1939 as in force at the date of execution of
this Indenture, except as provided in Section 9.03.
"Trust Securities" shall mean the Capital Securities
and the Common Securities, collectively.
"U.S. Government Obligations" shall mean securities
that are (i) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America,
which, in either case under clauses (i) or (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or
a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A,
the terms of which are incorporated in and made a part of this
Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to
which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be
issued in denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company
by manual or facsimile signature. If an Officer whose signature
is on a Security no longer holds that office at the time the
Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by
the manual signature of the Trustee. The signature of the
Trustee shall be conclusive evidence that the Security has been
authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Securities shall
be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate
for original issue up to, and the aggregate principal amount of
Securities outstanding at any time may not exceed $19,588,000
aggregate principal amount of the Securities, except as provided
in Sections 2.07, 2.08, 2.09 and 14.05. The series of Securities
to be initially issued hereunder shall be the Series A
Securities.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities
shall be issued in fully registered certificated form without
interest coupons. Principal of, premium, if any, and interest on
the Securities issued in certificated form will be payable, the
transfer of such Securities will be registrable and such
Securities will be exchangeable for Securities bearing identical
terms and provisions at the office or agency of the Company
maintained for such purpose under Section 3.02; provided,
however, that payment of interest with respect to Securities
(other than a Global Security) may be made at the option of the
Company (i) by check mailed to the holder at such address as
shall appear in the Security Register or (ii) by transfer to an
account maintained by the Person entitled thereto, provided that
proper transfer instructions have been received in writing by the
relevant record date. Notwithstanding the foregoing, so long as
the holder of any Securities is the Property Trustee, the payment
of the principal of, premium, if any, interest (including
Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, on such Securities held by the Property Trustee
will be made at such place and to such account as may be
designated by the Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this
Section 2.04 or as otherwise determined by the Company in
accordance with applicable law, each Security shall bear the
applicable legends relating to restrictions on transfer pursuant
to the securities laws in substantially the form set forth on
Exhibit A hereto.
(b) In the event of an Exchange Offer, the Company
shall issue and the Trustee shall, upon Company Order,
authenticate Series B Securities in exchange for Series A
Securities accepted for exchange in the Exchange Offer, which
Series B Securities shall not bear the legends required by
subsection (a) above, in each case unless the holder of such
Series A Securities is either (A) a broker dealer who purchased
such Series A Securities directly from the Company for resale
pursuant to Rule 144A or any other available exemption under the
Securities Act, (B) a Person participating in the distribution of
the Series A Securities or (C) a Person who is an affiliate (as
defined in Rule 144 under the Securities Act) of the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-
entry form, the related Definitive Securities shall be
presented to the Trustee (if an arrangement with the
Depositary has been maintained) by the Property Trustee in
exchange for one or more Global Securities (as may be
required pursuant to Section 2.07) in an aggregate principal
amount equal to the aggregate principal amount of all
outstanding Securities, to be registered in the name of the
Depositary, or its nominee, and delivered by the Trustee to
the Depositary for crediting to the accounts of its
participants pursuant to the instructions of the
Administrative Trustees; the Company upon any such
presentation shall execute one or more Global Securities in
such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery in accordance with
this Indenture; and payments on the Securities issued as a
Global Security will be made to the Depositary; and
(ii) if any Capital Securities are held in
certificated form, the related Definitive Securities may be
presented to the Trustee by the Property Trustee and any
Capital Security certificate which represents Capital
Securities other than Capital Securities in book-entry form
("Non Book-Entry Capital Securities") will be deemed to
represent beneficial interests in Securities presented to
the Trustee by the Property Trustee having an aggregate
principal amount equal to the aggregate liquidation amount
of the Non Book-Entry Capital Securities until such Capital
Security certificates are presented to the Security
Registrar for transfer or reissuance, at which time such
Capital Security certificates will be cancelled and a
Security, registered in the name of the holder of the
Capital Security certificate or the transferee of the holder
of such Capital Security certificate, as the case may be,
with an aggregate principal amount equal to the aggregate
liquidation amount of the Capital Security certificate
cancelled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in accordance
with this Indenture. Upon the issuance of such Securities,
Securities with an equivalent aggregate principal amount
that were presented by the Property Trustee to the Trustee
will be deemed to have been cancelled.
(b) The Global Securities shall represent the
aggregate amount of outstanding Securities from time to time
endorsed thereon; provided, that the aggregate amount of
outstanding Securities represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the
amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee, in
accordance with instructions given by the Company as required by
this Section 2.05.
(c) The Global Securities may be transferred, in whole
but not in part, only to the Depositary, another nominee of the
Depositary, or to a successor Depositary selected or approved by
the Company or to a nominee of such successor Depositary.
(d) If at any time the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary or the
Depositary has ceased to be a clearing agency registered under
the Exchange Act, and a successor Depositary is not appointed by
the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, the
Company will execute, and the Trustee, upon receipt of a Company
Order, will authenticate and make available for delivery the
Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the
Global Security in exchange for such Global Security. If there
is an Event of Default, the Depositary shall have the right to
exchange the Global Securities for Definitive Securities. In
addition, the Company may at any time determine that the
Securities shall no longer be represented by a Global Security.
In the event of such an Event of Default or such a determination,
the Company shall execute, and subject to Section 2.07, the
Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company and a Company Order, will
authenticate and make available for delivery the Definitive
Securities, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global
Security in exchange for such Global Security. Upon the exchange
of the Global Security for such Definitive Securities, in
authorized denominations, the Global Security shall be cancelled
by the Trustee. Such Definitive Securities issued in exchange
for the Global Security shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver
such Definitive Securities to the Depositary for delivery to the
Persons in whose names such Definitive Securities are so
registered.
SECTION 2.06. Interest.
(a) Each outstanding Security will bear interest at
the rate of 10.30% per annum (the "Coupon Rate") from the most
recent date to which interest has been paid or duly provided for
or, if no interest has been paid or duly provided for, from
June 5, 1997, until the principal thereof becomes due and
payable, and at the Coupon Rate on any overdue principal (and
premium, if any) and (to the extent that payment of such interest
is enforceable under applicable law) on any overdue installment
of interest, compounded semi-annually, payable (subject to the
provisions of Article XVI) semi-annually in arrears on June 1 and
December 1 of each year (each, an "Interest Payment Date")
commencing on December 1, 1997, to the Person in whose name such
Security or any predecessor Security is registered, at the close
of business on the regular record date for such interest
installment, which shall be the 15th day of the month preceding
the month in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months. In the event
that any Interest Payment Date falls on a day that is not a
Business Day, then payment of interest payable on such date will
be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such
delay), except that if such next succeeding Business Day falls in
the next succeeding calendar year, then such payment shall be
made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
(c) During such time as the Property Trustee is the
holder of any Securities, the Company shall pay any additional
amounts on the Securities as may be necessary in order that the
amount of Distributions then due and payable by the Patriot
Capital Trust on the outstanding Trust Securities shall not be
reduced as a result of any additional taxes, duties and other
governmental charges to which Patriot Capital Trust has become
subject as a result of a Tax Event ("Additional Sums").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A
Securities, and those Series B Securities with respect to which
any Person described in Section 2.04(b)(A), (B) or (C) is the
beneficial owner, may not be transferred except in compliance
with the legend contained in Exhibit A unless otherwise
determined by the Company in accordance with applicable law.
Upon any distribution of the Securities following a Dissolution
Event, the Company and the Trustee shall enter into a
supplemental indenture pursuant to Section 9.01 to provide for
the transfer restrictions and procedures with respect to the
Securities substantially similar to those contained in the Trust
Agreement to the extent applicable in the circumstances existing
at such time.
(ii) The Securities will be issued and may be
transferred only in blocks having an aggregate principal amount
of not less than $100,000. Any such transfer of the Securities
in a block having an aggregate principal amount of less than
$100,000 shall be deemed to be voided and of no legal effect
whatsoever. Any such transferee shall be deemed not to be a
holder of such Securities for any purpose, including, but not
limited to the receipt of payments on such Securities, and such
transferee shall be deemed to have no interest whatsoever in such
Securities.
(b) General Provisions Relating to Transfers and
Exchanges. To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate
Definitive Securities and Global Securities at the Trustee's
request. All Definitive Securities and Global Securities issued
upon any registration of transfer or exchange of Definitive
Securities or Global Securities shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Definitive Securities or
Global Securities surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith.
The Company shall not be required to (i) issue,
register the transfer of or exchange Securities during a period
beginning at the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of
Securities for redemption under Article XIV hereof and ending at
the close of business on the day of such mailing; or
(ii) register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
Prior to due presentment for the registration of a
transfer of any Security, the Trustee, any Agent and the Company
may deem and treat the Person in whose name any Security is
registered as the absolute owner of such Security for the purpose
of receiving payment of principal of and premium, if any, and
interest on such Securities, and neither the Trustee, any Agent
nor the Company shall be affected by notice to the contrary.
(c) Exchange of Series A Securities for Series B
Securities. The Series A Securities may be exchanged for
Series B Securities pursuant to the terms of the Exchange Offer.
The Trustee shall make the exchange as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the
transactions contemplated by the Exchange Offer
have been consummated; and
(B) the principal amount of Series A Securities
properly tendered in the Exchange Offer that are
represented by a Global Security and the principal
amount of Series A Securities properly tendered in
the Exchange Offer that are represented by
Definitive Securities, the name of each holder of
such Definitive Securities, the principal amount
properly tendered in the Exchange Offer by each
such holder and the name and address to which
Definitive Securities for Series B Securities
shall be registered and sent for each such holder.
The Trustee, upon receipt of (i) such Officers'
Certificate, (ii) an Opinion of Counsel (x) to the effect that
the Series B Securities have been registered under Section 5 of
the Securities Act and the Indenture has been qualified under the
Trust Indenture Act and (y) with respect to the matters set forth
in Section 3(p) of the Registration Rights Agreement and (iii) a
Company Order, shall authenticate (A) a Global Security
representing Series B Securities in aggregate principal amount
equal to the aggregate principal amount of Series A Securities
represented by a Global Security indicated in such Officers'
Certificate as having been properly tendered and (B) Definitive
Securities representing Series B Securities registered in the
names of, and in the principal amounts indicated in, such
Officers' Certificate.
If the principal amount of the Global Security for the
Series B Securities is less than the principal amount of the
Global Security for the Series A Securities, the Trustee shall
make an endorsement on such Global Security for Series A
Securities indicating a reduction in the principal amount
represented thereby.
The Trustee shall deliver such Definitive Securities
representing Series B Securities to the holders thereof as
indicated in such Officers' Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the
Trustee, or the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security,
the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements for
replacements of Securities are met. An indemnity bond must be
supplied by the holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any
agent thereof or any authenticating agent from any loss that any
of them may suffer if a Security is replaced. The Company or the
Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the
Company and shall be entitled to all of the benefits of this
Indenture equally and proportionately with all other Securities
duly issued hereunder.
SECTION 2.09. Temporary Securities.
Pending the preparation of Definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and make available for delivery, temporary
Securities that are printed, lithographed, typewritten,
mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Definitive
Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company shall
cause Definitive Securities to be prepared without unreasonable
delay. The Definitive Securities shall be printed, lithographed
or engraved, or provided by any combination thereof, or in any
other manner permitted by the rules and regulations of any
applicable securities exchange, all as determined by the officers
executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be
exchangeable for Definitive Securities upon surrender of the
temporary Securities at the office or agency maintained by the
Company for such purpose pursuant to Section 3.02 hereof, without
charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in
exchange therefor the same aggregate principal amount of
Definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be
entitled to the same benefits under this Indenture as Definitive
Securities.
SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the
Trustee for cancellation. The Trustee and no one else shall
cancel all Securities surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall retain
or destroy cancelled Securities in accordance with its normal
practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to
it. The Company may not issue new Securities to replace
Securities that have been redeemed or paid or that have been
delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
Any interest on any Security that is payable, but is
not punctually paid or duly provided for, on any Interest Payment
Date (herein called "Defaulted Interest") shall forthwith cease
to be payable to the holder on the relevant regular record date
by virtue of having been such holder; and such Defaulted Interest
shall be paid by the Company, at its election, as provided in
clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted
Interest on Securities to the Persons in whose names such
Securities (or their respective Predecessor Securities) are
registered at the close of business on a special record date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Security and the date of
the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon
the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall not be more than 15
nor less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such special record
date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed,
first class postage prepaid, to each Securityholder at his
or her address as it appears in the Security Register, not
less than 10 days prior to such special record date. Notice
of the proposed payment of such Defaulted Interest and the
special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names such Securities (or their respective
Predecessor Securities) are registered on such special
record date and shall be no longer payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted
Interest on any Securities in any other lawful manner not
inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon
such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
SECTION 2.12. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to
Securityholders; provided that any such notice may state that no
representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Trustee of
any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and
Interest.
The Company covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or
cause to be paid the principal of and premium, if any, and
interest on the Securities at the place, at the respective times
and in the manner provided herein. Except as provided in
Section 2.03, each installment of interest on the Securities may
be paid by mailing checks for such interest payable to the order
of the holder of Security entitled thereto as they appear in the
Security Register. The Company further covenants to pay any and
all amounts, including, without limitation, Additional Sums, as
may be required pursuant to Section 2.06(c), Liquidated Damages,
if any, on the dates and in the manner required under the
Registration Rights Agreement and Compounded Interest, as may be
required pursuant to Section 16.01.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding,
the Company will maintain in the Borough of Manhattan, The City
of New York, an office or agency where the Securities may be
presented for payment, an office or agency where the Securities
may be presented for registration of transfer and for exchange as
in this Indenture provided and an office or agency where notices
and demands to or upon the Company in respect of the Securities
or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or
agency and of any change of location thereof. Until otherwise
designated from time to time by the Company in a notice to the
Trustee, any such office or agency for all of the above purposes
shall be the Principal Office of the Trustee. In case the
Company shall fail to maintain any such office or agency in the
Borough of Manhattan, The City of New York, or shall fail to give
such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be
served at the Principal Office of the Trustee.
In addition to any such office or agency, the Company
may from time to time designate one or more offices or agencies
outside the Borough of Manhattan, The City of New York, where the
Securities may be presented for payment, registration of transfer
and for exchange in the manner provided in this Indenture, and
the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain any such office
or agency in the Borough of Manhattan, The City of New York, for
the purposes above mentioned. The Company will give to the
Trustee prompt written notice of any such designation or
rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in
Trustee's Office.
The Company, whenever necessary to avoid or fill a
vacancy in the office of Trustee, will appoint, in the manner
provided in Section 6.10, a Trustee, so that there shall at all
times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other
than the Trustee with respect to the Securities,
it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the
provision of this Section 3.04,
(1) that it will hold all sums held by it as such
agent for the payment of the principal of and
premium, if any, or interest on the
Securities (whether such sums have been paid
to it by the Company or by any other obligor
on the Securities) in trust for the benefit
of the holders of the Securities; and
(2) that it will give the Trustee notice of any
failure by the Company (or by any other
obligor on the Securities) to make any
payment of the principal of and premium or
interest (including Additional Sums and
Compounded Interest, if any) and Liquidated
Damages, if any, on the Securities when the
same shall be due and payable.
(b) If the Company shall act as its own paying agent,
it will, on or before each due date of the
principal of and premium, if any, or interest on
the Securities, set aside, segregate and hold in
trust for the benefit of the holders of the
Securities a sum sufficient to pay such principal,
premium or interest so becoming due and will
notify the Trustee of any failure to take such
action and of any failure by the Company (or by
any other obligor under the Securities) to make
any payment of the principal of and premium, if
any, or interest on the Securities when the same
shall become due and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for
the purpose of obtaining a satisfaction and
discharge with respect to the Securities
hereunder, or for any other reason, pay or cause
to be paid to the Trustee all sums held in trust
for such Securities by the Trustee or any paying
agent hereunder, as required by this Section 3.04,
such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in
trust as provided in this Section 3.04 is subject
to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before
120 days after the end of each fiscal year in each year,
commencing with the first fiscal year ending after the date
hereof, so long as Securities are outstanding hereunder, an
Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting
officer of the Company stating that in the course of the
performance by the signers of their duties as officers of the
Company they would normally have knowledge of any default by the
Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers
have knowledge and the nature thereof.
SECTION 3.06. Compliance with Consolidation
Provisions.
The Company will not, while any of the Securities
remain outstanding, consolidate with, or merge into, or merge
into itself, or sell or convey all or substantially all of its
property to any other Person unless the provisions of Article X
hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital
stock (which includes common and preferred stock) or (ii) make
any payment of principal, interest or premium, if any, on or
repay or repurchase or redeem any debt securities of the Company
(including any Other Debentures) that rank pari passu with or
junior in right of payment to the Securities or (iii) make any
guarantee payments with respect to any guarantee by the Company
of the debt securities of any Subsidiary of the Company
(including any Other Guarantees) if such guarantee ranks pari
passu or junior in right of payment to the Securities (other than
(a) dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, Common Stock of
the Company, (b) any declaration of a dividend in connection with
the implementation of a stockholder's rights plan, or the
issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Capital Securities Guarantee, (d) as a
result of a reclassification of the Company's capital stock or
the exchange or the conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock; (e) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the
security being converted or exchanged; and (f) purchases of
Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors,
officers or employees or any of the Company's dividend
reinvestment plans) if at such time (i) there shall have occurred
any event of which the Company has actual knowledge that (a) is
or, with the giving of notice or the lapse of time, or both,
would constitute an Event of Default and (b) in respect of which
the Company shall not have taken reasonable steps to cure,
(ii) if such Securities are held by the Property Trustee, the
Company shall be in default with respect to its payment
obligations under the Capital Securities Guarantee or (iii) the
Company shall have given notice of its election of the exercise
of its right to extend the interest payment period pursuant to
Section 16.01 and any such extension shall be continuing.
SECTION 3.08. Covenants as to Patriot Capital Trust
In the event Securities are issued to Patriot Capital
Trust or a trustee of such trust in connection with the issuance
of Trust Securities by Patriot Capital Trust, for so long as such
Trust Securities remain outstanding, the Company (i) will
maintain 100% direct or indirect ownership of the Common
Securities of Patriot Capital Trust; provided, however, that any
successor of the Company, permitted pursuant to Article X, may
succeed to the Company's ownership of such Common Securities,
(ii) will not cause, as sponsor of Patriot Capital Trust, or
permit, as holder of the Common Securities, the dissolution,
winding-up or termination of the Trust, except in connection with
a distribution of the Securities as provided in the Trust
Agreement and in connection with certain mergers, consolidations
or amalgamations and (iii) will use its reasonable best efforts
to cause Patriot Capital Trust (a) to remain a business trust,
except in connection with a distribution of Securities to the
holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of Patriot Capital
Trust or certain mergers, consolidations or amalgamations, each
as permitted by the Trust Agreement of Patriot Capital Trust, and
(b) to otherwise continue to be treated as a grantor trust and
not an association taxable as a corporation for United States
federal income tax purposes.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of
the Securities to the Patriot Capital Trust and in connection
with the sale of the Trust Securities by the Patriot Capital
Trust, the Company, in its capacity as borrower with respect to
the Securities, shall:
(a) pay all costs and expenses relating to the
offering, sale and issuance of the Securities, including
commissions to the initial purchasers payable pursuant to the
Purchase Agreement, fees and expenses in connection with any
exchange offer, filing of a shelf registration statement or other
action to be taken pursuant to the Registration Rights Agreement
and compensation of the Trustee in accordance with the provisions
of Section 6.06;
(b) pay all costs and expenses of the Trust,
including, but not limited to, costs and expenses relating to the
organization of the Patriot Capital Trust, the offering, sale and
issuance of the Trust Securities (including commissions to the
initial purchasers in connection therewith), the fees and
expenses of the Property Trustee and the Delaware Trustee, the
costs and expenses relating to the operation of Patriot Capital
Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the
acquisition, financing, and disposition of assets of Patriot
Capital Trust;
(c) be primarily and fully liable for any
indemnification obligations arising with respect to the Trust
Agreement;
(d) pay any and all taxes (other than United States
withholding taxes attributable to Patriot Capital Trust or its
assets) and all liabilities, costs and expenses with respect to
such taxes of the Trust; and
(e) pay all other fees, expenses, debts and
obligations (other than in respect of the Trust Securities)
related to Patriot Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or
resignation of the Trustee, unless otherwise stated, the Company
shall pay to the Trustee all amounts accrued and owing to the
date of such termination, removal or resignation. Upon
termination of the Trust Agreement or the removal or resignation
of the Delaware Trustee or the Property Trustee, as the case may
be, pursuant to Section 5.7 of the Trust Agreement, the Company
shall pay to the Delaware Trustee or the Property Trustee, as the
case may be, all amounts accrued and owing to the date of such
termination, removal or resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish
or cause to be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date
for the Securities, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Securityholders as of such record
date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the
Company of any such request, a list of similar
form and content as of a date not more than 15
days prior to the time such list is furnished,
except that, no such lists need be furnished so long as
the Trustee is in possession thereof by reason of its
acting as Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form
as is reasonably practicable, all information as
to the names and addresses of the holders of the
Securities (1) contained in the most recent list
furnished to it as provided in Section 4.01 or
(2) received by it in the capacity of Securities
registrar (if so acting) hereunder. The Trustee
may destroy any list furnished to it as provided
in Section 4.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Securities
(hereinafter referred to as "applicants") apply in
writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has
owned a Security for a period of at least six
months preceding the date of such application, and
such application states that the applicants desire
to communicate with other holders of Securities or
with holders of all Securities with respect to
their rights under this Indenture and is
accompanied by a copy of the form of proxy or
other communication which such applicants propose
to transmit, then the Trustee shall within 5
Business Days after the receipt of such
application, at its election, either:
(1) afford such applicants access to the
information preserved at the time by the
Trustee in accordance with the provisions of
subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate
number of holders of all Securities, whose
names and addresses appear in the information
preserved at the time by the Trustee in
accordance with the provisions of subsection
(a) of this Section 4.02, and as to the
approximate cost of mailing to such
Securityholders the form of proxy or other
communication, if any, specified in such
application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee
shall, upon the written request of such
applicants, mail to each Securityholder whose name
and address appear in the information preserved at
the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02
a copy of the form of proxy or other communication
which is specified in such request with reasonable
promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision
for the payment, of the reasonable expenses of
mailing, unless within five days after such
tender, the Trustee shall mail to such applicants
and file with the Commission, together with a copy
of the material to be mailed, a written statement
to the effect that, in the opinion of the Trustee,
such mailing would be contrary to the best
interests of the holders of Securities of such
series or all Securities, as the case may be, or
would be in violation of applicable law. Such
written statement shall specify the basis of such
opinion. If the Commission, after opportunity for
a hearing upon the objections specified in the
written statement so filed, shall enter an order
refusing to sustain any of such objections or if,
after the entry of an order sustaining one or more
of such objections, the Commission shall find,
after notice and opportunity for hearing, that all
the objections so sustained have been met and
shall enter an order so declaring, the Trustee
shall mail copies of such material to all such
Securityholders with reasonable promptness after
the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of
any obligation or duty to such applicants
respecting their application.
(c) Each and every holder of Securities, by receiving
and holding the same, agrees with the Company and
the Trustee that neither the Company nor the
Trustee nor any paying agent shall be held
accountable by reason of the disclosure of any
such information as to the names and addresses of
the holders of Securities in accordance with the
provisions of subsection (b) of this Section 4.02,
regardless of the source from which such
information was derived, and that the Trustee
shall not be held accountable by reason of mailing
any material pursuant to a request made under said
subsection (b).
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the date on which
the Company is required to file the same with the
Commission, copies of the annual reports and of
the information, documents and other reports (or
copies of such portions of any of the foregoing as
said Commission may from time to time by rules and
regulations prescribe) which the Company may be
required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act;
or, if the Company is not required to file
information, documents or reports pursuant to
either of such sections, then to file with the
Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time
by the Commission, such of the supplementary and
periodic information, documents and reports which
may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and
registered on a national securities exchange as
may be prescribed from time to time in such rules
and regulations.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time
by said Commission, such additional information,
documents and reports with respect to compliance
by the Company with the conditions and covenants
provided for in this Indenture as may be required
from time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by
mail to all holders of Securities, as the names
and addresses of such holders appear upon the
Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any
information, documents and reports required to be
filed by the Company pursuant to subsections
(a) and (b) of this Section 4.03 as may be
required by rules and regulations prescribed from
time to time by the Commission.
(d) Delivery of such reports, information and
documents to the Trustee is for informational
purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any
information contained therein or determinable from
information contained therein, including the
Company's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to
rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule
144A under the Securities Act, the Company shall,
upon request, provide the information required by
clause (d)(4) thereunder to each Securityholder
and to each beneficial owner and prospective
purchaser of Securities identified by each
Securityholder of Restricted Securities, unless
such information is furnished to the Commission
pursuant to Section 13 or 15(d) of the Exchange
Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such
reports concerning the Trustee and its actions
under this Indenture as may be required pursuant
to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by
Section 313(a) of the Trust Indenture Act, the
Trustee shall, within sixty days after each
January 15 following the date of this Indenture,
commencing January 15, 1998, deliver to
Securityholders a brief report, dated as of such
January 15, which complies with the provisions of
such Section 313(a).
(b) A copy of each such report shall, at the time of
such transmission to Securityholders, be filed by
the Trustee with each stock exchange, if any, upon
which the Securities are listed, with the
Commission and with the Company. The Company will
promptly notify the Trustee when the Securities
are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall
constitute an Event of Default hereunder:
(a) default in the payment of any interest (including
Additional Sums and Compounded Interest, if any)
and Liquidated Damages, if any, upon any Security
or any Other Debentures when it becomes due and
payable, and continuance of such default for a
period of 30 days; provided, however, that a valid
extension of an interest payment period by the
Company in accordance with the terms hereof shall
not constitute a default in the payment of
interest for this purpose; or
(b) default in the payment of all or any part of the
principal of (or premium, if any, on) any Security
or any Other Debentures as and when the same shall
become due and payable either at maturity, upon
redemption, by declaration of acceleration of
maturity or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Company in this
Indenture in any material respect (other than a
covenant or warranty a default in whose
performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance
of such default or breach for a period of 90 days
after there has been given, by registered or
certified mail, to the Company by the Trustee or
to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the
outstanding Securities a written notice specifying
such default or breach and requiring it to be
remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of
the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the
Company or for any substantial part of its
property, or ordering the winding-up or
liquidation of its affairs and such decree or
order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under
any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an
involuntary case under any such law, or shall
consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar
official) of the Company or of any substantial
part of its property, or shall make any general
assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become
due.
If an Event of Default with respect to Securities at
the time outstanding occurs and is continuing, then in every such
case the Trustee or the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding may declare
the principal amount of all Securities to be due and payable
immediately, by a notice in writing to the Company (and to the
Trustee if given by the holders of the outstanding Securities),
and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the
Securities shall have been so declared due and payable, and
before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided,
(i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all matured installments of interest
(including Additional Sums and Compounded Interest, if any) and
Liquidated Damages, if any, upon all the Securities and the
principal of and premium, if any, on any and all Securities which
shall have become due otherwise than by acceleration (with
interest upon such principal and premium, if any, and, to the
extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest, at the same
rate as the rate of interest specified in the Securities to the
date of such payment or deposit) and (B) such amount as shall be
sufficient to cover reasonable compensation to the Trustee and
each predecessor Trustee, their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except
as a result of negligence or bad faith, and (ii) any and all
Events of Default under the Indenture, other than the non-payment
of the principal of the Securities which shall have become due
solely by such declaration of acceleration, shall have been
cured, waived or otherwise remedied as provided herein, then, in
every such case, the holders of a majority in aggregate principal
amount of the Securities then outstanding, by written notice to
the Company and to the Trustee, may rescind and annul such
declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment
or for any other reason or shall have been determined adversely
to the Trustee, then and in every such case the Company, the
Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and
all rights, remedies and powers of the Company, the Trustee and
the holders of the Securities shall continue as though no such
proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be
made in the payment of any installment of interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, upon any of the Securities as and when the same
shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall
be made in the payment of the principal of or premium, if any, on
any of the Securities as and when the same shall have become due
and payable, whether at maturity of the Securities or upon
redemption or by declaration or otherwise, then, upon demand of
the Trustee, the Company will pay to the Trustee, for the benefit
of the holders of the Securities, the whole amount that then
shall have become due and payable on all such Securities for
principal and premium, if any, or interest (including Additional
Sums and Compounded Interest, if any) and Liquidated Damages, if
any, or both, as the case may be, with interest upon the overdue
principal and premium, if any, and (to the extent that payment of
such interest is enforceable under applicable law and, if the
Securities are held by Patriot Capital Trust or a trustee of such
trust, without duplication of any other amounts paid by Patriot
Capital Trust or trustee in respect thereof) upon the overdue
installments of interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, at
the rate borne by the Securities; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to
the Trustee, its agents, attorneys and counsel, and any expenses
or liabilities incurred by the Trustee hereunder other than
through its negligence or bad faith.
In case the Company shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to
institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or
any other obligor on the Securities and collect in the manner
provided by law out of the property of the Company or any other
obligor on the Securities wherever situated the moneys adjudged
or decreed to be payable.
In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Company or any other
obligor on the Securities under Title 11, United States Code, or
any other applicable law, or in case a receiver or trustee shall
have been appointed for the property of the Company or such other
obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities, or
to the creditors or property of the Company or such other
obligor, the Trustee, irrespective of whether the principal of
the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of
this Section 5.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove
a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Securities and, in case of any
judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and
all advances made, by the Trustee and each predecessor Trustee,
except as a result of negligence or bad faith) and of the
Securityholders allowed in such judicial proceedings relative to
the Company or any other obligor on the Securities, or to the
creditors or property of the Company or such other obligor,
unless prohibited by applicable law and regulations, to vote on
behalf of the holders of the Securities in any election of a
trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or
person performing similar functions in comparable proceedings,
and to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute the same
after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is
hereby authorized by each of the Securityholders to make such
payments to the Trustee, and, in the event that the Trustee shall
consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except
as a result of negligence or bad faith.
Nothing herein contained shall be construed to
authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities
or the rights of any holder thereof or to authorize the Trustee
to vote in respect of the claim of any Securityholder in any such
proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the
Trustee without the possession of any of the Securities, or the
production thereof on any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable
benefit of the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party) the Trustee
shall be held to represent all the holders of the Securities, and
it shall not be necessary to make any holders of the Securities
parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by
Trustee.
Any moneys collected by the Trustee shall be applied in
the order following, at the date or dates fixed by the Trustee
for the distribution of such moneys, upon presentation of the
Securities in respect of which moneys have been collected, and
stamping thereon the payment, if only partially paid, and upon
surrender thereof if fully paid:
First: To the payment of costs and expenses of
collection applicable to the Securities and reasonable
compensation to the Trustee, its agents, attorneys and counsel,
and of all other expenses and liabilities incurred, and all
advances made, by the Trustee except as a result of its
negligence or bad faith;
Second: To the payment of all Senior Indebtedness of
the Company if and to the extent required by Article XV;
Third: In case the principal of the outstanding
Securities in respect of which moneys have been collected shall
not have become due and be unpaid, to the payment of the amounts
then due and unpaid upon Securities for principal of (and
premium, if any) and interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, on
the Securities, in respect of which or for the benefit of which
money has been collected, ratably, without preference of priority
of any kind, according to the amounts due on such Securities for
principal (and premium, if any) and interest, respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by
virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture or for the appointment
of a receiver or trustee, or for any other remedy hereunder,
unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance
thereof with respect to the Securities specifying such Event of
Default, as hereinbefore provided, and unless also the holders of
not less than 25% in aggregate principal amount of the Securities
then outstanding shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and
the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such
action, suit or proceeding, it being understood and intended, and
being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that
no one or more holders of Securities shall have any right in any
manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any
other holder of Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of
all holders of Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive
payment of the principal of (premium, if any) and interest
(including Additional Sums and Compounded Interest, if any) and
Liquidated Damages, if any, on such Security, on or after the
same shall have become due and payable, or to institute suit for
the enforcement of any such payment, shall not be impaired or
affected without the consent of such holder and by accepting a
Security hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Security with every
other such taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner
whatsoever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of the
holders of any other Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of
all holders of Securities. For the protection and enforcement of
the provisions of this Section, each and every Securityholder and
the Trustee shall be entitled to such relief as can be given
either at law or in equity.
The Company and the Trustee acknowledge that pursuant
to the Trust Agreement, the holders of Capital Securities are
entitled, in the circumstances and subject to the limitations set
forth therein, to commence a Direct Action with respect to any
Event of Default under this Indenture and the Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to
Securities and is continuing, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by
proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this
Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the
Trustee or to the Securityholders shall, to the extent permitted
by law, be deemed cumulative and not exclusive of any other
powers and remedies available to the Trustee or the holders of
the Securities, by judicial proceedings or otherwise, to enforce
the performance or observance of the covenants and agreements
contained in this Indenture or otherwise established with respect
to the Securities, and no delay or omission of the Trustee or of
any holder of any of the Securities to exercise any right or
power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 5.04, every
power and remedy given by this Article V or by law to the Trustee
or to the Securityholders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount
of the Securities at the time outstanding shall have the right to
direct the time, method, and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee; provided, however, that
(subject to the provisions of Section 6.01) the Trustee shall
have the right to decline to follow any such direction if the
Trustee shall determine that the action so directed would be
unjustly prejudicial to the holders not taking part in such
direction or if the Trustee being advised by counsel determines
that the action or proceeding so directed may not lawfully be
taken or if the Trustee in good faith by its board of directors
or trustees, executive committee, or a trust committee of
directors or trustees and/or Responsible Officers shall determine
that the action or proceedings so directed would involve the
Trustee in personal liability. Prior to any declaration
accelerating the maturity of the Securities, the holders of a
majority in aggregate principal amount of the Securities at the
time outstanding may on behalf of the holders of all of the
Securities waive any past default or Event of Default and its
consequences except a default (a) in the payment of principal of
or premium, if any, or interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, on
any of the Securities or (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the
consent of the holder of each Security affected; provided,
however, that if the Securities are held by the Property Trustee,
such waiver or modification to such waiver shall not be effective
until the holders of a majority in aggregate liquidation amount
of Trust Securities shall have consented to such waiver or
modification to such waiver; provided further, that if the
consent of the holder of each outstanding Security is required,
such waiver shall not be effective until each holder of the Trust
Securities shall have consented to such waiver. Upon any such
waiver, the default covered thereby shall be deemed to be cured
for all purposes of this Indenture and the Company, the Trustee
and the holders of the Securities shall be restored to their
former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other default or impair
any right consequent thereon. Whenever any default or Event of
Default hereunder shall have been waived as permitted by this
Section 5.07, said default or Event of Default shall for all
purposes of the Securities and this Indenture be deemed to have
been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
(a) The Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities mail to
all Securityholders, as the names and addresses of such holders
appear upon the Security Register, notice of all defaults known
to the Trustee, unless such defaults shall have been cured before
the giving of such notice (the term "defaults" for the purpose of
this Section 5.08 being hereby defined to be the events specified
in clauses (a), (b), (c), (d) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and
irrespective of the giving of written notice specified in clause
(c) of Section 5.01); and provided that, except in the case of
default in the payment of the principal of or premium, if any, or
interest (including Additional Sums and Compounded Interest, if
any) and Liquidated Damages, if any, on any of the Securities,
the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such
notice is in the interests of the Securityholders; and provided
further, that in the case of any default of the character
specified in Section 5.01(c) no such notice to Securityholders
shall be given until at least 60 days after the occurrence
thereof but shall be given within 90 days after such occurrence.
(b) Within five Business Days after the occurrence of
any Event of Default actually known to the Trustee, the Trustee
shall transmit notice of such Event of Default to all
Securityholders, unless such Event of Default shall have been
cured or waived.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any
party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any
suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in aggregate principal amount of the
Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on any Security against the Company on or after
the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default
which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture.
In case an Event of Default has occurred (which has not been
cured or waived) the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct,
except that
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of
Default which may have occurred
(1) the duties and obligations of the Trustee
shall be determined solely by the express
provisions of this Indenture, and the Trustee
shall not be liable except for the
performance of such duties and obligations as
are specifically set forth in this Indenture,
and no implied covenants or obligations shall
be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and
the correctness of the opinions expressed
therein, upon any certificates or opinions
furnished to the Trustee and conforming to
the requirements of this Indenture; but, in
the case of any such certificates or opinions
which by any provision hereof are
specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not
they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible
Officer or Officers, unless it shall be proved
that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in
good faith, in accordance with the direction of
the Securityholders pursuant to Section 5.07,
relating to the time, method and place of
conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to
it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any
resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order,
bond, note, debenture or other paper or document
believed by it to be genuine and to have been
signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the
Company mentioned herein may be sufficiently
evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein
specifically prescribed); and any Board Resolution
may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant
Secretary of the Company;
(c) the Trustee may consult with counsel of its
selection and any advice or Opinion of Counsel
shall be full and complete authorization and
protection in respect of any action taken or
suffered omitted by it hereunder in good faith and
in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it
by this Indenture at the request, order or
direction of any of the Securityholders, pursuant
to the provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee
reasonable security or indemnity against the
costs, expenses and liabilities which may be
incurred therein or thereby;
(e) the Trustee shall not be liable for any action
taken or omitted by it in good faith and believed
by it to be authorized or within the discretion or
rights or powers conferred upon it by this
Indenture; nothing contained herein shall,
however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default (that
has not been cured or waived), to exercise such of
the rights and powers vested in it by this
Indenture, and to use the same degree of care and
skill in their exercise, as a prudent man would
exercise or use under the circumstances in the
conduct of his own affairs;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in
any resolution, certificate, statement,
instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, coupon
or other paper or document, unless requested in
writing to do so by the holders of a majority in
aggregate principal amount of the outstanding
Securities; provided, however, that if the payment
within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be
incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expense
or liability as a condition to so proceeding; and
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder
either directly or by or through agents (including
any Authenticating Agent) or attorneys, and the
Trustee shall not be responsible for any
misconduct or negligence on the part of any such
agent or attorney appointed by it with due care.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities
(except in the certificate of authentication of the Trustee or
the Authenticating Agent) shall be taken as the statements of the
Company and the Trustee and the Authenticating Agent assume no
responsibility for the correctness of the same. The Trustee and
the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities.
The Trustee and the Authenticating Agent shall not be accountable
for the use or application by the Company of any Securities or
the proceeds of any Securities authenticated and delivered by the
Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May
Own Securities.
The Trustee or any Authenticating Agent or any paying
agent or any transfer agent or any Security registrar, in its
individual or any other capacity, may become the owner or pledgee
of Securities with the same rights it would have if it were not
Trustee, Authenticating Agent, paying agent, transfer agent or
Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys
received by the Trustee or any paying agent shall, until used or
applied as herein provided, be held in trust for the purpose for
which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee and any
paying agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in
writing with the Company. So long as no Event of Default shall
have occurred and be continuing, all interest allowed on any such
moneys shall be paid from time to time upon the written order of
the Company, signed by the Chairman of the Board of Directors,
the President or a Vice President or the Treasurer or an
Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as issuer of Securities under this
Indenture, covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation
as shall be agreed to in writing between the Company and the
Trustee (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and
the Company will pay or reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred
or made by the Trustee in accordance with any of the provisions
of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or
advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee or any
predecessor Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all
loss, damage, claim, liability or expense including taxes (other
than taxes based on the income of the Trustee) incurred without
negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of defending itself
against any claim of liability in the premises. The obligations
of the Company under this Section 6.06 to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be
secured by a lien prior to that of the Securities upon all
property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of
particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d)
or Section 5.01(e), the expenses (including the reasonable
charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration
under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the
termination of this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or omitting any
action hereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to
be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action
taken or omitted by it under the provisions of this Indenture
upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Trustee and the Company shall in all respects
comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a
corporation organized and doing business under the laws of the
United States of America or any state or territory thereof or of
the District of Columbia or a corporation or other Person
permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars
($50,000,000) and subject to supervision or examination by
federal, state, territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this
Section 6.09 the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
The Company may not, nor may any Person directly or
indirectly controlling, controlled by, or under common control
with the Company, serve as Trustee.
In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.09,
the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving
written notice of such resignation to the Company
and by mailing notice thereof to the holders of
the Securities at their addresses as they shall
appear on the Security register. Upon receiving
such notice of resignation, the Company shall
promptly appoint a successor trustee or trustees
by written instrument, in duplicate, one copy of
which instrument shall be delivered to the
resigning Trustee and one copy to the successor
trustee. If no successor trustee shall have been
so appointed and have accepted appointment within
60 days after the mailing of such notice of
resignation to the affected Securityholders, the
resigning Trustee may petition any court of
competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has
been a bona fide holder of a Security for at least
six months may, subject to the provisions of
Section 5.09, on behalf of himself and all others
similarly situated, petition any such court for
the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a
successor trustee.
(b) In case at any time any of the following shall
occur:
(1) the Trustee shall fail to comply with the
provisions of Section 6.08 after written
request therefor by the Company or by any
Securityholder who has been a bona fide
holder of a Security or Securities for at
least six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of
Section 6.09 and shall fail to resign after
written request therefor by the Company or by
any such Securityholder, or
(3) the Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its
property shall be appointed, or any public
officer shall take charge or control of the
Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Company may remove the
Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or,
subject to the provisions of Section 5.09, any
Securityholder who has been a bona fide holder of
a Security for at least six months may, on behalf
of himself and all others similarly situated,
petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of
a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper
and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Securities at the time outstanding
may at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed
as successor trustee unless within 10 days after
such nomination the Company objects thereto or if
no successor trustee shall have been so appointed
and shall have accepted appointment within 30 days
after such removal, in which case the Trustee so
removed or any Securityholder, upon the terms and
conditions and otherwise as in subsection (a) of
this Section 6.10 provided, may petition any court
of competent jurisdiction for an appointment of a
successor trustee.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any
of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by
the successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in
Section 6.10 shall execute, acknowledge and deliver to the
Company and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or
removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if
originally named as trustee herein; but, nevertheless, on the
written request of the Company or of the successor trustee, the
trustee ceasing to act shall, upon payment of any amounts then
due it pursuant to the provisions of Section 6.06, execute and
deliver an instrument transferring to such successor trustee all
the rights and powers of the trustee so ceasing to act and shall
duly assign, transfer and deliver to such successor trustee all
property and money held by such retiring trustee thereunder.
Upon request of any such successor trustee, the Company shall
execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all
such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property or funds held or
collected by such trustee to secure any amounts then due it
pursuant to the provisions of Section 6.06.
No successor trustee shall accept appointment as
provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the
provisions of Section 6.08 and eligible under the provisions of
Section 6.09.
Upon acceptance of appointment by a successor trustee
as provided in this Section 6.11, the Company shall mail notice
of the succession of such trustee hereunder to the holders of
Securities at their addresses as they shall appear on the
Security register. If the Company fails to mail such notice
within 10 days after the acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice
to be mailed at the expense of the Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder without the execution or filing of any
paper or any further act on the part of any of the parties
hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any Securities
shall have been authenticated but not delivered, any such
successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to
the Trustee may authenticate such Securities either in the name
of any predecessor hereunder or in the name of the successor
trustee; and in all such cases such certificates shall have the
full force which the Securities or this Indenture elsewhere
provides that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate
Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or
consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor.
The Trustee shall comply with Section 311(a) of the
Trust Indenture Act, excluding any creditor relationship
described in Section 311(b) of the Trust Indenture Act. A
Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents
appointed by the Trustee upon the request of the Company with
power to act on its behalf and subject to its direction in the
authentication and delivery of Securities issued upon exchange or
transfer thereof as fully to all intents and purposes as though
any such Authenticating Agent had been expressly authorized to
authenticate and deliver Securities; provided, that the Trustee
shall have no liability to the Company for any acts or omissions
of the Authenticating Agent with respect to the authentication
and delivery of Securities. Any such Authenticating Agent shall
at all times be a corporation organized and doing business under
the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws
to act as Authenticating Agent, having a combined capital and
surplus of at least $5,000,000 and being subject to supervision
or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually pursuant to law or the requirements
of such authority, then for the purposes of this Section 6.14 the
combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately
in the manner and with the effect herein specified in this
Section.
Any corporation into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or
any corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of such
Authenticating Agent hereunder, if such successor corporation is
otherwise eligible under this Section 6.14 without the execution
or filing of any paper or any further act on the part of the
parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by
giving written notice of resignation to the Trustee and to the
Company. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to
such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in
case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.14, the Trustee may, and upon the
request of the Company shall, promptly appoint a successor
Authenticating Agent eligible under this Section 6.14, shall give
written notice of such appointment to the Company and shall mail
notice of such appointment to all Securityholders as the names
and addresses of such holders appear on the Security Register.
Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder,
with like effect as if originally named as Authenticating Agent
herein.
The Company, as borrower, agrees to pay to any
Authenticating Agent from time to time reasonable compensation
for its services. Any Authenticating Agent shall have no
responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the
holders of a specified percentage in aggregate principal amount
of the Securities may take any action (including the making of
any demand or request, the giving of any notice, consent or
waiver or the taking of any other action) the fact that at the
time of taking any such action the holders of such specified
percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed
by such Securityholders in person or by agent or proxy appointed
in writing, or (b) by the record of such holders of Securities
voting in favor thereof at any meeting of such Securityholders
duly called and held in accordance with the provisions of Article
VIII, or (c) by a combination of such instrument or instruments
and any such record of such a meeting of such Securityholders.
If the Company shall solicit from the Securityholders
any request, demand, authorization, direction, notice, consent,
waiver or other action, the Company may, at its option, as
evidenced by an Officers' Certificate, fix in advance a record
date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent,
waiver or other action, but the Company shall have no obligation
to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action
may be given before or after the record date, but only the
Securityholders of record at the close of business on the record
date shall be deemed to be Securityholders for the purposes of
determining whether Securityholders of the requisite proportion
of outstanding Securities have authorized or agreed or consented
to such request, demand, authorization, direction, notice,
consent, waiver or other action, and for that purpose the
outstanding Securities shall be computed as of the record date;
provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be
deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the
record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and
8.05, proof of the execution of any instrument by a
Securityholder or his agent or proxy shall be sufficient if made
in accordance with such reasonable rules and regulations as may
be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall
be proved by the Security Register or by a certificate of the
Security registrar. The Trustee may require such additional
proof of any matter referred to in this Section as it shall deem
necessary.
The record of any Securityholders' meeting shall be
proved in the manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer
of any Security, the Company, the Trustee, any Authenticating
Agent, any paying agent, any transfer agent and any Security
registrar may deem the person in whose name such Security shall
be registered upon the Security Register to be, and may treat him
as, the absolute owner of such Security (whether or not such
Security shall be overdue) for the purpose of receiving payment
of or on account of the principal of and premium, if any, and
(subject to Section 2.06) interest on such Security and for all
other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent
nor any Security registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time
being or upon his order shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite
aggregate principal amount of Securities have concurred in any
direction, consent or waiver under this Indenture, Securities
which are owned by the Company or any other obligor on the
Securities or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the
Company or any other obligor on the Securities shall be
disregarded and deemed not to be outstanding for the purpose of
any such determination; provided that for the purposes of
determining whether the Trustee shall be protected in relying on
any such direction, consent or waiver, only Securities which the
Trustee actually knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 7.04 if
the pledgee shall establish to the satisfaction of the Trustee
the pledgee's right to vote such Securities and that the pledgee
is not the Company or any such other obligor or Person directly
or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any such other
obligor. In the case of a dispute as to such right, any decision
by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
SECTION 7.05. Revocation of Consents; Future Holders
Bound.
At any time prior to (but not after) the evidencing to
the Trustee, as provided in Section 7.01, of the taking of any
action by the holders of the percentage in aggregate principal
amount of the Securities specified in this Indenture in
connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution
therefor), subject to Section 7.01, the serial number of which is
shown by the evidence to be included in the Securities the
holders of which have consented to such action may, by filing
written notice with the Trustee at its principal office and upon
proof of holding as provided in Section 7.02, revoke such action
so far as concerns such Security (or so far as concerns the
principal amount represented by any exchanged or substituted
Security). Except as aforesaid any such action taken by the
holder of any Security shall be conclusive and binding upon such
holder and upon all future holders and owners of such Security,
and of any Security issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is
made upon such Security or any Security issued in exchange or
substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time
and from time to time pursuant to the provisions of this Article
VIII for any of the following purposes:
(a) to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee,
or to consent to the waiving of any default
hereunder and its consequences, or to take any
other action authorized to be taken by
Securityholders pursuant to any of the provisions
of Article V;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
(d) to take any other action authorized to be taken by
or on behalf of the holders of any specified
aggregate principal amount of such Securities
under any other provision of this Indenture or
under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of
Securityholders to take any action specified in Section 8.01, to
be held at such time and at such place in the Borough of
Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Securityholders, setting forth the
time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to
holders of Securities at their addresses as they shall appear on
the Securities Register. Such notice shall be mailed not less
than 20 nor more than 180 days prior to the date fixed for the
meeting.
SECTION 8.03. Call of Meetings by Company or
Securityholders.
In case at any time the Company pursuant to a
resolution of the Board of Directors, or the holders of at least
10% in aggregate principal amount of the Securities then
outstanding, shall have requested the Trustee to call a meeting
of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting,
and the Trustee shall not have mailed the notice of such meeting
within 20 days after receipt of such request, then the Company or
such Securityholders may determine the time and the place in said
Borough of Manhattan for such meeting and may call such meeting
to take any action authorized in Section 8.01, by mailing notice
thereof as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of
Securityholders a Person shall (a) be a holder of one or more
Securities or (b) a Person appointed by an instrument in writing
as proxy by a holder of one or more Securities. The only Persons
who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its
counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof
of the holding of Securities and of the appointment of proxies,
and in regard to the appointment and duties of inspectors of
votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall
have been called by the Company or by Securityholders as provided
in Section 8.03, in which case the Company or the Securityholders
calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority
vote of the meeting.
Subject to the provisions of Section 8.04, at any
meeting each holder of Securities or proxy therefor shall be
entitled to one vote for each $1,000 principal amount of
Securities held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman
of the meeting to be not outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of
Securities held by him or instruments in writing as aforesaid
duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 8.02 or 8.03 may be
adjourned from time to time by a majority of those present, and
the meeting may be held as so adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting
of holders of Securities shall be by written ballots on which
shall be subscribed the signatures of such holders or of their
representatives by proxy and the serial number or numbers of the
Securities held or represented by them. The permanent chairman
of the meeting shall appoint two inspectors of votes who shall
count all votes cast at the meeting for or against any resolution
and who shall make and file with the secretary of the meeting
their verified written reports in triplicate of all votes cast at
the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was mailed as provided in
Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The
record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the
Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting. The holders
of the Series A Capital Securities and the Series B Capital
Securities shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company and the Trustee may from time to time and
at any time amend the Indenture, without the consent of the
Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another Person to
the Company, or successive successions, and the
assumption by the successor Person of the
covenants, agreements and obligations of the
Company pursuant to Article X hereof;
(b) to add to the covenants of the Company such
further covenants, restrictions or conditions for
the protection of the Securityholders as the Board
of Directors and the Trustee shall consider to be
for the protection of the Securityholders, and to
make the occurrence, or the occurrence and
continuance, of a default in any of such
additional covenants, restrictions or conditions a
default or an Event of Default permitting the
enforcement of all or any of the remedies provided
in this Indenture as herein set forth; provided,
however, that in respect of any such additional
covenant, restriction or condition such amendment
may provide for a particular period of grace after
default (which period may be shorter or longer
than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon
such default or may limit the remedies available
to the Trustee upon such default;
(c) to provide for the issuance under this Indenture
of Securities in coupon form (including Securities
registrable as to principal only) and to provide
for exchangeability of such Securities with the
Securities issued hereunder in fully registered
form and to make all appropriate changes for such
purpose;
(d) to cure any ambiguity or to correct or supplement
any provision contained herein or in any
supplemental indenture which may be defective or
inconsistent with any other provision contained
herein or in any supplemental indenture, or to
make such other provisions in regard to matters or
questions arising under this Indenture; provided
that any such action shall not materially
adversely affect the interests of the holders of
the Securities;
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities;
(f) to make provision for transfer procedures,
certification, book-entry provisions, the form of
restricted securities legends, if any, to be
placed on Securities, and all other matters
required pursuant to Section 2.07 or otherwise
necessary, desirable or appropriate in connection
with the issuance of Securities to holders of
Capital Securities in the event of a distribution
of Securities by Patriot Capital Trust following a
Dissolution Event;
(g) to qualify or maintain qualification of this
Indenture under the Trust Indenture Act; or
(h) to make any change that does not adversely affect
the rights of any Securityholder in any material
respect.
The Trustee is hereby authorized to join with the
Company in the execution of any supplemental indenture to effect
such amendment, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder,
but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any amendment to the Indenture authorized by the
provisions of this Section 9.01 may be executed by the Company
and the Trustee without the consent of the holders of any of the
Securities at the time outstanding, notwithstanding any of the
provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in
Section 7.01) of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, the Company,
when authorized by a Board Resolution, and the Trustee may from
time to time and at any time amend the Indenture for the purpose
of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the holders of the
Securities; provided, however, that no such amendment shall
without the consent of the holders of each Security then
outstanding and affected thereby (i) change the Maturity Date of
any Security, or reduce the rate or extend the time of payment of
interest thereon (except as contemplated by Article XVI), or
reduce the principal amount thereof, or reduce any amount payable
on redemption thereof, or make the principal thereof or any
interest or premium thereon payable in any coin or currency other
than that provided in the Securities, or impair or affect the
right of any Securityholder to institute suit for payment
thereof, or (ii) reduce the aforesaid percentage of Securities
the holders of which are required to consent to any such
amendment to the Indenture, provided, however, that if the
Securities are held by Patriot Capital Trust, such amendment
shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to
such amendment; provided, further, that if the consent of the
holder of each outstanding Security is required, such amendment
shall not be effective until each holder of the Trust Securities
shall have consented to such amendment.
Upon the request of the Company accompanied by a copy
of a resolution of the Board of Directors certified by its
Secretary or Assistant Secretary authorizing the execution of any
supplemental indenture affecting such amendment, and upon the
filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the
Trustee of any supplemental indenture pursuant to the provisions
of this Section, the Trustee shall transmit by mail, first class
postage prepaid, a notice, prepared by the Company, setting forth
in general terms the substance of such supplemental indenture, to
the Securityholders as their names and addresses appear upon the
Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures.
Any supplemental indenture executed pursuant to the
provisions of this Article IX shall comply with the Trust
Indenture Act. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article IX, this Indenture
shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the
Trustee, the Company and the holders of Securities shall
thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and
all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the
execution of any supplemental indenture affecting such series
pursuant to the provisions of this Article IX may bear a notation
in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company or the Trustee shall
so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental
indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and
delivered in exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01
and 6.02, may receive an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that any supplemental indenture
executed pursuant hereto complies with the requirements of this
Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on
Certain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the
Company with or into any other Person (whether or not affiliated
with the Company, as the case may be), or successive
consolidations or mergers in which the Company or its successor
or successors, as the case may be, shall be a party or parties,
or shall prevent any sale, conveyance, transfer or lease of the
property of the Company, or its successor or successors as the
case may be, as an entirety, or substantially as an entirety, to
any other Person (whether or not affiliated with the Company, or
its successor or successors, as the case may be authorized to
acquire and operate the same; provided, that (a) the Company is
the surviving Person, or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to
which such sale, conveyance, transfer or lease of property is
made is a Person organized and existing under the laws of the
United States or any State thereof or the District of Columbia,
and (b) upon any such consolidation, merger, sale, conveyance,
transfer or lease, the due and punctual payment of the principal
of (and premium, if any) and interest on the Securities according
to their tenor and the due and punctual performance and
observance of all the covenants and conditions of this Indenture
to be kept or performed by the Company shall be expressly
assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect)
satisfactory in form to the Trustee executed and delivered to the
Trustee by the Person formed by such consolidation, or into which
the Company shall have been merged, or by the Person which shall
have acquired such property, as the case may be, and (c) after
giving effect to such consolidation, merger, sale, conveyance,
transfer or lease, no Default or Event of Default shall have
occurred and be continuing.
SECTION 10.02. Successor Corporation to be Substituted
for Company.
In case of any such consolidation, merger, conveyance
or transfer and upon the assumption by the successor corporation,
by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on
all of the Securities and the due and punctual performance and
observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, such
successor Person shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein as
the party of the first part, and the Company thereupon shall be
relieved of any further liability or obligation hereunder or upon
the Securities. Such successor Person thereupon may cause to be
signed, and may issue either in its own name or in the name of
Patriot Bank Corp., any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee or the Authenticating Agent;
and, upon the order of such successor Person instead of the
Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee or the Authenticating
Agent shall authenticate and deliver any Securities which
previously shall have been signed and delivered by the officers
of the Company to the Trustee or the Authenticating Agent for
authentication, and any Securities which such successor Person
thereafter shall cause to be signed and delivered to the Trustee
or the Authenticating Agent for that purpose. All the Securities
so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture
as though all of such Indentures had been issued at the date of
the execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01
and 6.02, may receive an Opinion of Counsel as conclusive
evidence that any consolidation, merger, sale, conveyance,
transfer or lease, and any assumption, permitted or required by
the terms of this Article X complies with the provisions of this
Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than
any Securities which shall have been destroyed, lost or stolen
and which shall have been replaced as provided in Section 2.08)
and not theretofore cancelled, or (b) all the Securities not
theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in
trust, funds sufficient to pay on the Maturity Date or upon
redemption all of the Securities (other than any Securities which
shall have been destroyed, lost or stolen and which shall have
been replaced as provided in Section 2.08) not theretofore
cancelled or delivered to the Trustee for cancellation, including
principal and premium, if any, and interest (including Additional
Sums and Compounded Interest, if any) and Liquidated Damages, if
any, due or to become due to the Maturity Date or redemption
date, as the case may be, but excluding, however, the amount of
any moneys for the payment of principal of or premium, if any, or
interest (including Additional Sums and Compounded Interest, if
any) and Liquidated Damages, if any, on the Securities
(1) theretofore repaid to the Company in accordance with the
provisions of Section 11.04, or (2) paid to any State or to the
District of Columbia pursuant to its unclaimed property or
similar laws, and if in either case the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect except
for the provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02,
3.04, 6.06, 6.10 and 11.04 hereof, which shall survive until such
Securities shall mature and be paid. Thereafter, Sections 6.06,
6.10 and 11.04 shall survive, and the Trustee, on demand of the
Company accompanied by any Officers' Certificate and an Opinion
of Counsel and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and
discharging this Indenture, the Company, however, hereby agreeing
to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee in connection
with this Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by
Trustee.
Subject to the provisions of Section 11.04, all moneys
and U.S. Government Obligations deposited with the Trustee
pursuant to Sections 11.01 or 11.05 shall be held in trust and
applied by it to the payment, either directly or through any
paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Securities for the
payment of which such moneys or U.S. Government Obligations have
been deposited with the Trustee, of all sums due and to become
due thereon for principal, premium, if any, and interest.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 11.05
or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the
account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture
all moneys then held by any paying agent of the Securities (other
than the Trustee) shall, upon written demand of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying
agent shall be released from all further liability with respect
to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any
paying agent for payment of the principal of or premium, if any,
or interest on Securities and not applied but remaining unclaimed
by the holders of Securities for two years after the date upon
which the principal of or premium, if any, or interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on such Securities, as the case may be, shall
have become due and payable, shall be repaid to the Company by
the Trustee or such paying agent on written demand; and the
holder of any of the Securities shall thereafter look only to the
Company for any payment which such holder may be entitled to
collect and all liability of the Trustee or such paying agent
with respect to such moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations.
The Company shall be deemed to have been Discharged (as
defined below) from its obligations with respect to the
Securities on the 91st day after the applicable conditions set
forth below have been satisfied:
(1) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee or the
Defeasance Agent (as defined below) as trust funds
in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the
holders of the Securities (i) money in an amount,
or (ii) U.S. Government Obligations which through
the payment of interest and principal in respect
thereof in accordance with their terms will
provide, not later than one day before the due
date of any payment, money in an amount, or
(iii) a combination of (i) and (ii), sufficient,
in the opinion (with respect to (ii) and (iii)) of
a nationally recognized firm of independent public
accountants expressed in a written certification
thereof delivered to the Trustee and the
Defeasance Agent, if any, to pay and discharge
each installment of principal of and interest and
premium, if any, on the outstanding Securities on
the dates such installments of principal, interest
or premium are due;
(2) if the Securities are then listed on any national
securities exchange, the Company shall have
delivered to the Trustee and the Defeasance Agent,
if any, an Opinion of Counsel to the effect that
the exercise of the option under this
Section 11.05 would not cause such Securities to
be delisted from such exchange;
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing
on the date of such deposit; and
(4) the Company shall have delivered to the Trustee
and the Defeasance Agent, if any, an Opinion of
Counsel to the effect that holders of the
Securities will not recognize income, gain or loss
for United States federal income tax purposes as a
result of the exercise of the option under this
Section 11.05 and will be subject to United States
federal income tax on the same amount and in the
same manner and at the same times as would have
been the case if such option had not been
exercised, and such opinion shall be based on a
statute so providing or be accompanied by a
private letter ruling to that effect received from
the United States Internal Revenue Service or a
revenue ruling pertaining to a comparable form of
transaction to that effect published by the United
States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by,
and obligations under, the Securities and to have satisfied all
the obligations under this Indenture relating to the Securities
(and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same), except (A) the rights
of holders of Securities to receive, from the trust fund
described in clause (1) above, payment of the principal of and
the interest and premium, if any, on the Securities when such
payments are due; (B) the Company's obligations with respect to
the Securities under Sections 2.07, 2.08, 5.02 and 11.04; and
(C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder.
"Defeasance Agent" means another financial institution
which is eligible to act as Trustee hereunder and which assumes
all of the obligations of the Trustee necessary to enable the
Trustee to act hereunder. In the event such a Defeasance Agent
is appointed pursuant to this Section, the following conditions
shall apply:
(1) The Trustee shall have approval rights over the
document appointing such Defeasance Agent and the
document setting forth such Defeasance Agent's
rights and responsibilities;
(2) The Defeasance Agent shall provide verification to
the Trustee acknowledging receipt of sufficient
money and/or U. S. Government Obligations to meet
the applicable conditions set forth in this
Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely
Corporate Obligations.
No recourse for the payment of the principal of or
premium, if any, or interest on any Security, or for any claim
based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the
Company in this Indenture, or in any Security, or because of the
creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor
Person to the Company, either directly or through the Company or
any successor Person to the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and
agreements in this Indenture contained by the Company shall bind
its successors and assigns whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this
Indenture authorized or required to be done or performed by any
board, committee or officer of the Company shall and may be done
and performed with like force and effect by the like board,
committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by
authority of 2/3 (two-thirds) of its Board of Directors and
delivered to the Trustee may surrender any of the powers reserved
to the Company, and thereupon such power so surrendered shall
terminate both as to the Company, as the case may be, and as to
any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the
Trustee or by the holders of Securities on the Company may be
given or served by being deposited postage prepaid by registered
or certified mail in a post office letter box addressed (until
another address is filed by the Company with the Trustee for the
purpose) to the Company at High and Hanover Streets, Pottstown,
Pennsylvania 19464, Attention: Chief Financial Officer. Any
notice, direction, request or demand by any Securityholder to or
upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or made in writing at the
office of the Trustee, 101 Barclay Street, 21 West, New York, New
York 10286, Attention: Corporate Trust Administration Department
(unless another address is provided by the Trustee to the Company
for such purpose). Any notice or communication to a
Securityholder shall be mailed by first class mail to his or her
address shown on the register kept by the Security Registrar.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be
a contract made under the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance
with the laws of said State, without regard to conflicts of laws
principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that in the opinion of the signers all
conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to compliance
with a condition or covenant provided for in this Indenture
(except certificates delivered pursuant to Section 3.05) shall
include (1) a statement that the Person making such certificate
or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in
the opinion of such Person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition
has been complied with; and (4) a statement as to whether or not,
in the opinion of such person, such condition or covenant has
been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of
or premium, if any, or interest on the Securities will not be a
Business Day, the payment of such principal of or premium, if
any, or interest on the Securities need not be made on such date
but may be made on the next succeeding Business Day (and without
any interest or other payment in respect of such delay) except
that if such next succeeding Business Day falls in the next
succeeding calendar year, then such payment shall be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on the date of payment.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with the duties imposed
by Sections 310 to 317, inclusive, of the Trust Indenture Act of
1939, such imposed duties shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of
the articles and sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of
counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same
instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in
this Indenture or in the Securities shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provisions of this Indenture or of the Securities, but this
Indenture and the Securities shall be construed as if such
invalid or illegal or unenforceable provision had never been
contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign
any of its respective rights or obligations under this Indenture
to a direct or indirect wholly owned Subsidiary of the Company,
provided that, in the event of any such assignment, the Company
will remain liable for all such obligations. Subject to the
foregoing, the Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors
and assigns. This Indenture may not otherwise be assigned by the
parties thereto.
SECTION 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any
Securities held by Patriot Capital Trust or a trustee of such
trust, if the Property Trustee of such Trust fails to enforce its
rights under this Indenture as the holder of the Securities held
as the assets of Patriot Capital Trust any holder of Capital
Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this
Indenture without first instituting any legal proceedings against
such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the
failure of the Company to pay principal of or premium, if any, or
interest on the Securities when due, the Company acknowledges
that a holder of Capital Securities may directly institute a
proceeding for enforcement of payment to such holder of the
principal of or premium, if any, or interest on the Securities
having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such holder on or after the
respective due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Redemption.
If, prior to the Initial Optional Redemption Date, a
Special Event has occurred and is continuing then,
notwithstanding Section 14.02(a) but subject to Section 14.02(c),
the Company shall have the right, at any time within 90 days
following the occurrence of such Special Event, upon (i) not less
than 45 days written notice to the Trustee and (ii) not less than
30 days nor more than 60 days written notice to the
Securityholders, to redeem the Securities, in whole (but not in
part), at the Special Event Redemption Price. Following a
Special Event, the Company shall take such action as is necessary
to promptly determine the Special Event Redemption Price,
including without limitation with respect to the appointment of a
Quotation Agent. The Special Event Redemption Price shall be
paid prior to 12:00 noon, New York time, on the date of such
redemption or such earlier time as the Company determines,
provided that the Company shall deposit with the Trustee an
amount sufficient to pay the Special Event Redemption Price by
10:00 a.m., New York time, on the date such Special Event
Redemption Price is to be paid.
SECTION 14.02. Optional Redemption by Company.
(a) Subject to the provisions of this Article XIV, the
Company shall have the right to redeem the Securities, in whole
or in part, from time to time, on or after the Initial Optional
Redemption Date, at the redemption prices set forth below
(expressed as percentages of principal) plus, in each case,
accrued and unpaid interest thereon (including Additional Sums
and Compounded Interest, if any) and Liquidated Damages, if any,
to the applicable date of redemption (the "Optional Redemption
Price") if redeemed during the 12-month period beginning June 1
of the years indicated below.
Year Percentage
2007 105.150%
2008 104.635%
2009 104.120%
2010 103.605%
2011 103.090%
2012 102.575%
2013 102.060%
2014 101.545%
2015 101.030%
2016 100.515%
2017 and thereafter 100.000%
If the Securities are only partially redeemed pursuant
to this Section 14.02, the Securities will be redeemed pro rata
or by lot or by any other method utilized by the Trustee;
provided, that if at the time of redemption the Securities are
registered as a Global Security, the Depositary shall determine,
in accordance with its procedures, the principal amount of such
Securities held by each holder of a Security to be redeemed. The
Optional Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time
as the Company determines, provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Optional
Redemption Price by 10:00 a.m., New York time, on the date such
Optional Redemption Price is to be paid.
(b) Notwithstanding the first sentence of
Section 14.02, upon the entry of an order for dissolution of the
Patriot Capital Trust by a court of competent jurisdiction, the
Securities thereafter will be subject to optional redemption, in
whole only, but not in part, on or after June 1, 2007, at the
optional redemption prices set forth in Section 14.02 and
otherwise in accordance with this Article XIV.
(c) Any redemption of Securities pursuant to
Section 14.01 or Section 14.02 shall be subject to the Company
obtaining any required regulatory approval.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any
sinking fund.
SECTION 14.04. Notice of Redemption; Selection of
Securities.
In case the Company shall desire to exercise the right
to redeem all, or, as the case may be, any part of the Securities
in accordance with their terms, it shall fix a date for
redemption and shall mail a notice of such redemption at least 30
and not more than 60 days prior to the date fixed for redemption
to the holders of Securities so to be redeemed as a whole or in
part at their last addresses as the same appear on the Security
Register. Such mailing shall be by first class mail. The notice
if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice
by mail or any defect in the notice to the holder of any Security
designated for redemption as a whole or in part shall not affect
the validity of the proceedings for the redemption of any other
Security.
Each such notice of redemption shall specify the CUSIP
number of the Securities to be redeemed, the date fixed for
redemption, the redemption price at which the Securities are to
be redeemed (or the method by which such redemption price is to
be calculated), the place or places of payment that payment will
be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as
specified in said notice, and that on and after said date
interest thereon or on the portions thereof to be redeemed will
cease to accrue. If less than all the Securities are to be
redeemed the notice of redemption shall specify the numbers of
the Securities to be redeemed. In case any Security is to be
redeemed in part only, the notice of redemption shall state the
portion of the principal amount thereof to be redeemed and shall
state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities in
principal amount equal to the unredeemed portion thereof will be
issued.
By 10:00 a.m. New York time on the redemption date
specified in the notice of redemption given as provided in this
Section, the Company will deposit with the Trustee or with one or
more paying agents an amount of money sufficient to redeem on the
redemption date all the Securities so called for redemption at
the appropriate Redemption Price, together with accrued interest
to the date fixed for redemption.
The Company will give the Trustee notice not less than
45 days prior to the redemption date as to the aggregate
principal amount of Securities to be redeemed and the Trustee
shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Securities or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in
the applicable form of Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for
Redemption.
If notice of redemption has been given as provided in
Section 14.04, the Securities or portions of Securities with
respect to which such notice has been given shall become due and
payable on the date and at the place or places stated in such
notice at the applicable Redemption Price, together with interest
accrued to the date fixed for redemption (subject to the rights
of holders of Securities on the close of business on a regular
record date in respect of an Interest Payment Date occurring on
or prior to the redemption date), and on and after said date
(unless the Company shall default in the payment of such
Securities at the Redemption Price, together with interest
accrued to said date) interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, on
the Securities or portions of Securities so called for redemption
shall cease to accrue. On presentation and surrender of such
Securities at a place of payment specified in said notice, the
said Securities or the specified portions thereof shall be paid
and redeemed by the Company at the applicable Redemption Price,
together with interest (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, accrued thereon
to the date fixed for redemption (subject to the rights of
holders of Securities on the close of business on a regular
record date in respect of an Interest Payment Date occurring on
or prior to the redemption date).
Upon presentation of any Security redeemed in part
only, the Company shall execute and the Trustee shall
authenticate and make available for delivery to the holder
thereof, at the expense of the Company, a new Security or
Securities of authorized denominations, in principal amount equal
to the unredeemed portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of
Securities issued hereunder likewise covenants and agrees, that
the Securities shall be issued subject to the provisions of this
Article XV; and each holder of a Security, whether upon original
issue or upon transfer or assignment thereof, accepts and agrees
to be bound by such provisions.
The payment by the Company of the principal of,
premium, if any, and interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, on
all Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right
of payment to all Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the
occurrence of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default
by the Company in the payment of principal, premium, interest or
any other payment due on any Senior Indebtedness, or in the event
that the maturity of any Senior Indebtedness has been accelerated
because of a default, then, in either case, no payment shall be
made by the Company with respect to the principal (including
redemption payments) of or premium, if any, or interest on the
Securities.
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Company with
respect to the principal (including redemption payments) of or
premium, if any, or interest on the Securities until the holders
of all Senior Indebtedness outstanding at the time of such
acceleration shall receive payment in full of such Senior
Indebtedness (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee when such payment is
prohibited by the preceding paragraphs of this Section 15.02,
such payment shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness
or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests
may appear, but only to the extent that holders of the Senior
Indebtedness (or their representative or representatives or a
trustee) notify the Trustee in writing, within 90 days of such
payment of the amounts then due and owing on such Senior
Indebtedness and only the amounts specified in such notice to the
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of
assets of the Company of any kind or character, whether in cash,
property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness of the
Company shall first be paid in full, or payment thereof provided
for in money in accordance with its terms, before any payment is
made by the Company on account of the principal (and premium, if
any) or interest (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, on the
Securities; and upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the
Securityholders or the Trustee would be entitled to receive from
the Company, except for the provisions of this Article XV, shall
be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or
distribution, or by the Securityholders or by the Trustee under
the Indenture if received by them or it, directly to the holders
of Senior Indebtedness of the Company (pro rata to such holders
on the basis of the respective amounts of Senior Indebtedness
held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing
such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay
all such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders or to the
Trustee.
In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, prohibited by
the foregoing, shall be received by the Trustee before all Senior
Indebtedness is paid in full, or provision is made for such
payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall
be paid over or delivered to the holders of such Senior
Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all
such Senior Indebtedness in full in money in accordance with its
terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior
Indebtedness.
For purposes of this Article XV, the words "cash,
property or securities" shall not be deemed to include shares of
stock of the Company as reorganized or readjusted, or securities
of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article XV
with respect to the Securities to the payment of Senior
Indebtedness that may at the time be outstanding, provided that
(i) such Senior Indebtedness is assumed by the new corporation,
if any, resulting from any such reorganization or readjustment,
and (ii) the rights of the holders of such Senior Indebtedness
are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company
with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the sale,
conveyance, transfer or lease of its property as an entirety, or
substantially as an entirety, to another Person upon the terms
and conditions provided for in Article X of this Indenture shall
not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 15.03 if such
other Person shall, as a part of such consolidation, merger,
sale, conveyance, transfer or lease, comply with the conditions
stated in Article X of this Indenture. Nothing in Section 15.02
or in this Section 15.03 shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.06 of this
Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior
Indebtedness, the rights of the Securityholders shall be
subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash,
property or securities of the Company, as the case may be,
applicable to such Senior Indebtedness until the principal of
(and premium, if any) and interest on the Securities shall be
paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the
Securityholders or the Trustee would be entitled except for the
provisions of this Article XV, and no payment over pursuant to
the provisions of this Article XV to or for the benefit of the
holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between the Company, its creditors other than
holders of Senior Indebtedness of the Company, and the holders of
the Securities, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness. It is understood that the
provisions of this Article XV are and are intended solely for the
purposes of defining the relative rights of the holders of the
Securities, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in
this Indenture or in the Securities is intended to or shall
impair, as between the Company, its creditors other than the
holders of Senior Indebtedness of the Company, and the holders of
the Securities, the obligation of the Company, which is absolute
and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on the Securities as and when the same shall
become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of
the Securities and creditors of the Company, as the case may be,
other than the holders of Senior Indebtedness of the Company, as
the case may be, nor shall anything herein or therein prevent the
Trustee or the holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under
the Indenture, subject to the rights, if any, under this
Article XV of the holders of such Senior Indebtedness in respect
of cash, property or securities of the Company, as the case may
be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the
Company referred to in this Article XV, the Trustee, subject to
the provisions of Article VI of this Indenture, and the
Securityholders shall be entitled to conclusively rely upon any
order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization
proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or
to the Securityholders, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders
of Senior Indebtedness and other indebtedness of the Company, as
the case may be, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XV.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such
Securityholder's behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in this
Article XV and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the
Company that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article XV. Notwithstanding the provisions of
this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article XV, unless and until a Responsible
Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or
from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Article
VI of this Indenture, shall be entitled in all respects to assume
that no such facts exist; provided, however, that if the Trustee
shall not have received the notice provided for in this
Section 15.06 at least two Business Days prior to the date upon
which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the
principal of (or premium, if any) or interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have
full power and authority to receive such money and to apply the
same to the purposes for which they were received, and shall not
be affected by any notice to the contrary that may be received by
it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of
this Indenture, shall be entitled to conclusively rely on the
delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness of the Company (or
a trustee on behalf of such holder), as the case may be, to
establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of
any Person as a holder of such Senior Indebtedness to participate
in any payment or distribution pursuant to this Article XV, the
Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under
this Article XV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such
payment.
Upon any payment or distribution of assets of the
Company referred to in this Article XV, the Trustee and the
Securityholders shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in
bankruptcy, liquidating trustee, custodian, receiver, assignee
for the benefit of creditors, agent or other person making such
payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the persons
entitled to participate in such payment or distribution, the
holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article XV in
respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness of
the Company, the Trustee undertakes to perform or to observe only
such of its covenants and obligations as are specifically set
forth in this Article XV, and no implied covenants or obligations
with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall
not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Article VI
of this Indenture, the Trustee shall not be liable to any holder
of such Senior Indebtedness if it shall pay over or deliver to
Securityholders, the Company or any other Person money or assets
to which any holder of such Senior Indebtedness shall be entitled
by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired
by any act or failure to act on the part of the Company, as the
case may be, or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company, as the
case may be, with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness of the
Company may, at any time and from time to time, without the
consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this
Article XV or the obligations hereunder of the holders of the
Securities to the holders of such Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter,
such Senior Indebtedness, or otherwise amend or supplement in any
manner such Senior Indebtedness or any instrument evidencing the
same or any agreement under which such Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior
Indebtedness; (iii) release any Person liable in any manner for
the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company, as the
case may be, and any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is
continuing, the Company shall have the right, at any time and
from time to time during the term of the Securities, to defer
payments of interest by extending the interest payment period of
such Securities for a period not exceeding 10 consecutive semi-
annual periods, including the first such semi-annual period
during such extension period (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no
interest shall be due and payable; provided that no Extended
Interest Payment Period shall end on a date other than an
Interest Payment Date or extend beyond the Maturity Date. To the
extent permitted by applicable law, interest, the payment of
which has been deferred because of the extension of the interest
payment period pursuant to this Section 16.01, will bear interest
thereon at the Coupon Rate compounded semi-annually for each
semi-annual period of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and
unpaid on the Securities, including any Additional Sums and
Compounded Interest (together, "Deferred Interest") that shall be
payable to the holders of the Securities in whose names the
Securities are registered in the Security Register on the first
record date preceding the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment
Period, the Company may further defer payments of interest by
further extending such period, provided that such period,
together with all such previous and further extensions within
such Extended Interest Payment Period, shall not exceed 10
consecutive semi-annual periods, including the first such semi-
annual period during such Extended Interest Payment Period, end
on a date other than an Interest Payment Date or extend beyond
the Maturity Date of the Securities. Upon the termination of any
Extended Interest Payment Period and the payment of all Deferred
Interest then due, the Company may commence a new Extended
Interest Payment Period, subject to the foregoing requirements.
No interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof, but the Company may
prepay at any time all or any portion of the interest accrued
during an Extended Interest Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered
holder of the Securities at the time the Company selects an
Extended Interest Payment Period, the Company shall give written
notice to the Administrative Trustees, the Property Trustee and
the Trustee of its selection of such Extended Interest Payment
Period five Business Days before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities
issued by Patriot Capital Trust are payable, or (ii) the date the
Trust is required to give notice of the record date, or the date
such Distributions are payable, to any national securities
exchange or to holders of the Capital Securities issued by the
Trust, but in any event at least five Business Days before such
record date.
(b) If the Property Trustee is not the only holder of
the Securities at the time the Company selects an Extended
Interest Payment Period, the Company shall give the holders of
the Securities and the Trustee written notice of its selection of
such Extended Interest Payment Period at least 10 Business Days
before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of
the record or payment date of such interest payment to any
national securities exchange.
(c) The semi-annual period in which any notice is
given pursuant to paragraphs (a) or (b) of this Section 16.02
shall be counted as one of the 10 semi-annual periods permitted
in the maximum Extended Interest Payment Period permitted under
Section 16.01.
The Bank of New York hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions
hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers
thereunto duly authorized, as of the day and year first above
written.
PATRIOT BANK CORP.
By_________________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By_________________________________
Name:
Title:<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: - THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC") TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR
TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF
AND THE LAST DATE ON WHICH THE COMPANY OR ANY "AFFILIATE" OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-
U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT, SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY, AND
(ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE COMPANY. SUCH
HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
No. CUSIP No. ______________
<PAGE>
PATRIOT BANK CORP.
Series A 10.30% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE June 1, 2027
Patriot Bank Corp., a Delaware corporation (the
"Company", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to ______________ or registered assigns, the
principal sum of _____________ Dollars on June 1, 2027 (the
"Maturity Date"), unless previously redeemed, and to pay interest
on the outstanding principal amount hereof from June 5, 1997, or
from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly
provided for, semi-annually (subject to deferral as set forth
herein) in arrears on June 1 and December 1 of each year,
commencing December 1, 1997, at the rate of 10.30% per annum
until the principal hereof shall have become due and payable, and
on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually.
The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day
months and, for any period less than a full calendar month, the
number of days elapsed in such month. In the event that any date
on which the principal of (or premium, if any) or interest on
this Security is payable is not a Business Day, then the payment
payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in
respect of any such delay) except that if such next succeeding
Business Day falls in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on
such date. Pursuant to the Indenture, in certain circumstances
the Company will be required to pay Additional Sums and Compound
Interest (each as defined in the Indenture) with respect to this
Security. Pursuant to the Registration Rights Agreement, in
certain limited circumstances the Company will be required to pay
Liquidated Damages (as defined in the Registration Rights
Agreement) with respect to this Security.
The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities, as defined
in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be
the 15th day of the month preceding the month in which the
relevant interest payment date falls. Any such interest
installment not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular
record date and may be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at
the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice
whereof shall be given to the holders of Securities not less than
10 days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities
may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest
(including Additional Sums and Compounded Interest, if any) and
Liquidated Damages, if any, on this Security shall be payable at
the office or agency of the Trustee maintained for that purpose
in any coin or currency of the United States of America that at
the time of payment is legal tender for payment of public and
private debts; provided, however, that, payment of interest may
be made at the option of the Company by (i) check mailed to the
holder at such address as shall appear in the Security Register
or (ii) by transfer to an account maintained by the Person
entitled thereto, provided that proper written transfer
instructions have been received by the relevant record date.
Notwithstanding the foregoing, so long as the Holder of this
Security is the Property Trustee, the payment of the principal of
(and premium, if any) and interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, on
this Security will be made at such place and to such account as
may be designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and junior in right
of payment to the prior payment in full of all Senior
Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each holder of
this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee
on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact
for any and all such purposes. Each holder hereof, by his or her
acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each
such holder upon said provisions.
This Security shall not be entitled to any benefit
under the Indenture hereinafter referred to, be valid or become
obligatory for any purpose until the Certificate of
Authentication hereon shall have been signed by or on behalf of
the Trustee.
By acceptance of this Security, the holder agrees to
treat, for United States federal income tax purposes, this
Security as indebtedness.
The provisions of this Security are continued on the
reverse side hereof and such provisions shall for all purposes
have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has executed this
certificate this 5th day of June, 1997.
PATRIOT BANK CORP.
By:________________________________
Name:
Title:
Attest:
By:______________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: June 5, 1997
THE BANK OF NEW YORK, as Trustee
By_________________________________
Authorized Signatory
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company
(herein sometimes referred to as the "Securities"), specified in
the Indenture, all issued or to be issued under and pursuant to
an Indenture, dated as of June 1, 1997 (the "Indenture"), duly
executed and delivered between the Company and The Bank of New
York, as Trustee (the "Trustee"), to which Indenture reference is
hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Securities.
Upon the occurrence and continuation of a Special Event
prior to June 1, 2007 (the "Initial Optional Redemption Date"),
the Company shall have the right, at any time within 90 days
following the occurrence of such Special Event, to redeem this
Security in whole (but not in part) at the Special Event
Redemption Price. "Special Event Redemption Price" shall mean,
with respect to any redemption of the Securities following a
Special Event, an amount in cash equal to the greater of (i) 100%
of the principal amount to be redeemed or (ii) the sum, as
determined by a Quotation Agent, of the present values of the
principal amount and premium payable with respect to an Optional
Redemption (as defined below) of this Security on the Initial
Optional Redemption Date, together with scheduled payments of
interest on this Security from the prepayment date to and
including the Initial Optional Redemption Date, discounted to the
prepayment date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury
Rate, plus, in the case of each of clauses (i) and (ii), any
accrued but unpaid interest thereon (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if
any, to the date of such redemption.
In addition, the Company shall have the right to redeem
this Security, in whole or in part, at any time on or after the
Initial Optional Redemption Date (an "Optional Redemption"), at
the redemption prices set forth below (expressed as percentages
of principal to be redeemed) plus, in each case, accrued and
unpaid interest thereon (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, to the
applicable date of redemption (the "Optional Redemption Price")
if redeemed during the 12-month period beginning June 1 of the
years indicated below.
Year Percentage
2007 105.150%
2008 104.635%
2009 104.120%
2010 103.605%
2011 103.090%
2012 102.575%
2013 102.060%
2014 101.545%
2015 101.030%
2016 100.515%
2017 and thereafter 100.000%
The Optional Redemption Price or the Special Event
Redemption Price, as the case requires, shall be paid prior to
12:00 noon, New York time, on the date of such redemption or at
such earlier time as the Company determines, provided, that the
Company shall deposit with the Trustee an amount sufficient to
pay the applicable Redemption Price by 10:00 a.m., New York City
time, on the date such Redemption Price is to be paid. Any
redemption pursuant to this paragraph will be made upon not less
than 30 days nor more than 60 days notice. If the Securities are
only partially redeemed by the Company pursuant to an Optional
Redemption, the Securities will be redeemed pro rata or by lot or
by any other method utilized by the Trustee; provided that if, at
the time of redemption, the Securities are registered as a Global
Security, the Depositary shall determine the particular
Securities to be redeemed in accordance with its procedures.
In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion
hereof will be issued in the name of the holder hereof upon the
cancellation hereof.
Notwithstanding the foregoing, any redemption of
Securities by the Company shall be subject to the Company having
received any required regulatory approval.
In case an Event of Default, as defined in the
Indenture, shall have occurred and be continuing, the principal
of all of the Securities may be declared, and upon such
declaration shall become, due and payable, in the manner, with
the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of a
majority in aggregate principal amount of the Securities at the
time outstanding, as defined in the Indenture, to execute
supplemental indentures for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions
of the Indenture or of modifying in any manner the rights of the
holders of the Securities; provided, however, that no such
supplemental indenture shall, without the consent of each holder
of Securities then outstanding and affected thereby, (i) change
the Maturity Date of any Securities, or reduce the principal
amount thereof, or reduce any amount payable on redemption
thereof, or reduce the rate or extend the time of payment of
interest thereon (subject to Article XVI of the Indenture), or
make the principal of, or interest or premium on, the Securities
payable in any coin or currency other than U.S. dollars, or
impair or affect the right of any holder of Securities to
institute suit for the payment thereof, or (ii) reduce the
aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture. The
Indenture also contains provisions permitting the holders of a
majority in aggregate principal amount of the Securities at the
time outstanding affected thereby, on behalf of all of the
holders of the Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture, and its consequences,
except a default in the payment of the principal of or premium,
if any, or interest on any of the Securities or a default in
respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder
of Securities then outstanding. Any such consent or waiver by
the holder of this Security (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and
upon all future holders and owners of this Security and of any
Security issued in exchange herefor or in place hereof (whether
by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and premium, if any, and interest
(including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on this Security at the time and
place and at the rate and in the money herein prescribed.
So long as no Event of Default shall have occurred and
be continuing, the Company shall have the right, at any time and
from time to time during the term of the Securities, to defer
payments of interest by extending the interest payment period of
such Securities for a period not exceeding 10 consecutive semi-
annual periods, including the first such semi-annual period
during such extension period, and not extending beyond the
Maturity Date of the Securities (an "Extended Interest Payment
Period") or ending on a date other than an Interest Payment Date,
at the end of which period the Company shall pay all interest
then accrued and unpaid (together with interest thereon at the
rate specified for the Securities to the extent that payment of
such interest is enforceable under applicable law). Before the
termination of any such Extended Interest Payment Period, the
Company may further defer payments of interest by further
extending such Extended Interest Payment Period, provided that
such Extended Interest Payment Period, together with all such
previous and further extensions within such Extended Interest
Payment Period, (i) shall not exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such
Extended Interest Payment Period, (ii) shall not end on any date
other than an Interest Payment Date, and (iii) shall not extend
beyond the Maturity Date of the Securities. Upon the termination
of any such Extended Interest Payment Period and the payment of
all accrued and unpaid interest and any additional amounts then
due, the Company may commence a new Extended Interest Payment
Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or
pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of
the Company's capital stock (which includes common and preferred
stock) or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in
right of payment to the Securities or (iii) make any guarantee
payments with respect to any guarantee by the Company of the debt
securities or any Subsidiary of the Company (including any Other
Guarantees) if such guarantee ranks pari passu or junior in right
of payment to the Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Common Stock of the Company,
(b) any declaration of a dividend in connection with the
implementation of a stockholder's rights plan, or the issuance of
stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments
under the Capital Securities Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange
or the conversion of one class or series of the Company's capital
stock, for another class or series of the Company's capital
stock, (e) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the exchange or conversion of
such capital stock or the security being exchanged or converted,
and (f) purchases of Common Stock related to the issuance of
Common Stock or rights under any of the Company's benefit plans
for its directors, officers or employees or any of the Company's
dividend reinvestment plans) if at such time (i) there shall have
occurred any event of which the Company has actual knowledge that
(a) is or, with the giving of notice or the lapse of time, or
both, would be, an Event of Default and (b) in respect of which
the Company shall not have taken reasonable steps to cure,
(ii) if the Securities are held by Patriot Capital Trust, the
Company shall be in default with respect to its payment
obligations under the Capital Securities Guarantee or (iii) the
Company shall have given notice of its election of the exercise
of its right to extend the interest payment period and any such
extension shall be continuing.
Subject to (i) the receipt by the Company of any
required regulatory approval and (ii) the receipt by the Company
of an opinion of counsel to the effect that such distribution
will not be a taxable event to holders of Capital Securities, the
Company will have the right at any time to liquidate the Patriot
Capital Trust and cause the Securities to be distributed to the
holders of the Trust Securities in liquidation of the Trust.
The Securities are issuable only in registered form
without coupons in denominations of $1,000.00 and any integral
multiple thereof. As provided in the Indenture and subject to
the transfer restrictions limitations as may be contained herein
and therein from time to time, this Security is transferable by
the holder hereof on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the
office or agency of the Company in the City and State of New York
accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company or the Trustee duly executed by
the holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of authorized denominations
and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer
of this Security, the Company, the Trustee, any authenticating
agent, any paying agent, any transfer agent and the registrar may
deem and treat the holder hereof as the absolute owner hereof
(whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by
anyone other than the Security Registrar) for the purpose of
receiving payment of or on account of the principal hereof and
premium, if any, and (subject to the Indenture) interest due
hereon and for all other purposes, and neither the Company nor
the Trustee nor any authenticating agent nor any paying agent nor
any transfer agent nor any registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this Security, or
for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or
successor Person, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
CERTIFICATE OF TRUST
OF
PATRIOT CAPITAL TRUST I
This Certificate of Trust is being executed as of May 29,
1997 for the purposes of organizing a business trust pursuant to
the Delaware Business Trust Act, 12 Del. C. Sections 3801 et seq.
(the "Act").
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is "Patriot
Capital Trust I" (the "Trust").
2. Delaware Trustee. The name and business address of
the Delaware resident trustee of the Trust meeting the requirements
of Section 3807 of the Act are as follows:
The Bank of New York (Delaware)
400 White Clay Center, Route 273
Newark, Delaware 19711
3. Effective. This Certificate of Trust shall be
effective immediately upon filing in the office of the Secretary of
State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being all of the
trustees of the Trust, have duly executed this Certificate of Trust
as of the day and year first above written.
THE BANK OF NEW YORK (DELAWARE), as
Delaware Trustee
By:________________________________
_________________________________________________________________
DECLARATION OF TRUST
Patriot Capital Trust I
Dated as of May 29, 1997
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.................................... 1
ARTICLE II
ORGANIZATION
Section 2.1 Name........................................... 4
Section 2.2 Office......................................... 4
Section 2.3 Purpose........................................ 4
Section 2.4 Authority...................................... 4
Section 2.5 Title to Property of the Trust................. 4
Section 2.6 Powers of the Trustees......................... 5
Section 2.7 Filing of Certificate of Trust................. 6
Section 2.8 Duration of Trust.............................. 6
Section 2.9 Responsibilities of the Sponsor................ 6
Section 2.10 Declaration Binding on Holders of Securities... 6
ARTICLE III
TRUSTEES
Section 3.1 Trustees....................................... 7
Section 3.2 Delaware Trustee............................... 7
Section 3.3 Execution of Documents......................... 8
Section 3.4 Not Responsible for Recitals or Sufficiency of
Declaration.................................... 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 4.1 Exculpation.................................... 8
Section 4.2 Fiduciary Duty................................. 9
Section 4.3 Indemnification................................ 10
Section 4.4 Outside Businesses............................. 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
Section 5.1 Amendments..................................... 14
Section 5.2 Termination of Trust........................... 14
Section 5.3 Governing Law.................................. 14
Section 5.4 Headings....................................... 14
Section 5.5 Successors and Assigns......................... 14
Section 5.6 Partial Enforceability......................... 15
Section 5.7 Counterparts................................... 15
<PAGE>
DECLARATION OF TRUST
OF
PATRIOT CAPITAL TRUST I
May 29, 1997
DECLARATION OF TRUST ("Declaration") dated and
effective as of May 29, 1997 by the Trustees (as defined herein),
the Sponsor (as defined herein), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor desire to
establish a trust (the "Trust") pursuant to the Business Trust
Act (as defined herein) for the sole purpose of (i) issuing and
selling certain securities representing undivided beneficial
interests in the assets of the Trust, (ii) holding certain
Debentures of the Debenture Issuer (each as defined herein), and
(iii) engaging in only those other activities necessary,
advisable or incidental thereto; and
NOW, THEREFORE, it being the intention of the parties
hereto that the Trust constitute a business trust under the
Business Trust Act and that this Declaration constitutes the
governing instrument of such business trust, the Trustees declare
that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the
assets of the Trust issued hereunder, subject to the provisions
of this Declaration.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration
has the same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration of Trust as modified,
supplemented or amended from time to time;
(d) all references in this Declaration to
Articles and Sections are to Articles and Sections of this
Declaration unless otherwise specified;
(e) a reference to the singular includes the
plural and vice versa;
(f) a reference to any Person shall include its
successors and assigns;
(g) a reference to any agreement or instrument
shall mean such agreement or instrument as supplemented,
modified, amended and restated and in effect from time to time;
and
(h) a reference to any statute, law, rule or
regulation, shall include any amendments thereto and any
successor statute, law, rule or regulation.
"Administrative Trustee" means any Trustee
other than the Delaware Trustee and Property Trustees.
"Affiliate" has the same meaning as given to that term
in Rule 405 of the Securities Act or any successor rule
thereunder.
"Business Day" means any day other than a day on which
banking institutions in New York, New York are authorized or
required by any applicable law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. Sections 3801 et seq., as it may be
amended from time to time, or any successor legislation.
"Capital Security" means a security representing an
undivided interest in the assets of the Trust with such terms as
may be set out in any amendment to this Declaration.
"Commission" means the Securities and Exchange
Commission.
"Common Security" means a security representing an
undivided beneficial interest in the assets of the Trust with
such terms as may be set out in any amendment to this
Declaration.
"Company Indemnified Person" means (a) any
Administrative Trustee; (b) any Affiliate of any Administrative
Trustee; (c) any officers, directors, shareholders, members,
partners, employees, representatives or agents of any
Administrative Trustee; or (d) any employee or agent of the Trust
or its Affiliates.
"Covered Person" means any officer, director,
shareholder, partner, member, representative, employee or agent
of the Trust or the Trust's Affiliates.
"Debenture Issuer" means Patriot in its capacity as the
issuer of the Debentures under the Indenture.
"Debentures" means Debentures to be issued by the
Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means the original trustee under
the Indenture until a successor is appointed thereunder, and
thereafter means any such successor trustee.
"Delaware Trustee" has the meaning set forth in
Section 3.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 4.3(b).
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the indenture to be entered into
between Patriot and the Debenture Trustee pursuant to which the
Debentures are to be issued.
"Patriot" means Patriot Bank Corp., a Delaware
corporation, or any successor entity in a merger.
"Person" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Property Trustee" has the meaning set forth in
Section 3.1.
"Securities" means collectively the Common Securities
and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, or any successor legislation.
"Sponsor" means Patriot in its capacity as sponsor of
the Trust.
"Trustee" or "Trustees" means each Person who has
signed this Declaration as a trustee, so long as such Person
shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed,
qualified and serving as Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
Section 2.1 Name
The Trust created by this Declaration is named "Patriot
Capital Trust I." The Trust's activities may be conducted under
the name of the Trust or any other name deemed advisable by the
Administrative Trustees.
Section 2.2 Office
The address of the principal office of the Trust is
Patriot Bank Corp., High and Hanover Streets, Pottstown, PA 19464
Attention: Richard A. Elko, Administrative Trustee. On ten
Business Days written notice to the holders of Securities, the
Administrative Trustees may designate another principal office.
Section 2.3 Purpose
The exclusive purposes and functions of the Trust are
(a) to issue and sell Securities, (b) purchase and hold certain
Debentures of the Debenture Issuer, and (c) engage in only those
other activities necessary, advisable or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would
cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
Section 2.4 Authority
Subject to the limitations provided in this
Declaration, the Administrative Trustees shall have exclusive and
complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with
their powers shall constitute the act of and serve to bind the
Trust. In dealing with the Administrative Trustees acting on
behalf of the Trust, no person shall be required to inquire into
the authority of the Administrative Trustees to bind the Trust.
Persons dealing with the Trust are entitled to rely conclusively
on the power and authority of the Administrative Trustees as set
forth in this Declaration.
Section 2.5 Title to Property of the Trust
Legal title to all assets of the Trust shall be vested
in the Trust.
Section 2.6 Powers of the Trustees
The Administrative Trustees shall have the exclusive
power and authority to cause the Trust to engage in the following
activities:
(a) to issue and sell the Securities in
accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Capital Securities and
no more than one series of Common Securities, and, provided
further, that there shall be no interests in the Trust other than
the Securities;
(b) in connection with the issue and sale of the
Capital Securities, at the direction of the Sponsor, to:
(i) execute, if necessary, an offering
memorandum (the "Offering Memorandum") in preliminary and
final form prepared by the Sponsor, in relation to the
offering and sale of Capital Securities (i) to qualified
institutional buyers in reliance on Rule 144A under the
Securities Act, and (ii) to institutional "accredited
investors" (as defined in Rule 501(a)(1),(2),(3) or (7)
under the Securities Act);
(ii) execute and file any documents prepared
by the Sponsor, or take any acts as determined by the
Sponsor to be necessary in order to qualify or register all
or part of the Capital Securities in any State or foreign
jurisdiction in which the Sponsor has determined to qualify
or register such Capital Securities for sale;
(iii) execute and deliver letters,
documents, or instruments with The Depository Trust Company
relating to the Capital Securities;
(iv) execute and file an application, and
all other applications, statements, certificates, agreements
and other instruments that shall be necessary or desirable,
for including the Capital Securities in the Private
Offering, Resales and Trading through Automated Linkages
Market;
(v) execute and enter into subscription
agreements, purchase agreements, registration rights
agreements and other related agreements providing for the
sale of the Securities;
(c) to employ or otherwise engage employees and
agents (who may be designated as officers with titles) and
managers, contractors, advisors, and consultants and provide for
reasonable compensation for such services;
(d) to incur expenses that are necessary or
incidental to carry out any of the purposes of this Declaration,
which expenses shall be paid for by the Sponsor in all respects;
and
(e) to execute all documents or instruments,
perform all duties and powers, and do all things for and on
behalf of the Trust in all matters necessary or incidental to the
foregoing.
Section 2.7 Filing of Certificate of Trust
On or after the date of execution of this Declaration,
the Trustees shall cause the filing of the Certificate of Trust
for the Trust in the form attached hereto as Exhibit A with the
Secretary of State of the State of Delaware.
Section 2.8 Duration of Trust
The Trust, absent termination pursuant to the
provisions of Section 5.2, shall have existence for thirty-one
(31) years from the date hereof.
Section 2.9 Responsibilities of the Sponsor
In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the exclusive right and
responsibility to engage in the following activities:
(a) to prepare the Offering Memorandum, including
any amendments or supplements thereto;
(b) to determine the States and foreign
jurisdictions in which to take appropriate action to qualify or
register for sale all or part of the Capital Securities and to do
any and all such acts, other than actions which must be taken by
the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and
filed by the Trust, as the Sponsor deems necessary or advisable
in order to comply with the applicable laws of any such States
and foreign jurisdictions; and
(c) to negotiate the terms of subscription
agreements, purchase agreements, registration rights and other
related agreements providing for the sale of the Securities.
Section 2.10 Declaration Binding on Holders of
Securities
Every Person by virtue of having become a holder of a
Security or any interest therein in accordance with the terms of
this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
ARTICLE III
TRUSTEES
Section 3.1 Trustees
The number of Trustees initially shall be four (4), and
thereafter the number of Trustees shall be such number as shall
be fixed from time to time by a written instrument signed by the
Sponsor. The Sponsor is entitled to appoint or remove without
cause any Trustee at any time; provided, however that the number
of Trustees shall in no event be less than two (2); provided
further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or
which, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the
"Delaware Trustee") and (2) there shall be at least one
Administrative Trustee who is an employee or officer of, or is
affiliated with, the Sponsor.
Except as expressly set forth in this Declaration, if
there are more than two Administrative Trustees, any power of
such Administrative Trustees may be exercised by, or with the
consent of, a majority of such Administrative Trustees; provided
that if there are two Administrative Trustees, any power of such
Administrative Trustees shall be exercised by both Administrative
Trustees; provided further that if there is only one
Administrative Trustee, all powers of the Administrative Trustees
shall be exercised by such one Administrative Trustee.
The initial Administrative Trustee(s) shall be:
Richard A. Elko
Joseph W. Major
Gary N. Geiringer
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
Prior to the issuance of the Securities, the Sponsor
shall appoint another trustee (the "Property Trustee") meeting
the requirements of the Trust Indenture Act of 1939, as amended,
by the execution of an amendment to this Declaration executed by
the Administrative Trustees, the Sponsor, the Property Trustee
and the Delaware Trustee.
Section 3.2 Delaware Trustee
Notwithstanding any other provision of this
Declaration, the Delaware Trustee shall not be entitled to
exercise any of the powers, nor shall the Delaware Trustee have
any of the duties and responsibilities of the Administrative
Trustees described in this Declaration. The Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling
the requirements of Section 3807 of the Business Trust Act.
Notwithstanding anything herein to the contrary, the Delaware
Trustee shall not be liable for the acts or omissions to act of
the Trust or of the Administrative Trustees except such acts as
the Delaware Trustee is expressly obligated or authorized to
undertake under this Declaration or the Business Trust Act and
except for the negligence or willful misconduct of the Delaware
Trustee.
Section 3.3 Execution of Documents
(a) Unless otherwise determined by the
Administrative Trustees, and except as otherwise required by the
Business Trust Act, any Administrative Trustee is, or if there
are more than two Administrative Trustees, any two Administrative
Trustees are, authorized to execute on behalf of the Trust any
documents which the Administrative Trustees have the power and
authority to cause the Trust to execute pursuant to Section 2.6;
and
(b) an Administrative Trustee may, by power of
attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the
purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute
pursuant to Section 2.6.
Section 3.4 Not Responsible for Recitals or
Sufficiency of Declaration
The recitals contained in this Declaration shall be
taken as the statements of the Sponsor, and the Trustees do not
assume any responsibility for their correctness. The Trustees
make no representations as to the value or condition of the
property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this
Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 4.1 Exculpation.
(a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust
or any Covered Person for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person
by this Declaration or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by
reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions; and
(b) an Indemnified Person shall be fully
protected in relying in good faith upon the records of the Trust
and upon such information, opinions, reports or statements
presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Trust,
including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or
any other facts pertinent to the existence and amount of assets
from which distributions to holders of Securities might properly
be paid.
Section 4.2 Fiduciary Duty
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered
Person, an Indemnified Person acting under this Declaration shall
not be liable to the Trust or to any other Covered Person for its
good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict
the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified
Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists
or arises between Covered Persons; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the Trust or
any holder of Securities,
the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case
the relative interest of each party (including its own interest)
to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interests, any customary or
accepted industry practices, and any applicable generally
accepted accounting practices or principles. In the absence of
bad faith by the Indemnified Person, the resolution, action or
term so made, taken or provided by the Indemnified Person shall
not constitute a breach of this Declaration or any other
agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person
is permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be
entitled to consider such interests and factors as it
desires, including its own interests, and shall have no
duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other
Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other
or different standard imposed by this Declaration or by
applicable law.
Section 4.3 Indemnification
(a) (i) The Debenture Issuer shall indemnify, to
the full extent permitted by law, any Company Indemnified
Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed, action, suit
or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of
the Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify,
to the full extent permitted by law, any Company Indemnified
Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit
by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust,
except that no such indemnification shall be made in respect
of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or
suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company
Indemnified Person shall be successful on the merits or
otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission
of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this
Section 4.3(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection
therewith.
(iv) Any indemnification under paragraphs (i)
and (ii) of this Section 4.3(a) (unless ordered by a court)
shall be made by the Debenture Issuer only as authorized in
the specific case upon a determination that indemnification
of the Company Indemnified Person is proper in the
circumstances, because he has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Administrative
Trustees by a majority vote of a quorum consisting of such
Administrative Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable,
or, even if obtainable, if a quorum of disinterested
Administrative Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(v) Expenses (including attorneys' fees)
incurred by a Company Indemnified Person in defending a
civil, criminal, administrative or investigative action,
suit or proceeding referred to in paragraphs (i) and (ii) of
this Section 4.3(a) shall be paid by the Debenture Issuer in
advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this
Section 4.3(a) Notwithstanding the foregoing, no advance
shall be made by the Debenture Issuer if a determination is
reasonably and promptly made (i) by the Administrative
Trustees by a majority vote of a quorum of disinterested
Administrative Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of
disinterested Administrative Trustees so directs, by
independent legal counsel in a written opinion, or (iii) the
Common Security Holder of the Trust, that, based upon the
facts known to the Administrative Trustees, counsel or the
Common Security Holder at the time such determination is
made, such Company Indemnified Person acted in bad faith or
in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect
to any criminal proceeding, that such Company Indemnified
Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made
in instances where the Administrative Trustees, independent
legal counsel or Common Security Holder reasonably determine
that such person deliberately breached his duty to the Trust
or the holders of Securities.
(vi) The indemnification and advancement of
expenses provided by, or granted pursuant to, the other
paragraphs of this Section 4.3(a) shall not be deemed
exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Capital Security
Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office. All rights to indemnification under
this Section 4.3(a) shall be deemed to be provided by a
contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time
while this Section 4.3(a) is in effect. Any repeal or
modification of this Section 4.3(a) shall not affect any
rights or obligations then existing.
(vii) The Sponsor or the Trust may purchase
and maintain on behalf of any person who is or was a Company
Indemnified Person insurance against any liability asserted
against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the
Debenture Issuer would have the power to indemnify him
against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(a),
references to "the Trust" shall include, in addition to the
resulting or surviving entity, any constituent entity
(including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a
director, trustee, officer or employee of such constituent
entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position
under the provisions of this Section 4.3(a) with respect to
the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence
had continued.
(ix) The indemnification and advancement of
expenses provided by, or granted pursuant to, this
Section 4.3(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the
(i) the Delaware Trustee, (ii) any Affiliate of the Delaware
Trustee, and (iii) any officers, directors, shareholders,
members, partners, employees, representatives, nominees,
custodians or agents of the Delaware Trustee (each of the Persons
in (i) through (iii) being referred to as a "Fiduciary
Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against,
or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligation to indemnify as set forth in this Section 4.3(b)
shall survive the termination of this Declaration.
Section 4.4 Outside Businesses
Any Covered Person, the Sponsor and the Delaware
Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and
the Trust and the holders of Securities shall have no rights by
virtue of this Declaration in and to such independent ventures or
the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. No Covered Person, the
Sponsor or the Delaware Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and any Covered Person, the
Sponsor and the Delaware Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other
opportunity. Any Covered Person and the Delaware Trustee may
engage or be interested in any financial or other transaction
with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for or may act on any committee
or body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
Section 5.1 Amendments
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument
executed by all of the Administrative Trustees and the Sponsor.
Section 5.2 Termination of Trust
(a) The Trust shall terminate and be of no
further force or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or
the revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor or the Trust; and
(iv) before the issuance of any Securities,
with the consent of all of the Administrative Trustees and
the Sponsor.
(b) As soon as is practicable after the
occurrence of an event referred to in Section 5.2(a), the
Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware.
Section 5.3 Governing Law
THIS DECLARATION AND THE RIGHTS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES
SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO ITS PRINCIPLES
OF CONFLICT OF LAWS.
Section 5.4 Headings
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
Section 5.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto
is named or referred to, the successors and assigns of such party
shall be deemed to be included, and all covenants and agreements
in this Declaration by the Sponsor and the Trustees shall bind
and inure to the benefit of their respective successors and
assigns, whether so expressed.
Section 5.6 Partial Enforceability
If any provision of this Declaration, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the
application of such provision to persons or circumstances other
than those to which it is held invalid, shall not be affected
thereby.
Section 5.7 Counterparts
This Declaration may contain more than one counterpart
of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same
force and effect as though all of the signers had signed a single
signature page.<PAGE>
IN WITNESS WHEREOF, the undersigned, have caused this
Declaration to be executed as of the day and year first above
written.
___________________________________
Name:
As Administrative Trustee
___________________________________
Name:
As Administrative Trustee
___________________________________
Name:
As Administrative Trustee
THE BANK OF NEW YORK (DELAWARE), as
Delaware Trustee
By:________________________________
Name:
Title: Authorized Signatory
PATRIOT BANK CORP.
By:________________________________
Name:
Title:
________________________________________________________________
AMENDED AND RESTATED DECLARATION
OF TRUST
PATRIOT CAPITAL TRUST I
Dated as of June 5, 1997
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions.................................. 2
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.............. 11
Section 2.2 Lists of Holders of Securities................ 11
Section 2.3 Reports by the Property Trustee............... 12
Section 2.4 Periodic Reports to Property Trustee.......... 12
Section 2.5 Evidence of Compliance with Conditions
Precedent..................................... 12
Section 2.6 Events of Default; Waiver..................... 12
Section 2.7 Event of Default; Notice...................... 15
ARTICLE III
ORGANIZATION
Section 3.1 Name.......................................... 16
Section 3.2 Office........................................ 16
Section 3.3 Purpose....................................... 16
Section 3.4 Authority..................................... 16
Section 3.5 Title to Property of the Trust................ 17
Section 3.6 Powers and Duties of the Administrative
Trustees...................................... 17
Section 3.7 Prohibition of Actions by the Trust and the
Trustees...................................... 21
Section 3.8 Powers and Duties of the Property Trustee..... 22
Section 3.9 Certain Duties and Responsibilities of the
Property Trustee.............................. 25
Section 3.10 Certain Rights of Property Trustee............ 27
Section 3.11 Delaware Trustee.............................. 30
Section 3.12 Execution of Documents........................ 30
Section 3.13 Not Responsible for Recitals or Issuance of
Securities.................................... 31
Section 3.14 Duration of Trust............................. 31
Section 3.15 Mergers....................................... 31
ARTICLE IV
SPONSOR
Section 4.1 Sponsor's Purchase of Common Securities....... 33
Section 4.2 Responsibilities of the Sponsor............... 33
Section 4.3 Right to Proceed.............................. 34
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees: Appointment of Co-Trustee. 34
Section 5.2 Delaware Trustee.............................. 35
Section 5.3 Property Trustee; Eligibility................. 36
Section 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally................ 37
Section 5.5 Administrative Trustees....................... 37
Section 5.6 Delaware Trustee.............................. 38
Section 5.7 Appointment, Removal and Resignation of Trustee38
Section 5.8 Vacancies among Trustees...................... 40
Section 5.9 Effect of Vacancies........................... 40
Section 5.10 Meetings...................................... 41
Section 5.11 Delegation of Power........................... 41
Section 5.12 Merger, Conversion, Consolidation or Succession to
Business...................................... 42
ARTICLE VI
DISTRIBUTIONS
Section 6.1 Distributions................................. 42
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.1 General Provisions Regarding Securities....... 43
Section 7.2 Execution and Authentication.................. 44
Section 7.3 Form and Dating............................... 44
Section 7.4 Registrar, Paying Agent and Exchange Agent.... 47
Section 7.5 Paying Agent to Hold Money in Trust........... 47
Section 7.6 Replacement Securities........................ 48
Section 7.7 Outstanding Capital Securities................ 48
Section 7.8 Capital Securities in Treasury................ 49
Section 7.9 Temporary Securities.......................... 49
Section 7.10 Cancellation.................................. 50
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1 Termination of Trust.......................... 51
ARTICLE IX
TRANSFER OF INTERESTS
Section 9.1 Transfer of Securities........................ 52
Section 9.2 Transfer Procedures and Restrictions.......... 54
Section 9.3 Deemed Security Holders....................... 64
Section 9.4 Book Entry Interests.......................... 65
Section 9.5 Notices to Clearing Agency.................... 65
Section 9.6 Appointment of Successor Clearing Agency...... 66
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 10.1 Liability..................................... 66
Section 10.2 Exculpation................................... 66
Section 10.3 Fiduciary Duty................................ 67
Section 10.4 Indemnification............................... 68
Section 10.5 Outside Businesses............................ 72
ARTICLE XI
ACCOUNTING
Section 11.1 Fiscal Year................................... 73
Section 11.2 Certain Accounting Matters.................... 73
Section 11.3 Banking....................................... 74
Section 11.4 Withholding................................... 74
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments.................................... 75
Section 12.2 Meetings of the Holders; Action by Written
Consent....................................... 77
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 13.1 Representations and Warranties of Property
Trustee....................................... 79
Section 13.2 Representations and Warranties of Delaware
Trustee........................................80
ARTICLE XIV
REGISTRATION RIGHTS
Section 14.1 Registration Rights Agreement................. 81
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices....................................... 81
Section 15.2 Governing Law................................. 82
Section 15.3 Intention of the Parties...................... 82
Section 15.4 Headings...................................... 83
Section 15.5 Successors and Assigns........................ 83
Section 15.6 Partial Enforceability........................ 83
Section 15.7 Counterparts.................................. 83
ANNEX I TERMS OF SECURITIES......................I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE.....A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE......A2-1
EXHIBIT B SPECIMEN OF DEBENTURE....................B-1
EXHIBIT C PURCHASE AGREEMENT.......................C-1
EXHIBIT D REGISTRATION RIGHTS AGREEMENT............D-1
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Trust Agreement
310(a).................................. 5.3
310(b).................................. 5.3(c); 5.3(d)
311(a).................................. 2.2(b)
311(b).................................. 2.2(b)
312(a).................................. 2.2(a)
312(b).................................. 2.2(b)
313..................................... 2.3
314(a).................................. 2.4; 3.6(j)
314(c).................................. 2.5
315(a).................................. 3.9
315(b).................................. 2.7(a)
315(c).................................. 3.9(a)
315(d).................................. 3.9(b)
316(a).................................. 2.6
316(c).................................. 3.6(e)
317(a).................................. 3.8(e); 3.8(h)
317(b).................................. 3.8(i); 7.5
_______________
* This Cross-Reference Table does not constitute part of the
Trust Agreement and shall not affect the interpretation of
any of its terms or provisions.
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
PATRIOT CAPITAL TRUST I
June 5, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Trust
Agreement") dated and effective as of June 5, 1997, by the
Trustees (as defined herein), the Sponsor (as defined herein) and
by the holders, from time to time, of undivided beneficial
interests in the Trust to be issued pursuant to this Trust
Agreement;
WHEREAS, the Trustees and the Sponsor established
Patriot Capital Trust I (the "Trust"), a trust formed under the
Delaware Business Trust Act pursuant to a Declaration of Trust
dated as of May 29, 1997 (the "Original Declaration"), and a
Certificate of Trust filed with the Secretary of State of the
State of Delaware on May 29, 1997, for the sole purpose of
issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain Debentures of the Debenture Issuer
(each as hereinafter defined) , and engaging in only those other
activities necessary, advisable or incidental thereto;
WHEREAS, as of the date hereof, no interests in the
Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Trust Agreement, amend and restate each and every term and
provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties
hereto to continue the Trust as a statutory business trust under
the Business Trust Act and that this Trust Agreement constitute
the governing instrument of such business trust, the Trustees
declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the
assets of the Trust issued hereunder, subject to the provisions
of this Trust Agreement.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Trust Agreement but
not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Trust Agreement
has the same meaning throughout;
(c) all references to "the Trust Agreement" or "this
Trust Agreement" are to this Trust Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Trust Agreement to Articles
and Sections and Annexes and Exhibits are to Articles and
Sections of and Annexes and Exhibits to this Trust Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Trust Agreement unless
otherwise defined in this Trust Agreement or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural
and vice versa.
"Administrative Trustee" has the meaning set forth in
Section 5.1.
"Affiliate" has the same meaning as given to that term
in Rule 405 under the Securities Act or any successor rule
thereunder.
"Agent" means any Paying Agent, Registrar or Exchange
Agent.
"Authorized Officer" of a Person means any other Person
that is authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a
Global Certificate registered in the name of a Clearing Agency or
its nominee, ownership and transfers of which shall be maintained
and made through book entries by a Clearing Agency as described
in Section 9.4.
"Business Day" means any day other than a Saturday or a
Sunday or a day on which banking institutions in the City of New
York are authorized or required by law or executive order to
close.
"Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as it may
be amended from time to time, or any successor legislation.
"Capital Security Beneficial Owner" means, with respect
to a Book Entry Interest, a Person who is the beneficial owner of
such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A
Capital Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the
Series A Capital Securities Guarantee and the Series B Capital
Securities Guarantee.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act
that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall
be registered a Global Certificate and which shall undertake to
effect book entry transfers and pledges of the Capital
Securities.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time the Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"Closing Time" means the "Closing Time" under the
Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor legislation.
"Commission" means the United States Securities and
Exchange Commission as from time to time constituted, or if at
any time after the execution of this Trust Agreement such
Commission is not existing and performing the duties now assigned
to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in
Section 7.1(a).
"Common Securities Guarantee" means the guarantee
agreement dated as of June 5, 1997 of the Sponsor in respect of
the Common Securities.
"Company Indemnified Person" means (a) any
Administrative Trustee; (b) any Affiliate of any Administrative
Trustee; (c) any officers, directors, shareholders, members,
partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of
the Trust or its Affiliates.
"Corporate Trust Office" means the office of the
Property Trustee at which the corporate trust business of the
Property Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this
Agreement is located at 101 Barclay Street, 21 West, New York,
New York 10286.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent
of (i) the Trust or (ii) the Trust's Affiliates; and (b) any
Holder of Securities.
"Debenture Issuer" means Patriot Bank Corp., a Delaware
corporation, or any successor entity resulting from any
consolidation, amalgamation, merger or other business
combination, in its capacity as issuer of the Debentures under
the Indenture.
"Debenture Trustee" means The Bank of New York, a New
York banking corporation, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means, collectively, the Series A
Debentures and the Series B Debentures.
"Default" means an event, act or condition that with
notice or lapse of time, or both, would constitute an Event of
Default.
"Definitive Capital Securities" shall have the meaning
set forth in Section 7.3(c).
"Delaware Trustee" has the meaning set forth in
Section 5.2.
"Direct Action" shall have the meaning set forth in
Section 3.8(e).
"Distribution" means a distribution payable to Holders
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Event of Default" in respect of the Securities means
an Event of Default (as defined in the Indenture) that has
occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in
Section 7.4.
"Exchange Offer" means the offer that may be made
pursuant to the Registration Rights Agreement (i) by the Trust to
exchange Series B Capital Securities for Series A Capital
Securities and (ii) by the Debenture Issuer to exchange Series B
Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities
Guarantee.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 10.4(b).
"Fiscal Year" has the meaning set forth in
Section 11.1.
"Global Capital Security" has the meaning set forth in
Section 7.3(a).
"Holder" means a Person in whose name a Security is
registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of June 1,
1997, among the Debenture Issuer and the Debenture Trustee, as
amended from time to time.
"Investment Company" means an investment company as
defined in the Investment Company Act.
"Investment Company Act" means the Investment Company
Act of 1940, as amended from time to time, or any successor
legislation.
"Legal Action" has the meaning set forth in
Section 3.6(g).
"List of Holders" has the meaning set forth in
Section 2.2(a).
"Majority in liquidation amount" means, with respect to
the Trust Securities, except as provided in the terms of the
Capital Securities or by the Trust Indenture Act, Holder(s) of
outstanding Trust Securities voting together as a single class
or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of more than 50%
of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities
of the relevant class.
"Offering Memorandum" has the meaning set forth in
Section 3.6(b).
"Officers' Certificate" means, with respect to any
Person, a certificate signed by any two of the Chairman, a Vice
Chairman, the Chief Executive Officer, the President, a Vice
President, the Chief Financial Officer, the Treasurer, the
Comptroller, the Secretary, or an Assistant Secretary of such
Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this
Trust Agreement shall include:
(a) a statement that each officer signing the
Certificate has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion,
is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.
"Opinion of Counsel" means a written opinion of
counsel, who may be an employee of the Sponsor, and who shall be
acceptable to the Property Trustee.
"Paying Agent" has the meaning specified in
Section 7.4.
"Payment Amount" has the meaning specified in
Section 6.1.
"Person" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"PORTAL" has the meaning set forth in
Section 3.6(b)(iii).
"Property Trustee" has the meaning set forth in
Section 5.3(a).
"Property Trustee Account" has the meaning set forth in
Section 3.8(c).
"Purchase Agreement" means the Purchase Agreement for
the initial offering and sale of Capital Securities in the form
of Exhibit C.
"QIBs" shall mean qualified institutional buyers as
defined in Rule 144A.
"Quorum" means a majority of the Administrative Trust-
ees or, if there are only two Administrative Trustees, both of
them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration
Rights Agreement dated as of June 5, 1997, by and among the
Trust, the Debenture Issuer and the Initial Purchasers named
therein, as amended from time to time.
"Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Related Party" means, with respect to the Sponsor, any
direct or indirect wholly owned subsidiary of the Sponsor or any
other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
"Responsible Officer" means any officer within the
Corporate Trust Office of the Property Trustee, including any
vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer or other
officer of the Corporate Trust Office of the Property Trustee
customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Restricted Definitive Capital Securities" has the
meaning set forth in Section 7.3(c).
"Restricted Capital Security" means a Capital Security
required by Section 9.2 to contain a Restricted Securities
Legend.
"Restricted Securities Legend" has the meaning set
forth in Section 9.2.
"Rule 3a-5" means Rule 3a-5 under the Investment
Company Act, or any successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as
such rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act,
as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission.
"Securities" or "Trust Securities" means the Common
Securities and the outstanding Capital Securities.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities
Guarantee and the Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified
in Section 7.1(a).
"Series A Capital Securities Guarantee" means the
guarantee agreement dated as of June 5, 1997, by the Sponsor in
respect of the Series A Capital Securities.
"Series A Debentures" means the Series A 10.30% Junior
Subordinated Deferrable Interest Debentures due June 1, 2027 of
the Debenture Issuer issued pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified
in Section 7.1(a).
"Series B Capital Securities Guarantee" means the
guarantee agreement to be entered into in connection with the
Exchange Offer by the Sponsor in respect of the Series B Capital
Securities.
"Series B Debentures" means the Series B 10.30% Junior
Subordinated Deferrable Interest Debentures due June 1, 2027 of
the Debenture Issuer issued pursuant to the Indenture in the
event of the Exchange Offer.
"Special Event" has the meaning set forth in Annex I
hereto.
"Sponsor" means Patriot Bank Corp., a Delaware
corporation, or any successor entity resulting from any merger,
consolidation, amalgamation or other business combination, in its
capacity as sponsor of the Trust.
"Successor Entity" has the meaning set forth in
Section 3.15(b)(i).
"Super Majority" has the meaning set forth in
Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the
Trust Securities, except as provided in the terms of the Capital
Securities or by the Trust Indenture Act, Holder(s) of
outstanding Trust Securities voting together as a single class
or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of 10% or more
of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities
of the relevant class.
"Treasury Regulations" means the income tax
regulations, including temporary and proposed regulations,
promulgated under the Code by the United States Treasury, as such
regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has
signed this Trust Agreement as a trustee, so long as such Person
shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed,
qualified and serving as trustees in accordance with the
provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning
set forth in Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.
(a) This Trust Agreement is subject to the provisions
of the Trust Indenture Act that are required to be part of this
Trust Agreement in order for this Trust Agreement to be qualified
under the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Trust Agreement limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture
Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this
Trust Agreement shall not affect the nature of the Securities as
equity securities representing undivided beneficial interests in
the assets of the Trust.
Section 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative
Trustees on behalf of the Trust shall provide the Property
Trustee, unless the Property Trustee is Registrar for the
Securities (i) within 14 days after each record date for payment
of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders
("List of Holders") as of such record date, provided that neither
the Sponsor nor the Administrative Trustees on behalf of the
Trust shall be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent
List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at
any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Property
Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust
Indenture Act.
Section 2.3 Reports by the Property Trustee.
Within 60 days after January 15 of each year,
commencing January 15, 1998, the Property Trustee shall provide
to the Holders of the Capital Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide to the Property Trustee such
documents, reports and information as are required by Section 314
(if any) and the compliance certificate required by Section 314
of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
Section 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide to the Property Trustee such
evidence of compliance with any conditions precedent provided for
in this Trust Agreement that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act may be
given in the form of an Officers' Certificate.
Section 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Capital Securities may, by vote or written consent, on behalf of
the Holders of all of the Capital Securities, waive any past
Event of Default in respect of the Capital Securities and its
consequences, provided that, if the underlying Event of Default
under the Indenture:
(i) is not waivable under the Indenture, the
Event of Default under the Trust Agreement shall also not be
waivable; or
(ii) requires the consent or vote of greater than
a majority in aggregate principal amount of the holders of
the Debentures (a "Super Majority") to be waived under the
Indenture, the Event of Default under the Trust Agreement
may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the
Capital Securities that the relevant Super Majority repre-
sents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby
expressly excluded from this Trust Agreement and the Securities,
as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with
respect to the Capital Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Trust
Agreement, but no such waiver shall extend to any subsequent or
other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by
the Holders of the Capital Securities of an Event of Default with
respect to the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of
any such Event of Default with respect to the Common Securities
for all purposes of this Trust Agreement without any further act,
vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of
all of the Common Securities, waive any past Event of Default
with respect to the Common Securities and its consequences,
provided that, if the underlying Event of Default under the
Indenture:
(i) is not waivable under the Indenture, except
where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Trust Agreement
as provided below in this Section 2.6(b), the Event of
Default under the Trust Agreement shall also not be
waivable; or
(ii) requires the consent or vote of a Super
Majority to be waived, except where the Holders of the
Common Securities are deemed to have waived such Event of
Default under the Trust Agreement as provided below in this
Section 2.6(b), the Event of Default under the Trust
Agreement may only be waived by the vote of the Holders of
at least the proportion in aggregate liquidation amount of
the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the
Debentures outstanding;
provided further, the Holders of Common Securities will be deemed
to have waived any such Event of Default and all Events of
Default with respect to the Common Securities and its
consequences if all Events of Default with respect to the Capital
Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the Holders of the Capital Securities
and only the Holders of the Capital Securities will have the
right to direct the Property Trustee in accordance with the terms
of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of SectionSection 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act and such
SectionSection 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Trust
Agreement and the Securities, as permitted by the Trust Indenture
Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such waiver, any such default shall cease to exist and any
Event of Default with respect to the Common Securities arising
therefrom shall be deemed to have been cured for every purpose of
this Trust Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the
Indenture by the Property Trustee, at the direction of the
Holders of the Capital Securities, constitutes a waiver of the
corresponding Event of Default under this Trust Agreement. The
foregoing provisions of this Section 2.6(c) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby
expressly excluded from this Trust Agreement and the Securities,
as permitted by the Trust Indenture Act.
Section 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders, notices of all defaults
with respect to the Securities actually known to a Responsible
Officer, unless such defaults have been cured before the giving
of such notice (the term "defaults" for the purposes of this
Section 2.7(a) being hereby defined to be an Event of Default as
defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice
provided therein); provided that, except for a default in the
payment of principal of (or premium, if any) or interest on any
of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer
in good faith determines that the withholding of such notice is
in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 5.01(a) and 5.01(b)
of the Indenture; or
(ii) any default as to which the Property Trustee
shall have received written notice or of which a Responsible
Officer charged with the administration of the Trust
Agreement shall have actual knowledge.
(c) Within five Business Days after the occurrence of
any Event of Default actually known to the Property Trustee, the
Property Trustee shall transmit notice of such Event of Default
to the Holders of the Capital Securities, the Administrative
Trustees and the Sponsor, unless such Event of Default shall have
been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a
certification as to whether or not they are in compliance with
all the conditions and covenants applicable to them under this
Trust Agreement.
ARTICLE III
ORGANIZATION
Section 3.1 Name.
The Trust is named "Patriot Capital Trust I" as such
name may be modified from time to time by the Administrative
Trustees following written notice to the Holders. The Trust's
activities may be conducted under the name of the Trust or any
other name deemed advisable by the Administrative Trustees.
Section 3.2 Office.
The address of the principal office of the Trust is c/o
Patriot Bank Corp, High and Hanover Streets, Pottstown, PA 19464.
On ten Business Days written notice to the Holders of Securities,
the Administrative Trustees may designate another principal
office.
Section 3.3 Purpose.
The exclusive purposes and functions of the Trust are
(a) to issue and sell Securities, (b) use the proceeds from the
sale of the Securities to acquire the Debentures, and (c) except
as otherwise limited herein, to engage in only those other
activities necessary, advisable or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived
from investments, mortgage or pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
Section 3.4 Authority.
Subject to the limitations provided in this Trust
Agreement and to the specific duties of the Property Trustee, the
Administrative Trustees shall have exclusive and complete
authority to carry out the purposes of the Trust. An action
taken by the Administrative Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust
and an action taken by the Property Trustee on behalf of the
Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting
on behalf of the Trust, no Person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Trust
Agreement.
Section 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Trustee Account or as otherwise
provided in this Trust Agreement, legal title to all assets of
the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but
shall have an undivided beneficial interest in the assets of the
Trust.
Section 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive
power, duty and authority to cause the Trust to engage in the
following activities:
(a) to issue and sell the Securities in accordance
with this Trust Agreement; provided, however, that except as
contemplated in Section 7.1(a), (i) the Trust may issue no more
than one series of Capital Securities and no more than one series
of Common Securities, (ii) there shall be no interests in the
Trust other than the Securities, and (iii) the issuance of
Securities shall be limited to a simultaneous issuance of both
the Capital Securities and Common Securities at the Closing Time;
(b) in connection with the issue and sale of the
Capital Securities and the consummation of the Exchange Offer, at
the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an
offering memorandum (the "Offering Memorandum") in
preliminary and final form prepared by the Sponsor, in
relation to the offering and sale of Series A Capital
Securities to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and to institutional
"accredited investors" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act), and to execute and
file with the Commission, at such time as determined by the
Sponsor, any Registration Statement, including any
amendments thereto, as contemplated by the Registration
Rights Agreement;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor
to be necessary in order to qualify or register all or part
of the Capital Securities in any State in which the Sponsor
has determined to qualify or register such Capital
Securities for sale;
(iii) execute and file an application, prepared
by the Sponsor, to permit the Capital Securities to trade or
be quoted or listed in or on the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") Market or
any other securities exchange, quotation system or the
Nasdaq Stock Market's National Market;
(iv) execute and deliver letters, documents, or
instruments with DTC and other Clearing Agencies relating to
the Capital Securities;
(v) if required, execute and file with the
Commission a registration statement on Form 8-A, including
any amendments thereto, prepared by the Sponsor, relating to
the registration of the Capital Securities under Section 12
of the Exchange Act; and
(vi) execute and enter into the Purchase
Agreement and the Registration Rights Agreement providing
for, among other things, the sale and registration of the
Capital Securities;
(c) to acquire the Series A Debentures with the
proceeds of the sale of the Series A Capital Securities and the
Common Securities and to exchange the Series A Debentures for a
like principal amount of Series B Debentures, pursuant to the
Exchange Offer; provided, however, that the Administrative
Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the
Holders;
(d) to give the Sponsor and the Property Trustee
prompt written notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices
to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may
be required of the Administrative Trustees pursuant to the terms
of the Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant
to Section 3.8(e) the Property Trustee has the exclusive power to
bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable
compensation for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by
Section 314(a)(4) of the Trust Indenture Act to the Property
Trustee, which certificate may be executed by any Administrative
Trustee;
(k) to incur expenses that are necessary or incidental
to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
Registrar and Exchange Agent for the Securities or to appoint a
Paying Agent for the Securities as provided in Section 7.4 except
for such time as such power to appoint a Paying Agent is vested
in the Property Trustee;
(m) to give prompt written notice to the Property
Trustee and to Holders of any notice received from the Debenture
Issuer of its election to defer payments of interest on the
Debentures by extending the interest payment period under the
Indenture;
(n) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as a
statutory business trust under the laws of the State of Delaware
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to
enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with this
Trust Agreement or with applicable law, that the Administrative
Trustees determine in their discretion to be necessary or
desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor
trust; and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness
of the Debenture Issuer for United States federal income tax
purposes;
(p) to take all action necessary to consummate the
Exchange Offer or otherwise cause the Capital Securities to be
registered pursuant to an effective registration statement in
accordance with the provisions of the Registration Rights
Agreement;
(q) to take all action necessary to cause all
applicable tax returns and tax information reports that are
required to be filed with respect to the Trust to be duly
prepared and filed by the Administrative Trustees, on behalf of
the Trust; and
(r) to execute all documents or instruments, perform
all duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing.
The Administrative Trustees must exercise the powers
set forth in this Section 3.6 in a manner that is consistent with
the purposes and functions of the Trust set out in Section 3.3,
and the Administrative Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative
Trustees shall have none of the powers or the authority of the
Property Trustee set forth in Section 3.8.
Any expenses incurred by the Administrative Trustees
pursuant to this Section 3.6 shall be reimbursed by the Debenture
Issuer.
Section 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including
the Property Trustee and the Delaware Trustee) shall not, engage
in any activity other than as required or authorized by this
Trust Agreement. The Trust shall not:
(i) invest any proceeds received by the Trust
from holding the Debentures, but shall distribute all such
proceeds to Holders pursuant to the terms of this Trust
Agreement and of the Securities;
(ii) acquire any assets other than as expressly
provided herein;
(iii) possess Trust property for other than a
Trust purpose;
(iv) make any loans or incur any indebtedness
other than loans represented by the Debentures;
(v) possess any power or otherwise act in such a
way as to vary the Trust assets or the terms of the
Securities in any way whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the
Trust other than the Securities;
(vii) other than as provided in this Trust
Agreement or Annex I, (A) direct the time, method and place
of conducting any proceeding with respect to any remedy
available to the Debenture Trustee, or exercising any trust
or power conferred upon the Debenture Trustee with respect
to the Debentures, (B) waive any past default that is
waivable under the Indenture, or (C) exercise any right to
rescind or annul any declaration that the principal of all
the Debentures shall be due and payable; or
(viii) consent to any amendment, modification or
termination of the Indenture or the Debentures where such
consent shall be required unless the Trust shall have
received an opinion of a nationally recognized independent
tax counsel experienced in such matters to the effect that
such amendment, modification or termination will not cause
more than an insubstantial risk that for United States
federal income tax purposes the Trust will not be classified
as a grantor trust.
Section 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned
by and held of record in the name of the Property Trustee in
trust for the benefit of the Holders. The right, title and
interest of the Property Trustee to the Debentures shall vest
automatically in each Person who may hereafter be appointed as
Property Trustee in accordance with Section 5.7. Such vesting
and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been
executed and delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Debentures to the Administrative
Trustees or to the Delaware Trustee (if the Property Trustee does
not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-
interest bearing trust account (the "Property Trustee
Account") in the name of and under the exclusive control of
the Property Trustee on behalf of the Holders and, upon the
receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments or cause
the Paying Agent to make payments to the Holders from the
Property Trustee Account in accordance with Section 6.1.
Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Trust
Agreement. The Property Trustee Account shall be an account
that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness by a "nationally
recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities
Act, is at least investment grade;
(ii) engage in such ministerial activities as
shall be necessary or appropriate to effect the redemption
of the Trust Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued
by the Administrative Trustees in accordance with the terms
of the Securities, engage in such ministerial activities as
shall be necessary or appropriate to effect the distribution
of the Debentures to Holders upon the occurrence of certain
events.
(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the
Property Trustee pursuant to the terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee
shall take any Legal Action which arises out of or in connection
with an Event of Default of which a Responsible Officer has
actual knowledge or the Property Trustee's duties and obligations
under this Trust Agreement or the Trust Indenture Act and if such
Property Trustee shall have failed to take such Legal Action, the
Holders of the Capital Securities may take such Legal Action, to
the same extent as if such Holders of Capital Securities held an
aggregate principal amount of Debentures equal to the aggregate
liquidation amount of such Capital Securities, without first
proceeding against the Property Trustee or the Trust; provided
however, that if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the
Debenture Issuer to pay the principal of or premium, if any, or
interest on the Debentures on the date such principal, premium,
if any, or interest is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Capital
Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or
interest on the Debentures having a principal amount equal to the
aggregate liquidation amount of the Capital Securities of such
Holder (a "Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Direct
Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of Capital Securities
to the extent of any payment made by the Debenture Issuer to such
Holder of Capital Securities in such Direct Action. Except as
provided in the preceding sentences, the Holders of Capital
Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee
unless either:
(i) the Trust has been completely liquidated and
the proceeds of the liquidation distributed to the Holders
pursuant to the terms of the Securities; or
(ii) a successor Property Trustee has been
appointed and has accepted that appointment in accordance
with Section 5.7 (a "Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of
Debentures under the Indenture and, if an Event of Default
actually known to a Responsible Officer occurs and is continuing,
the Property Trustee shall, for the benefit of Holders, enforce
its rights as holder of the Debentures subject to the rights of
the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to
undertake any actions set forth in Section 317(a) of the Trust
Indenture Act.
(i) For such time as the Property Trustee is the
Paying Agent, the Property Trustee may authorize one or more
Persons to act as additional Paying Agents and to pay
Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust
Indenture Act. Any such additional Paying Agent may be removed
by the Property Trustee at any time the Property Trustee remains
as Paying Agent and a successor Paying Agent or additional Paying
Agents may be (but are not required to be) appointed at any time
by the Property Trustee while the Property Trustee is so acting
as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers or the
authority of the Administrative Trustees set forth in
Section 3.6.
Notwithstanding anything expressed or implied to the
contrary in this Trust Agreement or any Annex or Exhibit hereto,
(i) the Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes
and functions of the Trust set out in Section 3.3, and (ii) the
Property Trustee shall not take any action that is inconsistent
with the purposes and functions of the Trust set out in
Section 3.3.
Section 3.9 Certain Duties and Responsibilities of the
Property Trustee.
(a) The Property Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Trust Agreement and
in the Securities and no implied covenants shall be read into
this Trust Agreement against the Property Trustee. In case an
Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) of which a Responsible Officer has
actual knowledge, the Property Trustee shall exercise such of the
rights and powers vested in it by this Trust Agreement, and use
the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Trust Agreement shall be
construed to relieve the Property Trustee from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of an Event of
Default and after the curing or waiving of all such Events
of Default that may have occurred:
(A) the duties and obligations of the
Property Trustee shall be determined solely by the
express provisions of this Trust Agreement and in the
Securities and the Property Trustee shall not be liable
except for the performance of such duties and
obligations as are specifically set forth in this Trust
Agreement and in the Securities, and no implied
covenants or obligations shall be read into this Trust
Agreement against the Property Trustee; and
(B) in the absence of bad faith on the part
of the Property Trustee, the Property Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the
Property Trustee and conforming to the requirements of
this Trust Agreement; provided, however, that in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Trust Agreement;
(ii) the Property Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable
with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the
Holders of not less than a Majority in liquidation amount of
the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Trust Agreement;
(iv) no provision of this Trust Agreement shall
require the Property Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any
of its rights or powers, if it shall have reasonable grounds
for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this
Trust Agreement or indemnity reasonably satisfactory to the
Property Trustee against such risk or liability is not
reasonably assured to it;
(v) the Property Trustee's sole duty with respect
to the custody, safe keeping and physical preservation of
the Debentures and the Property Trustee Account shall be to
deal with such property in a similar manner as the Property
Trustee deals with similar property for its own account,
subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness,
existence or sufficiency of the Debentures or the payment of
any taxes or assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable
for any interest on any money received by it except as it
may otherwise agree in writing with the Sponsor. Money held
by the Property Trustee need not be segregated from other
funds held by it except in relation to the Property Trustee
Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be
responsible for monitoring the compliance by the
Administrative Trustees or the Sponsor with their respective
duties under this Trust Agreement, nor shall the Property
Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
Section 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely
and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Trust Agreement
may be sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this
Trust Agreement, the Property Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrative
Trustees;
(iv) the Property Trustee shall have no duty to
see to any recording, filing or registration of any
instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel
or other experts of its selection and the advice or opinion
of such counsel and experts with respect to legal matters or
advice within the scope of such experts' area of expertise
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice
or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees.
The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this
Trust Agreement from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Trust Agreement at the request or direction of
any Holder, unless such Holder shall have provided to the
Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses
and the expenses of the Property Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it
in complying with such request or direction, including such
reasonable advances as may be requested by the Property
Trustee provided, that, nothing contained in this
Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Trust Agreement;
(vii) the Property Trustee shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents,
custodians, nominees or attorneys and the Property Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder;
(ix) any action taken by the Property Trustee or
its agents hereunder shall bind the Trust and the Holders,
and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to
the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this
Trust Agreement, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders which
instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would
be entitled to direct the Property Trustee under the terms
of the Securities in respect of such remedy, right or
action, (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively
relying on or acting in or accordance with such
instructions;
(xi) except as otherwise expressly provided by
this Trust Agreement, the Property Trustee shall not be
under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement;
and
(xii) the Property Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it
in good faith, without negligence, and reasonably believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this Trust Agreement.
(b) No provision of this Trust Agreement shall be
deemed to impose any duty or obligation on the Property Trustee
to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in
which it shall be illegal, or in which the Property Trustee shall
be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right,
power, duty or obligation. No permissive power or authority
available to the Property Trustee shall be construed to be a
duty.
Section 3.11 Delaware Trustee.
Notwithstanding any other provision of this Trust
Agreement other than Section 5.2, the Delaware Trustee shall not
be entitled to exercise any powers, nor shall the Delaware
Trustee have any of the duties and responsibilities of the
Administrative Trustees or the Property Trustee described in this
Trust Agreement. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
Section 3.12 Execution of Documents.
Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust
Act, a majority of the Administrative Trustees or, if there are
only two, any Administrative Trustee or, if there is only one,
such Administrative Trustee is authorized to execute on behalf of
the Trust any documents that the Administrative Trustees have the
power and authority to execute pursuant to Section 3.6; provided
that, the Registration Statements contemplated by the
Registration Rights Agreement and referred to in
Section 3.6(b)(i), including any amendments thereto, shall be
signed by all of the Administrative Trustees.
Section 3.13 Not Responsible for Recitals or Issuance of
Securities.
The recitals contained in this Trust Agreement and the
Securities shall be taken as the statements of the Sponsor, and
the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the
value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity
or sufficiency of this Trust Agreement or the Securities.
Section 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions
of Article VIII hereof, shall have existence up to June 5, 2028.
Section 3.15 Mergers.
(a) The Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any Person,
except as described in Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with
the consent of the Administrative Trustees or, if there are more
than two, a majority of the Administrative Trustees and without
the consent of the Holders, the Delaware Trustee or the Property
Trustee, merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor
Entity") either:
(A) expressly assumes all of the obligations
of the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Securities
rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of
the Successor Entity that possesses the same powers and
duties as the Property Trustee as the holder of the
Debentures;
(iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with
another organization on which the Capital Securities are
then listed or quoted;
(iv) if the Capital Securities (including any
Successor Securities) are rated by any nationally recognized
statistical rating organization prior to such transaction,
such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital
Securities (including any Successor Securities), or if the
Debentures are so rated, the Debentures, to be downgraded by
any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of
the Holders (including the holders of any Successor
Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the new
entity);
(vi) such Successor Entity has a purpose
identical to that of the Trust;
(vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
the Sponsor has received an opinion of an independent
counsel to the Trust experienced in such matters to the
effect that:
(A) such merger, consolidation, amalgam-
ation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and
privileges of the Holders (including the holders of any
Successor Securities) in any material respect (other
than with respect to any dilution of the Holders'
interest in the new entity); and
(B) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or
lease, neither the Trust nor the Successor Entity will
be required to register as an Investment Company; and
(viii) the Sponsor or any permitted successor or
assignee owns all of the common securities of such Successor
Entity and guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent
provided by the Capital Securities Guarantee and the Common
Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in liquidation
amount of the Securities, consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an
entirety to, any other Person or permit any other Person to
consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the
Successor Entity not to be classified as a grantor trust for
United States federal income tax purposes.
ARTICLE IV
SPONSOR
Section 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of
the Common Securities then issued by the Trust, in an amount at
least equal to approximately, but not less than, 3% of the
capital of the Trust, at the same time as the Series A Capital
Securities are issued and sold.
Section 4.s Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the exclusive right and
responsibility to engage in the following activities:
(a) to prepare the Offering Memorandum and to prepare
for filing by the Trust with the Commission any Registration
Statement, including any amendments thereto, as contemplated by
the Registration Rights Agreement;
(b) to determine the States in which to take
appropriate action to qualify or register for sale all or part of
the Capital Securities and to do any and all such acts, other
than actions which must be taken by the Trust, and advise the
Trust of actions it must take, and prepare for execution and
filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with
the applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor,
to prepare for filing by the Trust an application to permit the
Capital Securities to trade or be quoted or listed in or on the
Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market, or any other securities exchange, quotation
system or the Nasdaq Stock Market's National Market for listing
or quotation of the Capital Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A, including any
amendments thereto, relating to the registration of the Capital
Securities under Section 12 of the Exchange Act; and
(e) to negotiate the terms of the Purchase Agreement
and the Registration Rights Agreement providing for the sale and
registration of the Capital Securities.
Section 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of
Capital Securities, in the event that a failure of the Trust to
pay Distributions on the Capital Securities is attributable to
the failure of the Company to pay interest or principal on the
Debentures, to institute a proceeding directly against the
Debenture Issuer for enforcement of its payment obligations on
the Debentures.
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees: Appointment of Co-Trustee.
The number of Trustees initially shall be five (5),
and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b) after the issuance of any Securities, the number
of Trustees may be increased or decreased by vote of the Holders
of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities;
provided, however, that, the number of Trustees shall in no event
be less than two (2); provided further that (1) one Trustee, in
the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, is an
entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); (2) there shall be at least
one Trustee who is an employee or officer of, or is affiliated
with the Sponsor (an "Administrative Trustee"); and (3) one
Trustee shall be the Property Trustee for so long as this Trust
Agreement is required to qualify as an indenture under the Trust
Indenture Act, and such Trustee may also serve as Delaware
Trustee if it meets the applicable requirements. Notwithstanding
the above, unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the
time be located, the Holders of a Majority in liquidation amount
of the Common Securities acting as a class at a meeting of the
Holders of the Common Securities, and the Administrative Trustees
shall have power to appoint one or more Persons either to act as
a co-trustee, jointly with the Property Trustee, of all or any
part of the Trust's property, or to act as separate trustee of
any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such
Person or Persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of
this Trust Agreement. In case an Event of Default has occurred
and is continuing, the Property Trustee alone shall have power to
make any such appointment of a co-trustee.
Section 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law,
provided that, if the Property Trustee has its principal place of
business in the State of Delaware and otherwise meets the
requirements of applicable law, then the Property Trustee shall
also be the Delaware Trustee and Section 3.11 shall have no
application.
Section 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the
"Property Trustee") which shall act as Property Trustee which
shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing
business under the laws of the United States of America or
any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the
Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then
for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Property Trustee shall cease to
be eligible to so act under Section 5.3(a), the Property Trustee
shall immediately resign in the manner and with the effect set
forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of
the Trust Indenture Act, the Property Trustee and the Holder of
the Common Securities (as if it were the obligor referred to in
Section 310(b) of the Trust Indenture Act) shall in all respects
comply with the provisions of Section 310(b) of the Trust
Indenture Act.
(d) The Capital Securities Guarantee shall be deemed
to be specifically described in this Trust Agreement for purposes
of clause (i) of the first provision contained in Section 310(b)
of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Section 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally.
Each Administrative Trustee and the Delaware Trustee
(unless the Property Trustee also acts as Delaware Trustee) shall
be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more Authorized
Officers.
Section 5.5 Administrative Trustees.
The initial Administrative Trustees shall be:
Richard A. Elko
Joseph W. Major
Gary N. Gieringer
(a) Except as expressly set forth in this Trust
Agreement and except if a meeting of the Administrative Trustees
is called with respect to any matter over which the
Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent
of, any one such Administrative Trustee.
(b) Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust
Act or applicable law, any Administrative Trustee is authorized
to execute on behalf of the Trust any documents which the
Administrative Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6, including any
amendments thereto, shall be signed by all of the Administrative
Trustees; and
(c) An Administrative Trustee may, by power of
attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the
purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
Section 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Section 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b) and to Section 6(b) of
Annex I hereto, Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Sponsor;
(ii) unless an Event of Default shall have
occurred and be continuing after the issuance of any
Securities, by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
and
(iii) if an Event of Default shall have occurred
and be continuing after the issuance of the Securities, with
respect to the Property Trustee or the Delaware Trustee, by
vote of Holders of a Majority in liquidation amount of the
Capital Securities voting as a class at a meeting of Holders
of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee
shall not be removed in accordance with Section 5.7(a) until a
Successor Property Trustee ("Successor Property Trustee") has
been appointed and has accepted such appointment by written
instrument executed by such Successor Property Trustee and
delivered to the Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee
shall not be removed in accordance with this Section 5.7(a)
until a successor Trustee possessing the qualifications to
act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by
such Successor Delaware Trustee and delivered to the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or until his death,
removal or resignation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an
instrument in writing signed by the Trustee and delivered to the
Sponsor and the Trust, which resignation shall take effect upon
such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts
as the Property Trustee shall be effective:
(A) until a Successor Property Trustee has
been appointed and has accepted such appointment by
instrument executed by such Successor Property Trustee
and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof
distributed to the Holders; and
(ii) no such resignation of the Trustee that acts
as the Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and
the resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an
Event of Default shall have occurred and be continuing after the
issuance of the Securities, the Holders of the Capital
Securities, shall use their best efforts to promptly appoint a
Successor Delaware Trustee or Successor Property Trustee, as the
case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this
Section 5.7.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted
appointment as provided in this Section 5.7 within 60 days after
delivery of an instrument of resignation or removal, the Property
Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware
Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper and prescribe, appoint a
Successor Property Trustee or Successor Delaware Trustee, as the
case may be.
(f) No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property
Trustee or Successor Delaware Trustee, as the case may be.
Section 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and
the number of Trustees is not reduced pursuant to Section 5.1, or
if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of
such vacancy by the Administrative Trustees or, if there are more
than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance
with Section 5.7.
Section 5.9 Effect of Vacancies.
The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or incapacity
to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number
of Administrative Trustees shall occur, until such vacancy is
filled by the appointment of an Administrative Trustee in
accordance with Section 5.7, the Administrative Trustees in
office, regardless of their number, shall have all the powers
granted to the Administrative Trustees and shall discharge all
the duties imposed upon the Administrative Trustees by this Trust
Agreement.
Section 5.10 Meetings.
If there is more than one Administrative Trustee,
meetings of the Administrative Trustees shall be held from time
to time upon the call of any Administrative Trustee. Regular
meetings of the Administrative Trustees may be held at a time and
place fixed by resolution of the Administrative Trustees. Notice
of any in-person meetings of the Administrative Trustees shall be
hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than
24 hours before such meeting. Notice of any telephonic meetings
of the Administrative Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than
24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of an
Administrative Trustee at a meeting shall constitute a waiver of
notice of such meeting except where an Administrative Trustee
attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise
in this Trust Agreement, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the
Administrative Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Administrative Trustees. In the
event there is only one Administrative Trustee, any and all
action of such Administrative Trustee shall be evidenced by a
written consent of such Administrative Trustee.
Section 5.11 Delegation of Power.
(a) Any Administrative Trustee may, by power of
attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the
purpose of executing any documents contemplated in Section 3.6,
including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to
delegate from time to time to such of their number or to officers
of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the
Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the
Trust, as set forth herein.
Section 5.12 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the
Delaware Trustee or any Administrative Trustee that is not a
natural person, as the case may be, may be merged or converted or
with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee, as the case may be, shall be a
party, or any Person succeeding to all or substantially all the
corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the
Property Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties
hereto.
ARTICLE VI
DISTRIBUTIONS
Section 6.1 Distributions.
Holders shall receive Distributions in accordance with
the applicable terms of the relevant Holder's Securities. If and
to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the
Indenture) and Additional Sums (as defined in the Indenture)),
premium and/or principal on the Debentures held by the Property
Trustee or Liquidated Damages (as defined in the Registration
Rights Agreement) or any other payments pursuant to the
Registration Rights Agreement with respect to the Debentures held
by the Property Trustee (the amount of any such payment being a
"Payment Amount"), the Property Trustee shall and is directed, to
the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the
Trust issue one class of capital securities representing
undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Series A Capital
Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities").
The Administrative Trustees shall on behalf of the Trust issue
one class of capital securities representing undivided beneficial
interests in the Trust having such terms as set forth in Annex I
(the "Series B Capital Securities") in exchange for Series A
Capital Securities accepted for exchange in the Exchange Offer,
which Series B Capital Securities shall not bear the legends
required by Section 9.2(i) unless the Holder of such Series A
Capital Securities is either (A) a broker-dealer who purchased
such Series A Capital Securities directly from the Trust for
resale pursuant to Rule 144A or any other available exemption
under the Securities Act, (B) a Person participating in the
distribution of the Series A Capital Securities or (C) a Person
who is an affiliate (as defined in Rule 144A) of the Trust. The
Trust shall issue no securities or other interests in the assets
of the Trust other than the Capital Securities and the Common
Securities.
(b) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the
capital of the Trust and shall not constitute a loan to the
Trust.
(c) Upon issuance of the Securities as provided in
this Trust Agreement, the Securities so issued shall be deemed to
be validly issued, fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder
or a Capital Security Beneficial Owner in accordance with the
terms of this Trust Agreement, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this
Trust Agreement.
Section 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the
Trust by an Administrative Trustee by manual or facsimile
signature. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such
Administrative Trustee before the Securities so signed shall be
delivered by the Trust, such Securities nevertheless may be
delivered as though the person who signed such Securities had not
ceased to be such Administrative Trustee; and any Securities may
be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the
Administrative Trustees of the Trust, although at the date of the
execution and delivery of the Trust Agreement any such person was
not such a Administrative Trustee.
(b) One Administrative Trustee shall sign the
Securities for the Trust by manual or facsimile signature.
A Security shall not be valid until authenticated by
the manual signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Trust Agreement.
Upon a written order of the Trust signed by one
Administrative Trustee, the Property Trustee shall authenticate
the Securities for original issue. The aggregate number of
Capital Securities outstanding at any time shall not exceed the
number set forth in the Terms in Annex I hereto except as
provided in Section 7.6.
The Property Trustee may appoint an authenticating
agent acceptable to the Trust to authenticate Securities. An
authenticating agent may authenticate Securities whenever the
Property Trustee may do so. Each reference in this Trust
Agreement to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the
same rights as the Property Trustee to deal with the Sponsor or
an Affiliate.
Section 7.3 Form and Dating.
The Capital Securities shall be substantially in the
form of Exhibit A-1 and the Common Securities shall be
substantially in the form of Exhibit A-2, each of which is hereby
incorporated in and expressly made a part of this Trust
Agreement. The Property Trustee's certificate of authentication
shall be substantially in the form set forth in Exhibits A-1 and
A-2. Certificates representing the Securities may be printed,
lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the Administrative Trustees, as
evidenced by their execution thereof. The Securities may have
letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements
required by law, stock exchange rule, agreements to which the
Trust is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the
Trust). The Trust at the direction of the Sponsor shall furnish
any such legend not contained in Exhibit A-1 to the Property
Trustee in writing. Each Capital Security shall be dated the
date of its authentication. The terms and provisions of the
Securities set forth in Annex I and the forms of Securities set
forth in Exhibits A-1 and A-2 are part of the terms of this Trust
Agreement and to the extent applicable, the Property Trustee and
the Sponsor, by their execution and delivery of this Trust
Agreement, expressly agree to such terms and provisions and to be
bound thereby.
(a) Global Securities. Securities offered and sold to
QIBs in reliance on Rule 144A, as provided in the Purchase
Agreement, shall be issued in the form of one or more, permanent
global Securities in definitive, fully registered form without
distribution coupons with the appropriate global legends and
Restricted Securities Legend set forth in Exhibit A-1 hereto (a
"Global Capital Security"), which shall be deposited on behalf of
the purchasers of the Capital Securities represented thereby with
the Property Trustee, at its New York office, as custodian for
the Clearing Agency, and registered in the name of the Clearing
Agency or a nominee of the Clearing Agency, duly executed by the
Trust and authenticated by the Property Trustee as hereinafter
provided. The number of Capital Securities represented by a
Global Capital Security may from time to time be increased or
decreased by adjustments made on the records of the Property
Trustee and the Clearing Agency or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall
apply only to the Global Capital Securities and such other
Capital Securities in global form as may be authorized by the
Trust to be deposited with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall,
in accordance with this Section 7.3, authenticate and make
available for delivery initially one or more Global Capital
Securities that (i) shall be registered in the name of Cede & Co.
or other nominee of such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to
such Clearing Agency's written instructions or held by the
Property Trustee as custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Trust Agreement
with respect to any Global Capital Security held on their behalf
by the Clearing Agency or by the Property Trustee as the
custodian of the Clearing Agency or under such Global Capital
Security, and the Clearing Agency may be treated by the Trust,
the Property Trustee and any agent of the Trust or the Property
Trustee as the absolute owner of such Global Capital Security for
all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Trust, the Property Trustee or any agent
of the Trust or the Property Trustee from giving effect to any
written certification, proxy or other authorization furnished by
the Clearing Agency or impair, as between the Clearing Agency and
its Participants, the operation of customary practices of such
Clearing Agency governing the exercise of the rights of a holder
of a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided
in Section 7.9 or 9.2(f)(i), owners of beneficial interests in a
Global Capital Security will not be entitled to receive physical
delivery of certificated Capital Securities ("Definitive Capital
Securities"). Purchasers of Securities (other than QIBs) who are
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) will receive Capital Securities in
the form of individual certificates in definitive, fully
registered form without distribution coupons and with the
Restricted Securities Legend set forth in Exhibit A-1 hereto
("Restricted Definitive Capital Securities"); provided, however,
that upon transfer of such Restricted Definitive Capital
Securities to a QIB, such Restricted Definitive Capital
Securities will, unless the Global Capital Security has
previously been exchanged, be exchanged for an interest in a
Global Capital Security pursuant to the provisions of
Section 9.2. Restricted Definitive Capital Securities will bear
the Restricted Securities Legend set forth on Exhibit A-1 unless
removed in accordance with this Section 7.3 or Section 9.2.
(d) Authorized Denominations. The Capital Securities
are issuable only in denominations of $1,000 and any integral
multiple thereof.
Section 7.4 Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in the Borough of Manhattan,
The City of New York, (i) an office or agency where Capital
Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities
may be presented for payment ("Paying Agent") and (iii) an office
or agency where Securities may be presented for exchange
("Exchange Agent"). The Registrar shall keep a register of the
Capital Securities and of their transfer. The Trust may appoint
the Registrar, the Paying Agent and the Exchange Agent and may
appoint one or more co-registrars, one or more additional paying
agents and one or more additional exchange agents in such other
locations as it shall determine. The term "Registrar" includes
any additional registrar, "Paying Agent" includes any additional
paying agent and the term "Exchange Agent" includes any
additional exchange agent. The Trust may change any Paying
Agent, Registrar, co-registrar or Exchange Agent without prior
notice to any Holder. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees. The Trust shall notify the Property
Trustee of the name and address of any Agent not a party to this
Trust Agreement. If the Trust fails to appoint or maintain
another entity as Registrar, Paying Agent or Exchange Agent, the
Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent, Registrar, or Exchange Agent.
The Trust shall act as Paying Agent, Registrar, co-registrar, and
Exchange Agent for the Common Securities.
The Trust initially appoints the Property Trustee as
Registrar, Paying Agent, and Exchange Agent for the Capital
Securities.
Section 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than
the Property Trustee to agree in writing that the Paying Agent
will hold in trust for the benefit of Holders or the Property
Trustee all money held by the Paying Agent for the payment of
liquidation amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property
Trustee may require a Paying Agent to pay all money held by it to
the Property Trustee. The Trust at any time may require a Paying
Agent to pay all money held by it to the Property Trustee and to
account for any money disbursed by it. Upon payment over to the
Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the
money. If the Trust or the Sponsor or an Affiliate of the Trust
or the Sponsor acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money
held by it as Paying Agent.
Section 7.6 Replacement Securities.
If a Holder claims that a Security owned by it has been
lost, destroyed or wrongfully taken or if such Security is
mutilated and is surrendered to the Trust or in the case of the
Capital Securities to the Property Trustee, the Trust shall issue
and the Property Trustee shall, upon written order of the Trust,
authenticate a replacement Security if the Property Trustee's and
the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the
judgment of the Property Trustee, is sufficient to protect the
Trustees, the Sponsor, the Trust or any authenticating agent from
any loss which any of them may suffer if a Security is replaced.
The Trust may charge such Holder for its expenses in replacing a
Security.
Every replacement Security is an additional beneficial
interest in the Trust.
Section 7.7 Outstanding Capital Securities.
The Capital Securities outstanding at any time are all
the Capital Securities authenticated by the Property Trustee
except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section as not out-
standing.
If a Capital Security is replaced, paid or purchased
pursuant to Section 7.6 hereof, it ceases to be outstanding
unless the Property Trustee receives proof satisfactory to it
that the replaced, paid or purchased Capital Security is held by
a bona fide purchaser.
If Capital Securities are considered paid in accordance
with the terms of this Trust Agreement, they cease to be
outstanding and Distributions on them shall cease to accumulate.
A Capital Security does not cease to be outstanding
because one of the Trust, the Sponsor or an Affiliate of the
Sponsor holds the Security.
Section 7.8 Capital Securities in Treasury.
In determining whether the Holders of the required
amount of Securities have concurred in any direction, waiver or
consent, Capital Securities owned by the Trust, the Sponsor or an
Affiliate of the Sponsor, as the case may be, shall be
disregarded and deemed not to be outstanding, except that for the
purposes of determining whether the Property Trustee shall be
fully protected in relying on any such direction, waiver or
consent, only Securities which the Property Trustee actually
knows are so owned shall be so disregarded.
Section 7.9 Temporary Securities.
(a) Until Definitive Securities are ready for
delivery, the Trust may prepare and, in the case of the Capital
Securities, the Property Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the
form of Definitive Securities but may have variations that the
Trust considers appropriate for temporary Securities. Without
unreasonable delay, the Trust shall prepare and, in the case of
the Capital Securities, the Property Trustee shall authenticate
Definitive Securities in exchange for temporary Securities.
(b) A Global Capital Security deposited with the
Clearing Agency or with the Property Trustee as custodian for the
Clearing Agency pursuant to Section 7.3 shall be transferred to
the beneficial owners thereof in the form of certificated Capital
Securities only if such transfer complies with Section 9.2 and
(i) the Clearing Agency notifies the Sponsor that it is unwilling
or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a
"clearing agency" registered under the Exchange Act and a
clearing agency is not appointed by the Sponsor within 90 days of
such notice, (ii) a Default or an Event of Default has occurred
and is continuing or (iii) the Trust at its sole discretion
elects to cause the issuance of certificated Capital Securities.
(c) Any Global Capital Security that is transferable
to the beneficial owners thereof in the form of certificated
Capital Securities pursuant to this Section 7.9 shall be
surrendered by the Clearing Agency to the Property Trustee
located in the Borough of Manhattan, The City of New York, to be
so transferred, in whole or from time to time in part, without
charge, and the Property Trustee shall authenticate and make
available for delivery, upon such transfer of each portion of
such Global Capital Security, an equal aggregate liquidation
amount of Securities of authorized denominations in the form of
certificated Capital Securities. Any portion of a Global Capital
Security transferred pursuant to this Section shall be registered
in such names as the Clearing Agency shall direct. Any Capital
Security in the form of certificated Capital Securities delivered
in exchange for an interest in the Restricted Global Capital
Security shall, except as otherwise provided by Sections 7.3 and
9.1, bear the Restricted Securities Legend set forth in Exhibit
A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the
Holder of a Global Capital Security may grant proxies and
otherwise authorize any Person, including Participants and
Persons that may hold interests through Participants, to take any
action which such Holder is entitled to take under this Trust
Agreement or the Securities.
(e) In the event of the occurrence of any of the
events specified in Section 7.9(b), the Trust will promptly make
available to the Property Trustee a reasonable supply of
certificated Capital Securities in fully registered form without
distribution coupons.
Section 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to
the Property Trustee for cancellation. The Registrar, Paying
Agent and Exchange Agent shall forward to the Property Trustee
any Capital Securities surrendered to them for registration of
transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities, surrendered for
registration of transfer, redemption, exchange, payment,
replacement or cancellation and shall dispose of cancelled
Capital Securities as the Trust directs, provided that the
Property Trustee shall not be obligated to destroy Capital
Securities. The Trust may not issue new Capital Securities to
replace Capital Securities that it has paid or that have been
delivered to the Property Trustee for cancellation or that any
Holder has exchanged.
Section 7.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the
Property Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders of Capital Securities;
provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on
the Capital Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other
identification numbers printed on the Capital Securities, and any
such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the
Property Trustee of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1 Termination of Trust.
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or liquidation or its equivalent with respect to
the Sponsor; or the revocation of the Sponsor's charter and
the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) following the distribution of a Like Amount
of the Debentures to the Holders, provided that, the
Property Trustee has received written notice from the
Sponsor directing the Property Trustee to terminate the
Trust (which direction is optional, and except as otherwise
expressly provided below, within the discretion of the
Sponsor) and provided, further, that such direction and such
distribution is conditioned on (i) the receipt by the
Sponsor of any required regulatory approval and (ii) the
Administrative Trustees' receipt of an opinion of an
independent tax counsel experienced in such matters, which
opinion may rely on published rulings of the Internal
Revenue Service, to the effect that the Holders will not
recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and
the distribution of Debentures;
(iv) upon the entry of a decree of judicial
dissolution of the Trust by a court of competent
jurisdiction;
(v) when all of the Securities shall have been
called for redemption and the amounts necessary for
redemption thereof shall have been paid to the Holders in
accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at
such time as no Debentures are outstanding; or
(vii) the expiration of the term of the Trust
provided in Section 3.14.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a), the Administrative
Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
Section 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in
this Trust Agreement and in the terms of the Securities. Any
transfer or purported transfer of any Security not made in
accordance with this Trust Agreement shall be null and void.
(b) Subject to this Article IX, Capital Securities may
only be transferred, in whole or in part, in accordance with the
terms and conditions set forth in this Trust Agreement. Any
transfer or purported transfer of any Security not made in
accordance with this Trust Agreement shall be null and void.
(c) For so long as the Trust Securities remain
outstanding, the Sponsor will covenant (i) to directly or
indirectly maintain 100% direct or indirect ownership of the
Common Securities of the Trust; provided, however, that any
permitted successor of the Sponsor under the Indenture may
succeed to the Sponsor's ownership of such Common Securities,
(ii) not to cause, as sponsor of the Trust, or to permit, as
Holder of the Common Securities, the dissolution, winding-up or
termination of the Trust, except in connection with a
distribution of the Debentures as provided in the Trust Agreement
and in connection with certain mergers, consolidations or
amalgamations permitted by this Trust Agreement and (iii) to use
its reasonable efforts to cause the Trust (a) to remain a
business trust, except in connection with the distribution of
Debentures to the Holders of Trust Securities in liquidation of
the Trust, the redemption of all of the Trust Securities, or
certain mergers, consolidations or amalgamations, each as
permitted by this Trust Agreement, and (b) to otherwise continue
to be classified as a grantor trust for United States federal
income tax purposes.
(d) The Administrative Trustees shall provide for the
registration of Securities and of the transfer of Securities,
which will be effected without charge but only upon payment (with
such indemnity as the Administrative Trustees may require) in
respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of
transfer of any Securities, the Administrative Trustees shall
cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered
for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Administrative
Trustees duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Property
Trustee (in the case of Capital Securities) or the Trust (in the
case of Common Securities). A transferee of a Security shall be
entitled to the rights and subject to the obligations of a Holder
hereunder upon the receipt by such transferee of a Security. By
acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Trust Agreement.
Section 9.2 Transfer Procedures and Restrictions.
(a) General. Except as otherwise provided in
Section 9.2(b), if Capital Securities are issued upon the
transfer, exchange or replacement of Capital Securities bearing
the Restricted Securities Legend set forth in Exhibit A-1 hereto,
or if a request is made to remove such Restricted Securities
Legend on Capital Securities, the Capital Securities so issued
shall bear the Restricted Securities Legend, or the Restricted
Securities Legend shall not be removed, as the case may be,
unless there is delivered to the Trust and the Property Trustee
such satisfactory evidence, which shall include an Opinion of
Counsel licensed to practice law in the State of New York, as may
be reasonably required by the Sponsor and the Property Trustee,
that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof are
made pursuant to an exception from the registration requirements
of the Securities Act or, with respect to Restricted Securities,
that such Securities are not "restricted" within the meaning of
Rule 144. Upon provision of such satisfactory evidence, the
Property Trustee, at the written direction of the Trust, shall
authenticate and deliver Capital Securities that do not bear the
legend.
(b) Transfers After Effectiveness of a Registration
Statement. After the effectiveness of a Registration Statement
with respect to any Capital Securities, all requirements
pertaining to legends on such Capital Securities will cease to
apply, and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such
Capital Securities, upon exchange of the transferring Holder's
Restricted Definitive Capital Security or directions to transfer
such Holder's beneficial interest in the Global Capital Security
as the case may be. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Global
Capital Security shall be effective unless the transferor
delivers to the Trust a certificate in a form substantially
similar to that attached hereto as the form of "Assignment" in
Exhibit A-1. Except as otherwise provided in Section 9.2(m),
after the effectiveness of a Registration Statement, the Trust
shall issue and the Property Trustee, upon a written order of the
Trust signed by one Administrative Trustee, shall authenticate a
Capital Security in global form without the Restricted Securities
Legend (the "Unrestricted Global Capital Security") to deposit
with the Clearing Agency to evidence transfers of beneficial
interests from the (i) Global Capital Security and
(ii) Restricted Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital
Securities. When Definitive Capital Securities are presented to
the Registrar or co-Registrar
(x) to register the transfer of such Definitive
Capital Securities; or
(y) to exchange such Definitive Capital
Securities which became mutilated, destroyed, defaced,
stolen or lost, for an equal number of Definitive Capital
Securities,
the Registrar or co-registrar shall register the transfer or make
the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive
Capital Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably
satisfactory to the Trust and the Registrar or co-registrar,
duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Definitive Capital Securities
that are Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities
are being delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification from such Holder to that
effect; or
(B) if such Restricted Capital Securities
are being transferred: (i) a certification from the
transferor in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit
A-1, and (ii) if the Trust or Registrar so requests,
evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the
Restricted Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital
Security for a Beneficial Interest in a Global Capital Security.
A Definitive Capital Security may not be exchanged for a
beneficial interest in a Global Capital Security except upon
satisfaction of the requirements set forth below. Upon receipt
by the Property Trustee of a Definitive Capital Security, duly
endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Property Trustee, together with:
(i) if such Definitive Capital Security is a
Restricted Capital Security, certification (in a form
substantially similar to that attached hereto as the form of
"Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital
Security is a Restricted Capital Security, written
instructions directing the Property Trustee to make, or to
direct the Clearing Agency to make, an adjustment on its
books and records with respect to the appropriate Global
Capital Security to reflect an increase in the number of the
Capital Securities represented by such Global Capital
Security,
then the Property Trustee shall cancel such Definitive Capital
Security and cause, or direct the Clearing Agency to cause, the
aggregate number of Capital Securities represented by the
appropriate Global Capital Security to be increased accordingly.
If no Global Capital Securities are then outstanding, the Trust
shall issue and the Property Trustee shall authenticate, upon
written order of any Administrative Trustee, an appropriate
number of Capital Securities in global form.
(e) Transfer and Exchange of Global Capital Securi-
ties. Subject to Section 9.2(f), the transfer and exchange of
Global Capital Securities or beneficial interests therein shall
be effected through the Clearing Agency, in accordance with this
Trust Agreement (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Clearing
Agency therefor.
(f) Transfer of a Beneficial Interest in a Global
Capital Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in a
Global Capital Security may upon request, but only upon 20
days prior notice to the Property Trustee, and if
accompanied by the information specified below, exchange
such beneficial interest for a Definitive Capital Security
representing the same number of Capital Securities. Upon
receipt by the Property Trustee from the Clearing Agency or
its nominee on behalf of any Person having a beneficial
interest in a Global Capital Security of written
instructions or such other form of instructions as is
customary for the Clearing Agency or the Person designated
by the Clearing Agency as having such a beneficial interest
in a Restricted Capital Security and a certification from
the transferor (in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit A-1),
which may be submitted by facsimile, then the Property
Trustee will cause the aggregate number of Capital
Securities represented by Global Capital Securities to be
reduced on its books and records and, following such
reduction, the Trust will execute and the Property Trustee
will authenticate and make available for delivery to the
transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in
exchange for a beneficial interest in a Global Capital
Security pursuant to this Section 9.2(f) shall be registered
in such names and in such authorized denominations as the
Clearing Agency, pursuant to instructions from its Clearing
Agency Participants or otherwise, shall instruct the
Property Trustee in writing. The Property Trustee shall
deliver such Capital Securities to the Persons in whose
names such Capital Securities are so registered in
accordance with such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global
Capital Securities. Notwithstanding any other provisions of this
Trust Agreement (other than the provisions set forth in
subsection (h) of this Section 9.2), a Global Capital Security
may not be transferred as a whole except by the Clearing Agency
to a nominee of the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to
a successor Clearing Agency or a nominee of such successor
Clearing Agency.
(h) Authentication of Definitive Capital Securities.
If at any time:
(i) there occurs a Default or an Event of Default
which is continuing, or
(ii) the Trust, in its sole discretion, notifies
the Property Trustee in writing that it elects to cause the
issuance of Definitive Capital Securities under this Trust
Agreement,
then the Trust will execute, and the Property Trustee, upon
receipt of a written order of the Trust signed by one
Administrative Trustee requesting the authentication and delivery
of Definitive Capital Securities to the Persons designated by the
Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of
Capital Securities represented by the Global Capital Securities,
in exchange for such Global Capital Securities.
(i) Legend.
(i) Except as permitted by the following
paragraph (ii), each Capital Security certificate evidencing
the Global Capital Securities and the Definitive Capital
Securities (and all Capital Securities issued in exchange
therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the
following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS
CAPITAL SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS CAPITAL SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF
AND THE LAST DATE ON WHICH THE CORPORATION OR
ANY "AFFILIATE" OF THE CORPORATION WAS THE
OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY
(A) TO THE CORPORATION, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A)
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF
RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE TRUST AND THE CORPORATION PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE REVERSE OF THIS CAPITAL
SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER
AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS CAPITAL SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY
BE TRANSFERRED ONLY IN BLOCKS HAVING A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000
(100 CAPITAL SECURITIES). ANY SUCH TRANSFER
OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF SUCH CAPITAL
SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT
LIMITED TO THE RECEIPT OF DISTRIBUTIONS OF
SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER
IN SUCH CAPITAL SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS
ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR (ii) THE ACQUISITION AND
HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT
PROHIBITED BY EITHER SECTION 406 OF ERISA OR
SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH
PROHIBITION.
(ii) Upon any sale or transfer of a Restricted
Capital Security (including any Restricted Capital Security
represented by a Global Capital Security) pursuant to an
effective registration statement under the Securities Act or
pursuant to Rule 144 under the Securities Act after such
registration statement ceases to be effective:
(A) in the case of any Restricted Capital
Security that is a Definitive Capital Security, the
Registrar shall permit the Holder thereof to exchange
such Restricted Capital Security for a Definitive
Capital Security that does not bear the Restricted
Securities Legend and rescind any restriction on the
transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital
Security that is represented by a Global Capital
Security, the Registrar shall permit the Holder of such
Global Capital Security to exchange such Global Capital
Security for another Global Capital Security that does
not bear the Restricted Securities Legend.
(j) Cancellation or Adjustment of Global Capital
Security. At such time as all beneficial interests in a Global
Capital Security have either been exchanged for Definitive
Capital Securities to the extent permitted by this Trust
Agreement or redeemed, repurchased or canceled in accordance with
the terms of this Trust Agreement, such Global Capital Security
shall be returned to the Clearing Agency for cancellation or
retained and canceled by the Property Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global
Capital Security is exchanged for Definitive Capital Securities,
Capital Securities represented by such Global Capital Security
shall be reduced and an adjustment shall be made on the books and
records of the Clearing Agency and the Registrar, to reflect such
reduction.
(k) Obligations with Respect to Transfers and
Exchanges of Capital Securities.
(i) To permit registrations of transfers and
exchanges, the Trust shall execute and the Property Trustee
shall authenticate Definitive Capital Securities and Global
Capital Securities at the Registrar's or co-registrar's
request in accordance with the terms of this Trust
Agreement.
(ii) Registrations of transfers or exchanges will
be effected without charge, but only upon payment (with such
indemnity as the Trust or the Sponsor may require) in
respect of any tax or other governmental charge that may be
imposed in relation to it.
(iii) The Registrar or co-registrar shall not be
required to register the transfer of or exchange of
(a) Capital Securities during a period beginning at the
opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Capital
Securities for redemption and ending at the close of
business on the day of such mailing; or (b) any Capital
Security so selected for redemption in whole or in part,
except the unredeemed portion of any Capital Security being
redeemed in part.
(iv) Prior to the due presentation for regis-
tration of transfer of any Capital Security, the Trust, the
Property Trustee, the Paying Agent, the Registrar or any co-
registrar may deem and treat the Person in whose name a
Capital Security is registered as the absolute owner of such
Capital Security for the purpose of receiving Distributions
on such Capital Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Capital Securities issued upon any
transfer or exchange pursuant to the terms of this Trust
Agreement shall evidence the same security and shall be
entitled to the same benefits under this Trust Agreement as
the Capital Securities surrendered upon such transfer or
exchange.
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no
responsibility or obligation to any beneficial owner of a
Global Capital Security, a Clearing Agency Participant in
the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its
nominee or of any Clearing Agency Participant thereof, with
respect to any ownership interest in the Capital Securities
or with respect to the delivery to any Clearing Agency
Participant, beneficial owner or other Person (other than
the Clearing Agency) of any notice (including any notice of
redemption) or the payment of any amount, under or with
respect to such Capital Securities. All notices and
communications to be given to the Holders and all payments
to be made to Holders under the Capital Securities shall be
given or made only to or upon the order of the registered
Holders (which shall be the Clearing Agency or its nominee
in the case of a Global Capital Security). The rights of
beneficial owners in any Global Capital Security shall be
exercised only through the Clearing Agency subject to the
applicable rules and procedures of the Clearing Agency. The
Property Trustee may conclusively rely and shall be fully
protected in relying upon information furnished by the
Clearing Agency or any agent thereof with respect to its
Clearing Agency Participants and any beneficial owners.
(ii) The Property Trustee and the Registrar shall
have no obligation or duty to monitor, determine or inquire
as to compliance with any restrictions on transfer imposed
under this Trust Agreement or under applicable law with
respect to any transfer of any interest in any Capital
Security (including any transfers between or among Clearing
Agency Participants or beneficial owners in any Global
Capital Security) other than to require delivery of such
certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly
required by, the terms of this Trust Agreement, and to
examine the same to determine substantial compliance as to
form with the express requirements hereof.
(m) Exchange of Series A Capital Securities for
Series B Capital Securities. The Series A Capital Securities may
be exchanged for Series B Securities pursuant to the terms of the
Exchange Offer. The Property Trustee shall make the exchange as
follows:
The Sponsor shall present the Property Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Capital Secu-
rities, the transactions contemplated by the
Exchange Offer have been consummated; and
(B) the number of Series A Capital Securities
properly tendered in the Exchange Offer that
are represented by a Global Capital Security
and the number of Series A Capital Securities
properly tendered in the Exchange Offer that
are represented by Definitive Capital
Securities, the name of each Holder of such
Definitive Capital Securities, the
liquidation amount of Capital Securities
properly tendered in the Exchange Offer by
each such Holder and the name and address to
which Definitive Capital Securities for
Series B Capital Securities shall be
registered and sent for each such Holder.
The Property Trustee, upon receipt of (i) such
Officers' Certificate, (ii) an Opinion of Counsel (x) to the
effect that the Series B Capital Securities have been registered
under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to
the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) a Company Order, shall authenticate (A) a
Global Capital Security representing Series B Capital Securities
in aggregate liquidation amount equal to the aggregate
liquidation amount of Series A Capital Securities represented by
a Global Capital Security indicated in such Officers' Certificate
as having been properly tendered and (B) Definitive Capital
Securities representing Series B Capital Securities registered in
the names of, and in the liquidation amounts indicated in such
Officers' Certificate.
If, upon consummation of the Exchange Offer, less than
all the outstanding Series A Capital Securities shall have been
properly tendered and not withdrawn, the Property Trustee shall
make an endorsement on the Global Capital Security representing
Series A Capital Securities indicating the reduction in the
number and aggregate liquidation amount represented thereby as a
result of the Exchange Offer.
The Trust shall deliver such Definitive Capital
Securities representing Series B Capital Securities to the
Holders thereof as indicated in such Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities
and, when issued, Series B Capital Securities may only be
transferred in minimum blocks of $100,000 aggregate liquidation
amount. Any transfer of Series A Capital Securities or Series B
Capital Securities in a block having an aggregate liquidation
amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not
to be a Holder of such Series A or Series B Capital Securities
for any purpose, including, but not limited to, the receipt of
Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital
Securities.
Section 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Security shall be registered on the books and records of the
Trust as the sole owner of such Security for purposes of
receiving Distributions and for all other purposes whatsoever
and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such Security on the part of any
Person, whether or not the Trust shall have actual or other
notice thereof.
Section 9.4 Book Entry Interests.
Global Capital Securities shall initially be registered
on the books and records of the Trust in the name of Cede & Co.,
the nominee of the Clearing Agency, and no Capital Security
Beneficial Owner will receive a definitive Capital Security
Certificate representing such Capital Security Beneficial Owner's
interests in such Global Capital Securities, except as provided
in Section 9.2 and Section 7.9. Unless and until definitive,
fully registered Capital Securities certificates have been issued
to the Capital Security Beneficial Owners pursuant to Section 9.2
and Section 7.9:
(a) the provisions of this Section 9.4 shall be in
full force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Trust
Agreement (including the payment of Distributions on the
Global Capital Securities and receiving approvals, votes or
consents hereunder) as the Holder of the Capital Securities
and the sole holder of the Global Certificates and shall
have no obligation to the Capital Security Beneficial
Owners;
(c) to the extent that the provisions of this
Section 9.4 conflict with any other provisions of this Trust
Agreement, the provisions of this Section 9.4 shall control;
and
(d) the rights of the Capital Security Beneficial
Owners shall be exercised only through the Clearing Agency
and shall be limited to those established by law and
agreements between such Capital Security Beneficial Owners
and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing
Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
Section 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital
Security Holders is required under this Trust Agreement, the
Trustees shall give all such notices and communications specified
herein to be given to the Holders of Global Capital Securities to
the Clearing Agency, and shall have no notice obligations to the
Capital Security Beneficial Owners.
Section 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its
services as securities depositary with respect to the Capital
Securities, the Administrative Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to
such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 10.1 Liability.
(a) Except as expressly set forth in this Trust
Agreement, the Securities Guarantees and the terms of the
Securities, the Sponsor shall not be:
(i) personally liable for the return of any
portion of the capital contributions (or any return
thereon) of the Holders which shall be made solely from
assets of the Trust; and
(ii) required to pay to the Trust or to any
Holder any deficit upon dissolution of the Trust or
otherwise.
(b) The Debenture Issuer shall be liable for all of
the debts and obligations of the Trust (other than in respect of
the Securities) to the extent not satisfied out of the Trust's
assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders shall be entitled to the same limitation of
personal liability extended to stockholders of private
corporations for profit organized under the General Corporation
Law of the State of Delaware.
Section 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Trust
Agreement or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's gross negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such
information, opinions, reports or statements presented to the
Trust by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
Section 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered
Person, an Indemnified Person acting under this Trust Agreement
shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Trust
Agreement. The provisions of this Trust Agreement, to the extent
that they restrict the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between any Covered Persons; or
(ii) whenever this Trust Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the Trust or
any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case
the relative interest of each party (including its own interest)
to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interests, any customary or
accepted industry practices, and any applicable generally
accepted accounting practices or principles. In the absence of
bad faith by the Indemnified Person, the resolution, action or
term so made, taken or provided by the Indemnified Person shall
not constitute a breach of this Trust Agreement or any other
agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Trust Agreement an Indemnified
Person is permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled
to consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Trust Agreement.
Section 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Company Indemnified Person
who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or pro-
ceeding, whether civil, criminal, administrative or investi-
gative (other than an action by or in the right of the
Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys'
fees and expenses), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Trust, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Company Indemnified Person
who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in
the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees and
expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of
the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to
be liable to the Trust unless and only to the extent that
the Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of
all the circumstances of the case, such Person is fairly and
reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified
Person shall be successful on the merits or otherwise
(including dismissal of an action without prejudice or the
settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and
(ii) of this Section 10.4(a) (unless ordered by a
court) shall be made by the Debenture Issuer only as
authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii).
Such determination shall be made (1) by the Administrative
Trustees by a majority vote of a Quorum consisting of such
Administrative Trustees who were not parties to such action,
suit or proceeding, (2) if such a Quorum is not obtainable,
or, even if obtainable, if a Quorum of disinterested
Administrative Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(v) Expenses (including attorneys' fees and
expenses) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative
action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 10.4(a) shall be paid by the Debenture
Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Debenture Issuer as
authorized in this Section 10.4(a). Notwithstanding the
foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by
the Administrative Trustees by a majority vote of a quorum
of disinterested Administrative Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Administrative Trustees so directs,
by independent legal counsel in a written opinion or
(iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Administrative Trustees, counsel
or the Common Security Holder at the time such determination
is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or
not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to
believe his conduct was unlawful. In no event shall any
advance be made in instances where the Administrative
Trustees, independent legal counsel or Common Security
Holder reasonably determine that such person deliberately
breached his duty to the Trust or its Common or Capital
Security Holders.
(vi) The indemnification and advancement of
expenses provided by, or granted pursuant to, the other
paragraphs of this Section 10.4(a) shall not be deemed
exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Capital Security
Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office. All rights to indemnification under
this Section 10.4(a) shall be deemed to be provided by a
contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time
while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any
rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may
purchase and maintain insurance on behalf of any person who
is or was a Company Indemnified Person against any liability
asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or
not the Debenture Issuer would have the power to indemnify
him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a),
references to "the Trust" shall include, in addition to the
resulting or surviving entity, any constituent entity
(including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a
director, trustee, officer or employee of such constituent
entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position
under the provisions of this Section 10.4(a) with respect to
the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence
had continued.
expenses provided by, or granted pursuant to, this
Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the
(i) Property Trustee, (ii) the Delaware Trustee, (iii) any
Affiliate of the Property Trustee and the Delaware Trustee, and
(iv) any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person
harmless against, any and all loss, liability, damage, claim or
expense including taxes (other than taxes based on the income of
such Fiduciary Indemnified Person) incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against or investigating any
claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 10.4(b) shall survive the
satisfaction and discharge of this Trust Agreement.
Section 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee may engage in or possess an interest in
other business ventures of any nature or description,
independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders shall have
no rights by virtue of this Trust Agreement in and to such
independent ventures or the income or profits derived therefrom,
and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper.
No Covered Person, the Sponsor, the Delaware Trustee, or the
Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such
opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor,
the Delaware Trustee and the Property Trustee shall have the
right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XI
ACCOUNTING
Section 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be
the calendar year, or such other year as is required by the Code.
Section 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust,
the Administrative Trustees shall keep, or cause to be kept, full
books of account, records and supporting documents, which shall
reflect in reasonable detail, each transaction of the Trust. The
books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the
records of the Trust shall be examined by and reported upon as of
the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Administrative
Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any annual United
States federal income tax information statement, required by the
Code, containing such information with regard to the Securities
held by each Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Administrative Trustees
shall endeavor to deliver all such information statements within
30 days after the end of each Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an
annual United States federal income tax return, on a Form 1041 or
such other form required by United States federal income tax law,
and any other annual income tax returns required to be filed by
the Administrative Trustees on behalf of the Trust with any state
or local taxing authority.
Section 11.3 Banking.
The Trust may maintain one or more bank accounts in the
name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by
the Property Trustee shall be made directly to the Property
Trustee Account and no other funds of the Trust shall be
deposited in the Property Trustee Account. The sole signatories
for such accounts shall be designated by the Administrative
Trustees; provided, however, that the Property Trustee shall
designate the signatories for the Property Trustee Account.
Section 11.4 Withholding.
The Trust and the Administrative Trustees shall comply
with all withholding requirements under United States federal,
state and local law. The Trust shall request, and the Holders
shall provide to the Trust, such forms or certificates as are
necessary to establish an exemption from withholding with respect
to each Holder, and any representations and forms as shall
reasonably be requested by the Trust to assist it in determining
the extent of, and in fulfilling, its withholding obligations.
The Administrative Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect
to Distributions or allocations to any Holder, the amount
withheld shall be deemed to be a Distribution in the amount of
the withholding to the Holder. In the event of any claimed over
withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld
was not withheld from actual Distributions made, the Trust may
reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments.
(a) Except as otherwise provided in this Trust
Agreement or by any applicable terms of the Securities, this
Trust Agreement may only be amended by a written instrument
approved and executed by:
(i) the Administrative Trustees (or if there are
more than two Administrative Trustees a majority of the
Administrative Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee,
the Property Trustee; and
(iii) if the amendment affects the rights,
powers, duties, obligations or immunities of the Delaware
Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed
amendment, the Property Trustee shall have first received an
Officers' Certificate from each of the Trust and the Sponsor
that such amendment is permitted by, and conforms to, the
terms of this Trust Agreement (including the terms of the
Securities);
(ii) unless, in the case of any proposed
amendment which affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the
Property Trustee shall have first received:
(A) an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Trust
Agreement (including the terms of the Securities); and
(B) an Opinion of Counsel (who may be
counsel to the Sponsor or the Trust) that such
amendment is permitted by, and conforms to, the terms
of this Trust Agreement (including the terms of the
Securities) and that all conditions precedent, if any,
in this Trust Agreement to the execution and delivery
of such amendment have been satisfied,
provided, however, that the Property Trustee shall not be
required to sign any such amendment; and
(iii) to the extent the result of such amendment
would be to:
(A) cause the Trust to fail to continue to
be classified for purposes of United States federal
income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the
Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) At such time after the Trust has issued any
Securities that remain outstanding, any amendment that would
adversely affect the rights, privileges or preferences of any
Holder may be effected only with such additional requirements as
may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders;
(e) Article Four shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the
Common Securities and;
(f) The rights of the holders of the Common Securities
under Article Five to increase or decrease the number of, and
appoint and remove Trustees shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the
Common Securities; and
(g) Notwithstanding Section 12.1(c), this Trust
Agreement may be amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any
provision in this Trust Agreement that may be inconsistent
with any other provision of this Trust Agreement or to make
any other provisions with respect to matters or questions
arising under this Trust Agreement which shall not be
inconsistent with the other provisions of the Trust
Agreement; and
(ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as shall be
necessary to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to
ensure that the Trust will not be required to register as an
Investment Company under the Investment Company Act.
provided, however, that in the case of clause (i), such action
shall not adversely affect in any material respect the interests
of the Holders, and any amendments of this Trust Agreement shall
become effective when notice thereof is given to the Holders.
Section 12.2 Meetings of the Holders; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Administrative Trustees (or as
provided in the terms of the Securities) to consider and act on
any matter on which Holders of such class of Securities are
entitled to act under the terms of this Trust Agreement, the
terms of the Securities or the rules of any stock exchange on
which the Capital Securities are listed or admitted for trading.
The Administrative Trustees shall call a meeting of the Holders
of such class if directed to do so by the Holders of at least 10%
in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrative
Trustees one or more notices in writing stating that the signing
Holders wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security
Certificates held by the Holders exercising the right to call a
meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions shall apply to
meetings of Holders:
(i) notice of any such meeting shall be given to
all the Holders having a right to vote thereat at least
seven days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the
Holders is permitted or required under this Trust Agreement
or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the
Holders. Any action that may be taken at a meeting of the
Holders may be taken without a meeting if a consent in
writing setting forth the action so taken is signed by the
Holders owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all
Holders having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a
meeting shall be given to the Holders entitled to vote who
have not consented in writing. The Administrative Trustees
may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without
a meeting shall be returned to the Trust within the time
specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act
for it by proxy on all matters in which a Holder is entitled
to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be
valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Holder executing
it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and
the Holders were stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be
conducted by the Administrative Trustees or by such other
Person that the Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Trust
Agreement, the terms of the Securities, the Trust Indenture
Act or the listing rules of any stock exchange on which the
Capital Securities are then listed or trading, otherwise
provides, the Administrative Trustees, in their sole
discretion, shall establish all other provisions relating to
meetings of Holders, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on
by any Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right
to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 13.1 Representations and Warranties of Property
Trustee.
The Trustee that acts as initial Property Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Trust Agreement, and each Successor Property Trustee
represents and warrants to the Trust and the Sponsor at the time
of the Successor Property Trustee's acceptance of its appointment
as Property Trustee that:
(a) The Property Trustee is a New York banking
corporation with trust powers and authority to execute and
deliver, and to carry out and perform its obligations under the
terms of, this Trust Agreement;
(b) The execution, delivery and performance by the
Property Trustee of this Trust Agreement has been duly authorized
by all necessary corporate action on the part of the Property
Trustee. This Trust Agreement has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless
of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) The execution, delivery and performance of this
Trust Agreement by the Property Trustee does not conflict with or
constitute a breach of the charter or by-laws of the Property
Trustee; and
(d) No consent, approval or authorization of, or
registration with or notice to, any New York State or federal
banking authority is required for the execution, delivery or
performance by the Property Trustee of this Trust Agreement.
Section 13.2 Representations and Warranties of Delaware
Trustee.
The Trustee that acts as initial Delaware Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Trust Agreement, and each Successor Delaware Trustee
represents and warrants to the Trust and the Sponsor at the time
of the Successor Delaware Trustee's acceptance of its appointment
as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of,
this Trust Agreement;
(b) The execution, delivery and performance by the
Delaware Trustee of this Trust Agreement has been duly authorized
by all necessary corporate action on the part of the Delaware
Trustee. This Trust Agreement has been duly executed and
delivered by the Delaware Trustee and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless
of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the
Delaware Trustee of this Trust Agreement; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
Section 14.1 Registration Rights Agreement.
The Holders of the Capital Securities, the Debentures
and the Capital Securities Guarantee (collectively, the
"Registrable Securities") are entitled to the benefits of a
Registration Rights Agreement. In certain limited circumstances
set forth in the Registration Rights Agreement, the Debenture
Issuer shall be required to pay Liquidated Damages with respect
to the Debentures. Unless otherwise stated, the term
"Distribution", as used in this Trust Agreement, includes such
Liquidated Damages.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices.
All notices provided for in this Trust Agreement shall
be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as
follows:
(a) if given to the Trust, in care of the
Administrative Trustees at the Trust's mailing address set forth
below (or such other address as the Trust may give notice of to
the Holders):
Patriot Capital Trust I
High and Hanover Streets
Pottstown, PA 19464
Attention: Administrative Trustee
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware
Trustee may give notice of to the Holders):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address
as the Property Trustee may give notice of to the Holders):
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10283
Attention: Corporate Trust
Trustee Administration
(d) if given to the Holder of the Common Securities,
at the mailing address of the Sponsor set forth below (or such
other address as the Holder of the Common Securities may give
notice to the Trust):
Patriot Bank Corp.
High and Hanover Streets
Pottstown, PA 19464
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
Section 15.2 Governing Law.
This Trust Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware and all rights and remedies
shall be governed by such laws without regard to principles of
conflict of laws.
Section 15.3 Intention of the Parties.
It is the intention of the parties hereto that the
Trust be classified for United States federal income tax purposes
as a grantor trust. The provisions of this Trust Agreement shall
be interpreted to further this intention of the parties.
Section 15.4 Headings.
Headings contained in this Trust Agreement are inserted
for convenience of reference only and do not affect the
interpretation of this Trust Agreement or any provision hereof.
Section 15.5 Successors and Assigns.
Whenever in this Trust Agreement any of the parties
hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and
agreements in this Trust Agreement by the Sponsor and the
Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
Section 15.6 Partial Enforceability.
If any provision of this Trust Agreement, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Trust Agreement, or
the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be
affected thereby.
Section 15.7 Counterparts.
This Trust Agreement may contain more than one
counterpart of the signature page and this Trust Agreement may be
executed by the affixing of the signature of each of the Trustees
to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers
had signed a single signature page.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above
written.
___________________________________
Joseph W. Major, as Administrative
Trustee
___________________________________
Gary N. Gieringer, as
Administrative Trustee
___________________________________
Richard A. Elko, as Administrative
Trustee
THE BANK OF NEW YORK (Delaware) as
Delaware Trustee
By:________________________________
Name:
Title:
THE BANK OF NEW YORK as Property
Trustee
By:________________________________
Name:
Title:
PATRIOT BANK CORP., as Sponsor
By:________________________________
Name:
Title:
<PAGE>
ANNEX I
TERMS OF
10.30% Series A/Series B CAPITAL SECURITIES
10.30% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of June 5, 1997 (as amended from
time to time, the "Trust Agreement"), the designation, rights,
privileges, restrictions, preferences and other terms and
provisions of the Securities are set out below (each capitalized
term used but not defined herein has the meaning set forth in the
Trust Agreement or, if not defined in such Trust Agreement, as
defined in the Offering Memorandum referred to below in
Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. 19,000 Series A Capital
Securities of the Trust and 19,000 Series B Capital Securities of
the Trust, each series with an aggregate liquidation amount with
respect to the assets of the Trust of Nineteen Million Dollars
($19,000,000), and each with a liquidation amount with respect to
the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "10.30%
Series A Capital Securities" and "10.30% Series B Capital
Securities", respectively (collectively, the "Capital
Securities"). The certificates evidencing the Capital Securities
shall be substantially in the form of Exhibit A-1 to the Trust
Agreement, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or
practice or to conform to the rules of any exchange or quotation
system on or in which the Capital Securities are listed, traded
or quoted.
(b) Common Securities. 588 Common Securities of
the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of Five Hundred Eighty-Eight Thousand
Dollars ($588,000) and a liquidation amount with respect to the
assets of the Trust of $1,000 per security, are hereby designated
for the purposes of identification only as "10.30% Common
Securities" (collectively, the "Common Securities"). The
certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Trust Agreement,
with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will
be fixed at a rate per annum of 10.30% (the "Coupon Rate") of the
liquidation amount of $1,000 per Security (the "Liquidation
Amount"), such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in
arrears for more than one semi-annual period will bear additional
distributions thereon compounded semi-annually at the Coupon Rate
(to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances
the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to
the Debentures. The term "Distributions", as used herein,
includes distributions of any such interest and Liquidated
Damages payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the
Property Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be
cumulative, will accumulate from the most recent date to which
Distributions have been paid or, if no Distributions have been
paid, from June 5, 1997, and will be payable semi-annually in
arrears on June 1 and December 1 of each year, commencing on
December 1, 1997 (each, a "Distribution Date"), except as
otherwise described below. Distributions will be computed on the
basis of a 360-day year consisting of twelve 30-day months and
for any period less than a full calendar month on the basis of
the actual number of days elapsed in such month. As long as no
Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture
to defer payments of interest by extending the interest payment
period at any time and from time to time on the Debentures for a
period not exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such period
(each an "Extension Period"), during which Extension Period no
interest shall be due and payable on the Debentures, provided
that no Extension Period shall end on a date other than an
Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with
additional Distributions thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension
Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-
annual periods, including the first semi-annual period during
such Extension Period, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above
requirements.
(c) Distributions on the Securities will be
payable to the Holders thereof as they appear on the books and
records of the Trust on the fifteenth day of the month preceding
the month in which the relevant Distribution Date occurs, which
Distribution Dates correspond to the interest payment dates on
the Debentures. Subject to any applicable laws and regulations
and the provisions of the Trust Agreement, each such payment in
respect of the Capital Securities will be made as described under
the heading "Description of Capital Securities -- Form,
Denomination, Book-Entry Procedures and Transfer" in the Offering
Memorandum dated June 2, 1997, of the Debenture Issuer and the
Trust relating to the Securities and the Debentures. The
relevant record dates for the Common Securities shall be the same
as the record dates for the Capital Securities. Distributions
payable on any Securities that are not punctually paid on any
Distribution Date, as a result of the Debenture Issuer having
failed to make a payment under the Debentures, will cease to be
payable to the Holder on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in
whose name such Securities are registered on the special record
date or other specified date determined in accordance with the
Indenture. If any date on which Distributions are payable on the
Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that if
such next succeeding Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made
on such date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for
hereunder, such property shall be distributed Pro Rata (as
defined herein) among the Holders.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust or the
Sponsor otherwise gives notice of its election to liquidate the
Trust pursuant to Section 8.1(a)(iii) of the Trust Agreement, the
Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be
possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the
Holders a Like Amount (as defined below) of the Debentures,
unless such distribution is determined by the Property Trustee
not to be practicable, in which event such Holders will be
entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction
of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the aggregate of the
liquidation amount of $1,000 per Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of
the Securities, Securities having a Liquidation Amount equal to
the principal amount of Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Debentures
upon the liquidation of the Trust, Debentures having a principal
amount equal to the Liquidation Amount of the Securities of the
Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation
Distribution can be paid only in part because the Trust has
insufficient assets on hand legally available to pay in full the
aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro
Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole
or in part, at maturity or upon early redemption (either at the
option of the Debenture Issuer or pursuant to a Special Event, as
described below), the proceeds from such repayment shall be
simultaneously applied by the Property Trustee (subject to the
Property Trustee having received notice no later than 45 days
prior to such repayment) to redeem a Like Amount of the Securi-
ties at a redemption price equal to (i) in the case of the
repayment of the Debentures at maturity, the Maturity Redemption
Price (as defined below), (ii) in the case of the optional
redemption of the Debentures upon the occurrence and continuation
of a Special Event, the Special Event Redemption Price (as
defined below) and (iii) in the case of the optional redemption
of the Debentures on or after June 1, 2007, the Optional
Redemption Price (as defined below). The Maturity Redemption
Price, the Special Event Redemption Price and the Optional
Redemption Price are referred to collectively as the "Redemption
Price". Holders will be given not less than 30 nor more than 60
days notice of such redemption.
(b) (i) The "Maturity Redemption Price", with
respect to a redemption of Securities, shall mean an amount equal
to the principal of and accrued and unpaid interest on the
Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption,
if fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed Pro Rata and the
Capital Securities to be redeemed will be determined as described
in Section 4(f)(ii) below. Upon the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction,
the Debentures thereafter will be subject to optional repayment,
in whole, but not in part, on or after June 1, 2007 (the "Initial
Optional Redemption Date").
The Debenture Issuer shall have the right (subject to
the conditions in the Indenture) to elect to redeem the
Debentures in whole or in part at any time on or after the
Initial Optional Redemption Date, upon not less than 30 days and
not more than 60 days notice, at the Optional Redemption Price
and, simultaneous with such redemption, to cause a Like Amount of
the Securities to be redeemed by the Trust at the Optional
Redemption Price on a Pro Rata basis. "Optional Redemption
Price" shall mean a price equal to the percentage of the
liquidation amount of Securities to be redeemed plus accumulated
and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning
June 1, of the years indicated below:
Year Percentage
2007 105.150%
2008 104.635%
2009 104.120%
2010 103.605%
2011 103.090%
2012 102.575%
2013 102.060%
2014 101.545%
2015 101.030%
2016 100.515%
2017 and thereafter 100.0000%
(c) If at any time a Tax Event or a Regulatory
Capital Event (each as defined below, and each a "Special
Event") occurs, the Debenture Issuer shall have the right
(subject to the conditions set forth in the Indenture) at any
time prior to the Initial Optional Redemption Date, upon not less
than 30 nor more than 60 days notice, to redeem the Debentures in
whole, but not in part, within the 90 days following the
occurrence of such Special Event (the "90 Day Period"), and,
simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Special Event
Redemption Price on a Pro Rata basis.
"Tax Event" shall occur upon receipt by the Debenture
Issuer and the Trust of an Opinion of Counsel experienced in such
matters to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in, the laws
or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after June 5, 1997,
there is more than an insubstantial risk that (i) the Trust is,
or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received
or accrued on the Debentures, (ii) interest payable by the
Debenture Issuer on the Debentures is not, or within 90 days of
the date of such opinion, will not be, deductible by the
Debenture Issuer, in whole or in part, for United States federal
income tax purposes, or (iii) the Trust is, or will be within 90
days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental
charges.
"Regulatory Capital Event" shall mean that the Sponsor
shall have become, or pursuant to law or regulation will become
within 180 days, subject to capital requirements under which, in
the written opinion of independent bank regulatory counsel
experienced in such matters, the Capital Securities would not
constitute Tier 1 Capital applied as if the Sponsor (or its
successor) were a bank holding company (as that concept is used
in the guidelines or regulations issued by the Federal Reserve
Board or its then equivalent; provided, however, that the
distribution of the Debentures in connection with the liquidation
of the Trust by the Debenture Issuer shall not in and of itself
constitute a Regulatory Capital Event unless such liquidation
shall have occurred in connection with a Tax Event.
"Special Event Redemption Price" shall mean, with
respect to a redemption of Securities, a price equal to the
greater of (i) 100% of the principal of a Like Amount of
Debentures to be redeemed or (ii) the sum, as determined by a
Quotation Agent (as defined in the Indenture), of the present
values of the principal amount and premium payable as part of the
prepayment price with respect to an optional redemption of a Like
Amount of the Debentures on the Initial Optional Redemption Date,
together with scheduled payments of interest on the Debentures
from the redemption date to and including the Initial Optional
Redemption Date, discounted to the redemption date on a semi-
annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined in the
Indenture), plus, in the case of each of clauses (i) and (ii),
accumulated but unpaid Distributions thereon, if any, to the date
of such redemption.
(d) On and from the date fixed by the Administra-
tive Trustees for any distribution of Debentures and liquidation
of the Trust: (i) the Securities will no longer be deemed to be
outstanding, (ii) the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee), as the Holder of the
Capital Securities, will receive a registered global certificate
or certificates representing the Debentures to be delivered upon
such distribution and any certificates representing Securities
not held by the Clearing Agency or its nominee (or any successor
Clearing Agency or its nominee) will be deemed to represent
beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent
for transfer or reissue.
(e) The Trust may not redeem fewer than all the
outstanding Securities unless all accumulated and unpaid
Distributions have been paid on all Securities for all semi-
annual Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions or
distributions of Securities shall be as follows:
(i) Notice of any redemption of, or notice
of distribution of Debentures in exchange for, the
Securities (a "Redemption/Distribution Notice") will be
given by the Trust by mail to each Holder to be redeemed or
exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for redemption
of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(f)(i), a
Redemption/Distribution Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders. Each Redemption/Distribution
Notice shall be addressed to the Holders at the address of
each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or
in the mailing of either thereof with respect to any Holder
shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the
outstanding Securities are to be redeemed, the Securities to
be redeemed shall be redeemed Pro Rata from each Holder, it
being understood that, in respect of Capital Securities
registered in the name of and held of record by the Clearing
Agency or its nominee (or any successor Clearing Agency or
its nominee) or any nominee, the distribution of the
proceeds of such redemption will be made to the Clearing
Agency and disbursed by such Clearing Agency in accordance
with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and
the Trust gives a Redemption/Distribution Notice, (which
notice will be irrevocable), then (A) with respect to
Capital Securities issued in book-entry form, by 12:00 noon,
New York City time, on the redemption date, provided that
the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related
redemption or maturity of the Debentures by 10:00 a.m., New
York City time, on the maturity date or the date of
redemption, as the case requires, the Property Trustee will
deposit irrevocably with the Clearing Agency or its nominee
(or successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with
respect to such Capital Securities and will give the
Clearing Agency irrevocable instructions and authority to
pay the Redemption Price to the relevant Clearing Agency
Participants, and (B) with respect to Capital Securities
issued in certificated form and Common Securities, provided
that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property
Trustee will pay the relevant Redemption Price to the
Holders by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on
the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business
on the date of such deposit, or on the redemption date, as
applicable, Distributions will cease to accumulate on the
Securities so called for redemption and all rights of
Holders so called for redemption will cease, except the
right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption
Price, and such Securities shall cease to be outstanding.
(iv) Distributions on the Redemption Date
of the Securities will
be subject to the rights of Holders on the close of business
on a regular record date in respect of a Distribution Date
occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the
Trust shall be required to register or cause to be
registered the transfer of (i) any Securities beginning on
the opening of business 15 days before the day of mailing of
a notice of redemption or any notice of selection of
Securities for redemption or (ii) any Securities selected
for redemption except the unredeemed portion of any Security
being redeemed. If any date fixed for redemption of
Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay)
except that, if such next succeeding Business Day falls in
the next calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect
of any Securities is improperly withheld or refused and not
paid either by the Property Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accumulate
from the original redemption date to the actual date of
payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be
sent by the Property Trustee on behalf of the Trust to
(A) in respect of the Capital Securities, the Clearing
Agency or its nominee (or any successor Clearing Agency or
its nominee) if the Global Certificates have been issued or,
if Definitive Capital Security Certificates have been
issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable
law (including, without limitation, United States federal
securities laws and banking laws), provided the acquiror is
not the Holder of the Common Securities or the obligor under
the Indenture, the Sponsor or any of its subsidiaries may at
any time and from time to time purchase outstanding Capital
Securities by tender, in the open market or by private
agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b) and 7
and as otherwise required by law and the Trust Agreement, the
Holders of the Capital Securities will have no voting rights.
(b) So long as any Debentures are held by the
Property Trustee, the Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or executing any trust or
power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under
Section 5.07 of the Indenture, (iii) exercise any right to
rescind or annul a declaration of acceleration of the maturity of
the principal of the Debentures or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in
liquidation amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would
require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee
without the prior approval of each Holder of the Capital
Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital
Securities except by subsequent vote of such Holders. The
Property Trustee shall notify each Holder of Capital Securities
of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of
the Capital 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 not
be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such
action.
If an Event of Default under the Trust Agreement has
occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay principal of or premium,
if any, or interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or
premium, if any, or interest on a Like Amount of Debentures (a
"Direct Action") on or after the respective due date specified in
the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the
rights of such Holder of Capital Securities to the extent of any
payment made by the Debenture Issuer to such Holder of Capital
Securities in such Direct Action. Except as provided in the
second preceding sentence, the Holders of Capital Securities will
not be able to exercise directly any other remedy available to
the holders of the Debentures.
Any approval or direction of Holders of Capital
Securities may be given at a separate meeting of Holders of
Capital Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to written
consent. The Property Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to
vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to each Holder of
record of Capital Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which written
consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Capital
Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance
with the Trust Agreement and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Capital Securities that are owned by
the Sponsor or any Affiliate of the Sponsor shall not be entitled
to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c),
and 7 and as otherwise required by law and the Trust Agreement,
the Holders of the Common Securities will have no voting rights.
(b) Unless an Event of Default shall have
occurred and be continuing, any Trustee may be removed at any
time by the holder of the Common Securities. If an Event of
Default has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the holders
of a Majority in liquidation amount of the outstanding Capital
Securities. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace
the Administrative Trustees, which voting rights are vested
exclusively in the Sponsor as the holder of the Common
Securities. No resignation or removal of a Trustee and no
appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance
with the provisions of the Trust Agreement.
(c) So long as any Debentures are held by the
Property Trustee, the Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or executing any trust or
power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under
Section 5.07 of the Indenture, (iii) exercise any right to
rescind or annul a declaration of acceleration of the maturity of
the principal of the Debentures or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in
liquidation amount of all outstanding Common Securities;
provided, however, that where a consent under the Indenture would
require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee
without the prior approval of each Holder of the Common
Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common
Securities except by subsequent vote of such Holders. The
Property Trustee shall notify each Holder of Common Securities of
any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of
the Common 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 not
be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such
action.
If an Event of Default under the Trust Agreement has
occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay principal of or premium,
if any, or interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement
of payment to such Holder of the principal of or premium, if any,
or interest on a Like Amount of Debentures on or after the
respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Common Securities
Holder will be subordinated to the rights of such Holder of
Capital Securities to the extent of any payment made by the
Debenture Issuer to such Holder of Common Securities in such
Direct Action. Except as provided in the second preceding
sentence, the Holders of Common Securities will not be able to
exercise directly any other remedy available to the holders of
the Debentures.
Any approval or direction of Holders of Common
Securities may be given at a separate meeting of Holders of
Common Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to written
consent. The Administrative Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to
vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which written
consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Common
Securities will be required for the Trust to redeem and cancel
Common Securities or to distribute the Debentures in accordance
with the Trust Agreement and the terms of the Securities.
7. Amendments to Trust Agreement and Indenture.
In addition to the requirements set out in Section 12.1
of the Trust Agreement, the Trust Agreement may be amended from
time to time by the Sponsor, the Property Trustee and the
Administrative Trustees, without the consent of the Holders
(i) to cure any ambiguity, correct or supplement any provisions
in the Trust Agreement that may be inconsistent with any other
provisions, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement which
shall not be inconsistent with the other provisions of the Trust
Agreement, or (ii) to modify, eliminate or add to any provisions
of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust at all times that
any Securities are outstanding or to ensure that the Trust will
not be required to register as an "Investment Company" under the
Investment Company Act; provided, however, that in the case of
clause (i), such action shall not adversely affect in any
material respect the interests of any Holder, any amendments of
the Trust Agreement shall become effective when notice thereof is
given to the Holders. The Trust Agreement may also be amended by
the Trustees and the Sponsor with (i) the consent of Holders
representing a Majority in liquidation amount of all outstanding
Securities, and (ii) receipt by the Trustees of an Opinion of
Counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment
will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from
status as an Investment Company under the Investment Company Act,
provided that, without the consent of each Holder of Trust
Securities, the Trust Agreement may not be amended to (i) change
the amount or timing of any Distribution on the Trust Securities
or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust
Securities to institute suit for the enforcement of any such
payment on or after such date.
8. Pro Rata.
A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean
pro rata to each Holder according to the aggregate liquidation
amount of the Securities held by the relevant Holder in relation
to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default under the
Trust Agreement has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each
Holder of the Capital Securities pro rata according to the
aggregate liquidation amount of Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of
all Capital Securities outstanding, and only after satisfaction
of all amounts owed to the Holders of the Capital Securities, to
each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of
all Common Securities outstanding.
9. Ranking.
The Capital Securities rank pari passu with the Common
Securities and payment thereon shall be made Pro Rata with the
Common Securities, except that, if an Event of Default under the
Trust Agreement occurs and is continuing, no payments in respect
of Distributions on, or payments upon liquidation, redemption or
otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full
the Distributions, Redemption Price, Liquidation Distribution and
other payments to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common
Securities, by the acceptance thereof, agrees to the provisions
of the Capital Securities Guarantee and the Common Securities
Guarantee, respectively, including the subordination provisions
therein and to the provisions of the Indenture.
11. No Preemptive Rights.
The Holders shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Trust Agreement.
The Sponsor will provide a copy of the Trust Agreement,
the Capital Securities Guarantee, the Common Securities Guarantee
(as may be appropriate), or the Indenture (including any
supplemental indenture) to a Holder without charge upon written
request to the Sponsor at its principal place of business.
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY,
INSERT: THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY
WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY
(THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING AGENCY.
THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
TRUST AGREEMENT AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE
CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A
NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER
NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.]
[IF THIS GLOBAL SECURITY IS A RULE 144A GLOBAL
SECURITY, INSERT: UNLESS THIS CAPITAL SECURITY IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THESE CAPITAL SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.
NEITHER THIS CAPITAL SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF
THIS CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT
LESS THAN $100,000 (100 CAPITAL SECURITIES). ANY SUCH TRANSFER
OF CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF
LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL
EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING
BUT NOT LIMITED TO THE RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL
SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS
NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR (ii) THE
ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT
PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM
ANY SUCH PROHIBITION.
<PAGE>
Certificate Number Aggregate Liquidation Amount
CUSIP NO. __________
Certificate Evidencing Capital Securities
of
Patriot Capital Trust I
10.30% Capital Securities
(liquidation amount $1,000 per Capital Security)
Patriot Capital Trust I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"),
hereby certifies that ______________ (the "Holder") is the
registered owner of [$_________ in aggregate liquidation amount
of Capital Securities of the Trust] [the aggregate liquidation
amount of Capital Securities of the Trust specified in Schedule A
hereto] representing undivided beneficial interests in the assets
of the Trust designated the 10.30% Series A Capital Securities
(liquidation amount $1,000 per Capital Security) (the "Capital
Securities"). The Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the
Capital Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of June 5, 1997, as
the same may be amended from time to time (the "Trust
Agreement"), including the designation of the terms of the
Capital Securities as set forth in Annex I to the Trust
Agreement. Capitalized terms used but not defined herein shall
have the meaning given them in the Trust Agreement. The Sponsor
will provide a copy of the Trust Agreement, the Capital
Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental
indenture) to a Holder without charge upon written request to the
Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound
by the Trust Agreement and is entitled to the benefits thereunder
and to the benefits of the Capital Securities Guarantee to the
extent provided therein.
By acceptance, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as
indebtedness and the Capital Securities as evidence of indirect
beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this
certificate this 5th day of June, 1997.
PATRIOT CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in
the within-mentioned Trust Agreement.
Dated: June 5, 1997
THE BANK OF NEW YORK,
as Property Trustee
By:________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be
fixed at a rate per annum of 10.30% (the "Coupon Rate") of the
liquidation amount of $1,000 per Capital Security, such rate
being the rate of interest payable on the Debentures to be held
by the Property Trustee. Distributions in arrears for more than
one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement,
in certain limited circumstances the Debenture Issuer will be
required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures.
The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages
payable unless otherwise stated. A Distribution is payable only
to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be
cumulative, will accumulate from the most recent date to which
Distributions have been paid or, if no Distributions have been
paid, from June 5, 1997 and will be payable semi-annually in
arrears, on June 1 and December 1 of each year, commencing on
December 1, 1997, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than
a full calendar month, the number of days elapsed in such month.
As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest
payment period at any time and from time to time on the
Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period
during such extension period (each an "Extension Period"),
provided that no Extension Period shall end on a date other than
an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such
deferral, semi-annual Distributions will continue to accumulate
with interest thereon (to the extent permitted by applicable law,
but not at a rate exceeding the rate of interest then accruing on
the Debentures) at the Coupon Rate compounded semi-annually
during any such Extension Period. Prior to the termination of
any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such
previous and further extensions within such Extension Period, may
not exceed 10 consecutive semi-annual periods, including the
first semi-annual period during such Extension Period, end on a
date other than an Interest Payment Date for the Debentures or
extend beyond the Maturity Date of the Debentures. Payments of
accumulated Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the termination
of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject
to the above requirements.
Subject to receipt by the Sponsor of any required
regulatory approval and to certain other conditions set forth in
the Trust Agreement and the Indenture, the Property Trustee may,
at the direction of the Sponsor, at any time liquidate the Trust
and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided
in the Trust Agreement.<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent
to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:
<PAGE>
[Include the following if the Capital Security bears a Restricted
Capital Securities Legend --
In connection with any transfer of any of the Capital Securities
evidenced by this certificate, the undersigned confirms that such
Capital Securities are being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account
without transfer; or
(2) [ ] transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) [ ] transferred to an institutional "accredited
investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501
under the Securities Act of 1933 that is acquiring
the Capital Securities for its own account, or for
the account of such an institutional "accredited
investor," for investment purposes and not with a
view to, or for offer or sale in connection with,
any distribution in violation of the Securities
Act of 1933; or
(5) [ ] transferred pursuant to another available
exemption from the registration requirements of
the Securities Act of 1933; or
(6) [ ] transferred pursuant to an effective Registration
Statement.
Unless one of the boxes is checked, the Registrar will refuse to
register any of the Capital Securities evidenced by this
certificate in the name of any Person other than the registered
Holder thereof; provided, however, that if box (3), (4) or (5) is
checked, the Registrar may require, prior to registering any such
transfer of the Capital Securities, such legal opinions,
certifications and other information as the Trust has reasonably
requested to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as
the exemption provided by Rule 144 under such Act; provided,
further, that (i) if box (2) is checked, the transferee must also
certify that it is a qualified institutional buyer as defined in
Rule 144A or (ii) if box (4) is checked, the transferee must also
provide to the Registrar a Transferee Letter of Representation in
the form attached to the Offering Memorandum of the Trust dated
June 2, 1997; provided, further, that after the date that a
Registration Statement has been filed and so long as such
Registration Statement continues to be effective, the Registrar
may only permit transfers for which box (6) has been checked.
___________________________________
Signature
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.
NEITHER THIS COMMON SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF
THIS COMMON SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE
TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS COMMON SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
<PAGE>
Certificate Evidencing Common Securities
of
Patriot Capital Trust I
10.30% Common Securities
(liquidation amount $1,000 per Common Security)
Patriot Capital Trust I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that Patriot Bank Corp. (the "Holder") is the
registered owner of 588 common securities of the Trust
representing undivided beneficial interests in the assets of the
Trust designated the 10.30% Common Securities (liquidation amount
$1,000 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of June 5, 1997, as
the same may be amended from time to time (the "Trust
Agreement"), including the designation of the terms of the Common
Securities as set forth in Annex I to the Trust Agreement.
Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide
a copy of the Trust Agreement, the Common Securities Guarantee,
the Capital Securities Guarantee (as may be appropriate) and the
Indenture (including any supplemental indenture) to a Holder
without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Holder is bound
by the Trust Agreement and is entitled to the benefits thereunder
and to the benefits of the Common Securities Guarantee to the
extent provided therein.
By acceptance, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as
indebtedness and the Common Securities as evidence of indirect
beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this
certificate this 5th day of June, 1997.
Patriot Capital Trust I
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the
within-mentioned Trust Agreement.
Dated: June 5, 1997 THE BANK OF NEW YORK, as Property
Trustee
By:________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be
fixed at a rate per annum of 10.30% (the "Coupon Rate") of the
liquidation amount of $1,000 per Common Security, such rate being
the rate of interest payable on the Debentures to be held by the
Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-
annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement,
in certain limited circumstances the Debenture Issuer will be
required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures.
The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages
payable unless otherwise stated. A Distribution is payable only
to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.
Distributions on the Common Securities will be
cumulative, will accumulate from the most recent date to which
Distributions have been paid or, if no Distributions have been
paid, from June 5, 1997 and will be payable semi-annually in
arrears, on June 1 and December 1 of each year, commencing on
December 1, 1997, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than
a full calendar month, the number of days elapsed in such month.
As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest
payment period at any time and from time to time on the
Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period
during such extension period (each an "Extension Period"),
provided that no Extension Period shall end on a date other than
an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a
rate exceeding the rate of interest then accruing on the
Debentures) at the Coupon Rate compounded semi-annually during
any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments
of interest by further extending such Extension Period; provided
that such Extension Period, together with all such previous and
further extensions within such Extension Period, may not exceed
10 consecutive semi-annual periods, including the first semi-
annual period during such Extension Period, or end on a date
other than an Interest Payment Date for the Debentures or extend
beyond the Maturity Date of the Debentures. Payments of accrued
Distributions will be payable to Holders as they appear on the
books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to
the above requirements.
Subject to receipt by the Sponsor of any required
regulatory approval and to certain other conditions set forth in
the Trust Agreement and the Indenture, the Property Trustee may,
at the direction of the Sponsor, at any time liquidate the Trust
and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.
Under certain circumstances, the right of the holders
of the Common Securities shall be subordinate to the rights of
the holders of the Capital Securities (as defined in the Trust
Agreement), as provided in the Declaration.
The Common Securities shall be redeemable as provided
in the Trust Agreement.
________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
Dated June 5, 1997
among
PATRIOT BANK CORP.
PATRIOT CAPITAL TRUST I
and
SANDLER O'NEILL & PARTNERS, L.P.
JANNEY MONTGOMERY SCOTT INC.
as Initial Purchasers
_______________________________________________________________
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered into as of June 5, 1997 among PATRIOT BANK CORP.,
a Delaware corporation (the "Corporation"), PATRIOT CAPITAL TRUST
I, a business trust formed under the laws of the state of Delaware
(the "Trust"), and SANDLER O'NEILL & PARTNERS, L.P. and JANNEY
MONTGOMERY SCOTT INC. (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement
dated June 2, 1997 (the "Purchase Agreement"), among the
Corporation, as issuer of the Series A 10.30% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 (the "Subordinated
Debentures"), the Trust and the Initial Purchasers, which provides
for, among other things, the sale by the Trust to the Initial
Purchasers of $19,000,000 of the Trust's Series A 10.30% Capital
Securities, liquidation amount $1,000 per Capital Security (the
"Capital Securities"), the proceeds of which will be used by the
Trust to purchase Subordinated Debentures. The Capital Securities,
together with the Subordinated Debentures and the Corporation's
guarantee of the Capital Securities (the "Capital Securities
Guarantee"), are collectively referred to as the "Securities". In
order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Corporation and the Trust have agreed to provide to
the Initial Purchasers and their direct and indirect transferees
the registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing under
the Purchase Agreement.
In consideration of the foregoing, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following
meanings:
"Additional Distributions" shall have the meaning set forth in
Section 2(e) hereof.
"Advice" shall have the meaning set forth in the last
paragraph of Section 3 hereof.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Applicable Period" shall have the meaning set forth in
Section 3(t) hereof.
"Business Day" means any day other than a Saturday, a Sunday,
or a day on which banking institutions in New York, New York,
Wilmington, Delaware or Pottstown, Pennsylvania are authorized or
required by law or executive order to close.
"Closing Time" shall mean the Closing Time as defined in the
Purchase Agreement.
"Corporation" shall have the meaning set forth in the preamble
to this Agreement and also includes the Corporation's successors
and permitted assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended
and Restated Declaration of Trust of Patriot Capital Trust I, dated
as of June 5, 1997, by the trustees named therein and the
Corporation as sponsor.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Trust; provided, however, that
such depositary must have an address in the Borough of Manhattan,
in The City of New York.
"Effectiveness Period" shall have the meaning set forth in
Section 2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Exchange Offer" shall mean the offer by the Corporation and
the Trust to the Holders to exchange all of the Registrable Securi-
ties (other than Private Exchange Securities) for a like principal
amount of Exchange Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under
the Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on
another appropriate form), and all amendments and supplements to
such registration statement, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorpo-
rated by reference therein.
"Exchange Period" shall have the meaning set forth in Section
2(a) hereof.
"Exchange Securities" shall mean (i) with respect to the
Subordinated Debentures, the Series B 10.30% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 (the "Exchange
Debentures") containing terms substantially identical to the Subor-
dinated Debentures (except that they will not contain terms with
respect to the transfer restrictions under the Securities Act
(other than requiring minimum transfers thereof to be in blocks of
$100,000 aggregate principal amount), and will not provide for any
Liquidated Damages thereon), (ii) with respect to the Capital
Securities, the Trust's Series B 10.30% Capital Securities, liqui-
dation amount $1,000 per Capital Security (the "Exchange Capital
Securities") which will have terms substantially identical to the
Capital Securities (except they will not contain terms with respect
to transfer restrictions under the Securities Act (other than
requiring minimum transfers thereof to be in blocks of $100,000
aggregate liquidation amount), and will not provide for any
increase in Additional Distributions thereon) and (iii) with
respect to the Capital Securities Guarantee, the Corporation's
guarantee (the "Exchange Capital Securities Guarantee") of the
Exchange Capital Securities which will have terms substantially
identical to the Capital Securities Guarantee.
"Holder" shall mean the Initial Purchasers, for so long as
they own any Registrable Securities, and each of its respective
successors, assigns and direct and indirect transferees who become
registered owners of Registrable Securities under the Indenture or
Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subor-
dinated Debentures and the Exchange Debentures dated as of June 1,
1997 between the Corporation, as issuer, and The Bank of New York,
as trustee, as the same may be amended from time to time in accor-
dance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
preamble to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n)
hereof.
"Issue Date" shall mean June 5, 1997, the date of original
issuance of the Securities.
"Liquidated Damages" shall have the meaning set forth in
Section 2(e) hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth
in Section 3(t) hereof.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, limited liability corpora-
tion, or a government or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section
2(a) hereof.
"Private Exchange Securities" shall have the meaning set forth
in Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Regis-
tration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities
covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-
effective amendments, and in each case including all material
incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Records" shall have the meaning set forth in Section 3(n)
hereof.
"Registrable Securities" shall mean the Securities and, if
issued, the Private Exchange Securities; provided, however, that
Securities or Private Exchange Securities, as the case may be,
shall cease to be Registrable Securities when (i) a Registration
Statement with respect to such Securities or Private Exchange
Securities for the exchange or resale thereof, as the case may be,
shall have been declared effective under the Securities Act and
such Securities or Private Exchange Securities, as the case may be,
shall have been disposed of pursuant to such Registration State-
ment, (ii) such Securities or Private Exchange Securities, as the
case may be, shall have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A)
under the Securities Act or are eligible to be sold without
restriction as contemplated by Rule 144(k), (iii) such Securities
or Private Exchange Securities, as the case may be, shall have
ceased to be outstanding or (iv) with respect to the Securities,
such Securities shall have been exchanged for Exchange Securities
upon consummation of the Exchange Offer and are thereafter freely
tradeable by the holder thereof (other than an Affiliate of the
Corporation).
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Corporation with
this Agreement, including without limitation: (i) all SEC or
National Association of Securities Dealers, Inc. (the "NASD")
registration and filing fees, including, if applicable, the fees
and expenses of any "qualified independent underwriter" (and its
counsel) that is required to be retained by any Holder of Regis-
trable Securities in accordance with the rules and regulations of
the NASD, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including
reasonable fees and disbursements of one counsel for all underwrit-
ers or Holders as a group in connection with blue sky qualification
of any of the Exchange Securities or Registrable Securities) and
compliance with the rules of the NASD, (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Pro-
spectus and any amendments or supplements thereto, and in preparing
or assisting in preparing, printing and distributing any underwrit-
ing agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement,
(iv) all rating agency fees, (v) the fees and disbursements of
counsel for the Corporation and of the independent certified public
accountants of the Corporation, including the expenses of any "cold
comfort" letters required by or incident to such performance and
compliance, (vi) the fees and expenses of the Trustee and its
counsel and any exchange agent or custodian, (vii) all fees and
expenses incurred in connection with the listing, if any, of any of
the Exchange Securities or the Registrable Securities on any
securities exchange or exchanges, and (viii) the reasonable fees
and expenses of any special experts retained by the Corporation in
connection with any Registration Statement.
"Registration Statement" shall mean any registration statement
of the Corporation and the Trust which covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of
this Agreement, and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Rule 144(k) Period" shall mean the period of two years (or
such shorter period as may hereafter be referred to in Rule 144(k)
under the Securities Act (or similar successor rule)) commencing on
the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble
to this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set
forth in Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" regis-
tration statement of the Corporation and the Trust pursuant to the
provisions of Section 2(b) hereof which covers all of the Regis-
trable Securities or all of the Private Exchange Securities, as the
case may be, on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustees" shall mean any and all trustees with respect to (i)
the Capital Securities under the Declaration, (ii) the Subordinated
Debentures under the Indenture and (iii) the Capital Securities
Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. Except as set forth in Section 2(b)
below, the Corporation and the Trust shall, for the benefit of the
Holders, use their reasonable best efforts to (i) cause to be filed
with the SEC within 150 days after the Issue Date an Exchange Offer
Registration Statement on an appropriate form under the Securities
Act relating to the Exchange Offer, (ii) cause such Exchange Offer
Registration Statement to be declared effective under the Securi-
ties Act by the SEC not later than the date which is 180 days after
the Issue Date, and (iii) keep such Exchange Offer Registration
Statement effective for not less than 30 calendar days (or longer
if required by applicable law) after the date notice of the
Exchange Offer is mailed to the Holders. Upon the effectiveness of
the Exchange Offer Registration Statement, the Corporation and the
Trust shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer to enable each Holder eligible and
electing to exchange Registrable Securities for a like principal
amount of Exchange Debentures or a like liquidation amount of
Exchange Capital Securities, together with the Exchange Guarantee,
as applicable (assuming that such Holder (i) is not an Affiliate of
the Trust or the Corporation, (ii) is not a broker-dealer tendering
Registrable Securities acquired directly from the Corporation for
its own account, (iii) acquires the Exchange Securities in the
ordinary course of such Holder's business and (iv) has no arrange-
ments or understandings with any Person to participate in the
Exchange Offer for the purpose of distributing the Exchange
Securities) to transfer such Exchange Securities from and after
their receipt without any limitations or restrictions under the
Securities Act and under state securities or blue sky laws (other
than requiring minimum transfers in blocks having an aggregate
principal or liquidation amount, as the case may be, of $100,000).
In connection with the Exchange Offer, the Corporation
and the Trust shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period
of not less than 30 days after the date notice thereof is mailed to
the Holders (or longer if required by applicable law) (such period
referred to herein as the "Exchange Period");
(iii) utilize the services of the Depositary for the Exchange
Offer;
(iv) permit Holders to withdraw tendered Securities at any
time prior to the close of business, New York time, on the last
Business Day of the Exchange Period, by sending to the institution
specified in the notice, a telegram, telex, facsimile transmission
or letter setting forth the name of such Holder, the principal
amount of Securities delivered for exchange, and a statement that
such Holder is withdrawing his election to have such Securities
exchanged;
(v) notify each Holder that any Security not tendered by such
Holder in the Exchange Offer will remain outstanding and continue
to accrue interest or accumulate distributions, as the case may be,
but will not retain any rights under this Agreement (except in the
case of the Initial Purchasers and Participating Broker-Dealers as
provided herein); and
(vi) otherwise comply in all respects with all applicable
laws relating to the Exchange Offer.
If any Initial Purchaser determines upon advice of its
outside counsel that it is not eligible to participate in the
Exchange Offer with respect to the exchange of Securities consti-
tuting any portion of an unsold allotment in the initial distri-
bution, as soon as practicable upon receipt by the Corporation and
the Trust of a written request from such Initial Purchaser, the
Corporation and the Trust, as applicable, shall issue and deliver
to such Initial Purchaser in exchange (the "Private Exchange") for
the Securities held by such Initial Purchaser, a like liquidation
amount of Capital Securities of the Trust or, in the event the
Trust is liquidated and Subordinated Debentures are distributed, a
like principal amount of the Subordinated Debentures of the
Corporation, together with the Exchange Guarantee, in each case
that are identical (except that such securities may bear a
customary legend with respect to restrictions on transfer pursuant
to the Securities Act) to the Exchange Securities (the "Private
Exchange Securities") and which are issued pursuant to the
Indenture, the Declaration or the Guarantee (which provides that
the Exchange Securities will not be subject to the transfer
restrictions set forth in the Indenture or the Declaration, as
applicable (other than requiring minimum transfers in blocks having
an aggregate principal or liquidation amount, as the case may be,
of $100,000), and that the Exchange Securities, the Private Ex-
change Securities and the Securities will vote and consent together
on all matters as one class and that neither the Exchange Securi-
ties, the Private Exchange Securities nor the Securities will have
the right to vote or consent as a separate class on any matter).
The Private Exchange Securities shall be of the same series as the
Exchange Securities and the Corporation and the Trust will seek to
cause the CUSIP Service Bureau to issue the same CUSIP Numbers for
the Private Exchange Securities as for the Exchange Securities
issued pursuant to the Exchange Offer.
As soon as practicable after the close of the Exchange
Offer and, if applicable, the Private Exchange, the Corporation and
the Trust, as the case requires, shall:
(i) accept for exchange all Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer
or the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable
Trustee for cancellation all Securities or portions thereof so
accepted for exchange by the Corporation; and
(iii) issue, and cause the applicable Trustee under the
Indenture, the Declaration or the Guarantee, as applicable, to
promptly authenticate and deliver to each Holder, new Exchange
Securities or Private Exchange Securities, as applicable, equal in
principal amount to the principal amount of the Subordinated
Debentures or equal in liquidation amount to the liquidation amount
of the Capital Securities (together with the guarantee thereof) as
are surrendered by such Holder.
Distributions on each Exchange Capital Security and
interest on each Exchange Debenture and Private Exchange Security
issued pursuant to the Exchange Offer and in the Private Exchange
will accrue from the last date on which a Distribution or interest
was paid on the Capital Security or the Subordinated Debenture
surrendered in exchange therefor or, if no Distribution or interest
has been paid on such Capital Security or Subordinated Debenture,
from the Issue Date. To the extent not prohibited by any law or
applicable interpretation of the staff of the SEC, the Corporation
and the Trust shall use their reasonable best efforts to complete
the Exchange Offer as provided above, and shall comply with the
applicable requirements of the Securities Act, the Exchange Act and
other applicable laws in connection with the Exchange Offer. The
Exchange Offer shall not be subject to any conditions, other than
that the Exchange Offer does not violate applicable law or any
applicable interpretation of the staff of the SEC. Each Holder of
Registrable Securities who wishes to exchange such Registrable
Securities for Exchange Securities in the Exchange Offer will be
required to make certain customary representations in connection
therewith, including, in the case of any Holder of Capital
Securities, representations that (i) it is not an Affiliate of the
Trust or the Corporation, (ii) the Exchange Securities to be
received by it were acquired in the ordinary course of its business
and (iii) at the time of the Exchange Offer, it has no arrangement
with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Capital Securities.
The Corporation and the Trust shall inform the Initial Purchasers,
after consultation with the applicable Trustees, of the names and
addresses of the Holders to whom the Exchange Offer is made, and
the Initial Purchasers shall have the right to contact such Holders
and otherwise facilitate the tender of Registrable Securities in
the Exchange Offer.
Upon consummation of the Exchange Offer in accordance
with this Section 2(a), the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely with respect to
Registrable Securities that are Private Exchange Securities and
Exchange Securities held by Participating Broker-Dealers, and the
Corporation and the Trust shall have no further obligation to
register the Registrable Securities (other than Private Exchange
Securities) held by any Holder pursuant to Section 2(b) of this
Agreement.
(b) Shelf Registration. In the event that (i) the
Corporation, the Trust or the Majority Holders reasonably deter-
mine, after conferring with counsel (which may be in-house
counsel), that the Exchange Offer Registration provided in Section
2(a) above is not available under applicable law and regulations
and currently prevailing interpretations of the staff of the SEC,
(ii) the Corporation shall determine in good faith that there is a
reasonable likelihood that, or a material uncertainty exists as to
whether, consummation of the Exchange Offer would result in (x) the
Trust becoming subject to federal income tax with respect to income
received or accrued on the Subordinated Debentures or the Exchange
Debentures (collectively, the "Debentures"), (y) interest payable
by the Corporation on the Debentures not being deductible by the
Corporation for United States federal income tax purposes or (z)
the Trust becoming subject to more than a de minimus amount of
other taxes, duties or governmental charges, (iii) the Exchange
Offer Registration Statement is not declared effective within 180
days of the Issue Date or (iv) upon the request of any Initial Pur-
chaser with respect to any Registrable Securities held by it, if
such Initial Purchaser is not permitted, in the opinion of Malizia,
Spidi, Sloane & Fisch, P.C., pursuant to applicable law or applica-
ble interpretations of the staff of the SEC, to participate in the
Exchange Offer and thereby receive securities that are freely
tradeable without restriction under the Securities Act and
applicable blue sky or state securities laws (any of the events
specified in (i)-(iv) being a "Shelf Registration Event" and the
date of occurrence thereof, the "Shelf Registration Event Date"),
then in addition to or in lieu of conducting the Exchange Offer
contemplated by Section 2(a), as the case may be, the Corporation
and the Trust shall use their reasonable best efforts to cause to
be filed as promptly as practicable after such Shelf Registration
Event Date, as the case may be, and, in any event, within 45 days
after such Shelf Registration Event Date (which shall be no earlier
than 75 days after the Closing Time), a Shelf Registration
Statement providing for the sale by the Holders of all of the
Registrable Securities (except in the case of clause (iv) above in
which case the Shelf Registration Statement need cover only the
Registrable Securities held by the Initial Purchasers) and shall
use its reasonable best efforts to have such Shelf Registration
Statement declared effective by the SEC as soon as practicable. No
Holder of Registrable Securities shall be entitled to include any
of its Registrable Securities in any Shelf Registration pursuant to
this Agreement unless and until such Holder furnishes to the
Corporation and the Trust in writing, within 15 days after receipt
of a request therefor, such information as the Corporation and the
Trust may, after conferring with counsel with regard to information
relating to Holders that would be required by the SEC to be
included in such Shelf Registration Statement or Prospectus
included therein, reasonably request for inclusion in any Shelf
Registration Statement or Prospectus included therein. Each Holder
as to which any Shelf Registration is being effected agrees to
furnish to the Corporation and the Trust all information with
respect to such Holder necessary to make the information previously
furnished to the Corporation by such Holder not materially mislead-
ing.
The Corporation and the Trust agree to use their
reasonable best efforts to keep the Shelf Registration Statement
continuously effective and usable for resales for (a) the Rule
144(k) Period in the case of a Shelf Registration Statement filed
pursuant to Section 2(b)(i), (ii) or (iii) or (b) 180 days in the
case of a Shelf Registration Statement filed pursuant to Section
2(b)(iv) (subject in each case to extension pursuant to the last
paragraph of Section 3 hereof), or for such shorter period which
will terminate when all of the Registrable Securities covered by
the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or cease to be outstanding (the
"Effectiveness Period"). The Corporation and the Trust shall not
permit any securities other than Registrable Securities to be
included in the Shelf Registration. The Corporation and the Trust
will, in the event a Shelf Registration Statement is declared
effective, provide to each Holder a reasonable number of copies of
the Prospectus which is a part of the Shelf Registration Statement
and notify each such Holder when the Shelf Registration has become
effective. The Corporation and the Trust further agree, if
necessary, to supplement or amend the Shelf Registration Statement,
if required by the rules, regulations or instructions applicable to
the registration form used by the Corporation for such Shelf
Registration Statement or by the Securities Act or by any other
rules and regulations thereunder for shelf registrations, and the
Corporation and the Trust agree to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
(c) Expenses. The Corporation, as issuer of the
Subordinated Debentures, shall pay all Registration Expenses in
connection with any Registration Statement filed pursuant to
Section 2(a) and/or 2(b) hereof and will reimburse the Initial
Purchasers for the reasonable fees and disbursements of Malizia,
Spidi, Sloane & Fisch, P.C., counsel for the Initial Purchasers,
incurred in connection with the Exchange Offer and, if applicable,
the Private Exchange, or any one other counsel designated in
writing by the Majority Holders to act as counsel for the Holders
of the Registrable Securities in connection with a Shelf Regis-
tration Statement, which other counsel shall be reasonably satis-
factory to the Corporation. Except as provided herein, each Holder
shall pay all expenses of its counsel and any of its other advisors
or experts, underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration State-
ment.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf
Registration Statement pursuant to Section 2(b) hereof will not be
deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been
declared effective, the offering of Registrable Securities pursuant
to such Exchange Offer Registration Statement or Shelf Registration
Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or
court, such Registration Statement will be deemed not to have been
effective during the period of such interference, until the
offering of Registrable Securities pursuant to such Registration
Statement may legally resume. The Corporation and the Trust will
be deemed not to have used their reasonable best efforts to cause
the Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, to become, or to remain, effective
during the requisite period if either of them voluntarily takes any
action that would result in any such Registration Statement not
being declared effective or that would result in the Holders of
Registrable Securities covered thereby not being able to exchange
or offer and sell such Registrable Securities during that period
unless such action is required by applicable law.
(e) Liquidated Damages. In the event that:
(i) neither the Exchange Offer Registration
Statement is filed with the SEC on or prior to the 150th day after
the Issue Date nor a Shelf Registration Statement is filed with the
SEC on or prior to the 45th day after the Shelf Registration Event
Date in respect of a Shelf Registration Event attributable to any
of the events set forth in Sections 2(b)(i), (ii) and (iii)
(provided that in no event shall such date be earlier than 75 days
after the Issue Date), then commencing on the day after the appli-
cable required filing date, liquidated damages ("Liquidated
Damages") shall accrue on the principal amount of the Subordinated
Debentures, and additional distributions ("Additional Distribu-
tions") shall accumulate on the liquidation amount of the Trust
Securities (as such term is defined in the Declaration), each at a
rate of .25% per annum; or
(ii) neither the Exchange Offer Registration State-
ment nor a Shelf Registration Statement is declared effective by
the SEC on or prior to the 180th day after the Issue Date (in the
case of an Exchange Offer Registration Statement) or on or prior to
the later of (A) the 30th day after the date such Shelf Registra-
tion Statement was required to be filed and (B) the 180th day after
the Issue Date (in the case of a Shelf Registration Statement, in
respect of a Shelf Registration Event attributable to any of the
events set forth in Sections 2(b)(i), (ii) and (iii)), then, com-
mencing on the 181st day after the Issue Date (in the case of an
Exchange Offer Registration Statement) or the later of (A) the 31st
day after the day such Shelf Registration Statement was required to
be filed and (B) the 181st day after the Issue Date (in the case of
a Shelf Registration Statement, in respect of a Shelf Registration
Event attributable to any of the events set forth in Sections
2(b)(i), (ii) and (iii)), Liquidated Damages shall accrue on the
principal amount of the Subordinated Debentures, and Additional
Distributions shall accumulate on the liquidation amount of the
Trust Securities, each at a rate of .25% per annum;
(iii) (A) the Trust has not exchanged Exchange
Capital Securities or the Corporation has not exchanged Exchange
Guarantees or Exchange Subordinated Debentures for all Capital
Securities, Guarantees or Subordinated Debentures, as the case may
be, validly tendered, in accordance with the terms of the Exchange
Offer on or prior to the 45th day after the date on which the
Exchange Offer Registration Statement was declared effective or (B)
if applicable, the Shelf Registration Statement in respect of a
Shelf Registration Event attributable to any of the events set
forth in Sections 2(b)(i), (ii) and (iii) has been declared effec-
tive and such Shelf Registration Statement ceases to be effective
or usable for resales (whether as a result of an event contemplated
by Section 3(e) or otherwise) at any time prior to the expiration
of the Rule 144(k) Period (other than after such time as all
Securities have been disposed of thereunder or otherwise cease to
be Registrable Securities), then Liquidated Damages shall accrue on
the principal amount of Subordinated Debentures, and Additional
Distributions shall accumulate on the liquidation amount of the
Trust Securities, each at a rate of .25% per annum commencing on
(x) the 46th day after such effective date, in the case of (A)
above, or (y) the day such Shelf Registration Statement ceases to
be effective or usable for resales in the case of (B) above;
provided, however, that neither the Liquidated Damages rate on the
Subordinated Debentures, nor the Additional Distribution rate on
the liquidation amount of the Trust Securities, may exceed in the
aggregate .25% per annum; provided, further, however, that (1) upon
the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (i) above), (2) upon
the effectiveness of the Exchange Offer Registration Statement or
a Shelf Registration Statement (in the case of clause (ii) above),
or (3) upon the exchange of Exchange Capital Securities, Exchange
Guarantees and Exchange Debentures for all Capital Securities,
Guarantees and Subordinated Debentures validly tendered (in the
case of clause (iii)(A) above), or at such time as the Shelf
Registration Statement which had ceased to remain effective or
usable for resales again becomes effective and usable for resales
(in the case of clause (iii)(B) above), Liquidated Damages on the
principal amount of the Subordinated Debentures and Additional
Distributions on the liquidation amount of the Trust Securities as
a result of such clause (or the relevant subclause thereof) shall
cease to accrue and accumulate.
Any amounts of Liquidated Damages and Additional Distributions
due pursuant to Section 2(e)(i), (ii) or (iii) above will be
payable in cash on the next succeeding January 1 and July 1, as the
case may be, to Holders on the relevant record dates for the
payment of interest and distributions pursuant to the Indenture and
the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies
available to the Holders, the Corporation and the Trust acknowledge
that any failure by the Corporation or the Trust to comply with its
obligations under Section 2(a) and Section 2(b) hereof may result
in material irreparable injury to the Holders for which there is no
adequate remedy at law, that it would not be possible to measure
damages for such injuries precisely and that, in the event of any
such failure, any Holder may obtain such relief as may be required
to specifically enforce the Corporation's and the Trust's obliga-
tions under Section 2(a) and Section 2(b) hereof.
(g) Distribution of Subordinated Debentures. Notwith-
standing any other provisions of this Agreement, in the event that
Subordinated Debentures are distributed to holders of Capital
Securities in liquidation of the Trust pursuant to the Declaration,
(i) all references in this Section 2 and in Section 3 to Securi-
ties, Registrable Securities and Exchange Securities shall not
include the Capital Securities and Capital Securities Guarantee or
Exchange Capital Securities and Exchange Capital Securities
Guarantee issued or to be issued in exchange therefor in the
Exchange Offer and (ii) all requirements for action to be taken by
the Trust in this Section 2 and in Section 3 shall cease to apply
and all requirements for action to be taken by the Corporation in
this Section 2 and in Section 3 shall apply to the Subordinated
Debentures and Exchange Debentures issued or to be issued in
exchange therefor in the Exchange Offer.
3. Registration Procedures. In connection with the
obligations of the Corporation and the Trust with respect to the
Registration Statements pursuant to Sections 2(a) and 2(b) hereof,
the Corporation and the Trust shall:
(a) prepare and file with the SEC a Registration
Statement or Registration Statements as prescribed by Sections
2(a) and 2(b) hereof within the relevant time period specified
in Section 2 hereof on the appropriate form under the Securi-
ties Act, which form (i) shall be selected by the Corporation
and the Trust, (ii) shall, in the case of a Shelf Registra-
tion, be available for the sale of the Registrable Securities
by the selling Holders thereof and, in the case of an Exchange
Offer, be available for the exchange of Registrable Securi-
ties, and (iii) shall comply as to form in all material re-
spects with the requirements of the applicable form and
include all financial statements required by the SEC to be
filed therewith; and use its best efforts to cause such
Registration Statement to become effective and remain effec-
tive (and, in the case of a Shelf Registration Statement,
usable for resales) in accordance with Section 2 hereof; pro-
vided, however, that if (1) such filing is pursuant to Sec-
tion 2(b), or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securi-
ties, before filing any Registration Statement or Prospectus
or any amendments or supplements thereto, the Corporation and
the Trust shall furnish to and afford the Holders of the
Registrable Securities and each such Participating Broker-Dea-
ler, as the case may be, covered by such Registration State-
ment, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be
filed. The Corporation and the Trust shall not file any
Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must be
afforded an opportunity to review prior to the filing of such
document if the Majority Holders or such Participating
Broker-Dealer, as the case may be, their counsel or the
managing underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as
may be necessary to keep such Registration Statement effective
for the Effectiveness Period or the Applicable Period, as the
case may be; and cause each Prospectus to be supplemented, if
so determined by the Corporation or the Trust or requested by
the SEC, by any required prospectus supplement and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provision then in force) under the Securities Act, and comply
with the provisions of the Securities Act, the Exchange Act
and the rules and regulations promulgated thereunder applica-
ble to it with respect to the disposition of all securities
covered by each Registration Statement during the Effective-
ness Period or the Applicable Period, as the case may be, in
accordance with the intended method or methods of distribution
by the selling Holders thereof described in this Agreement
(including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities included in the Shelf
Registration Statement, at least three Business Days prior to
filing, that a Shelf Registration Statement with respect to
the Registrable Securities is being filed and advising such
Holder that the distribution of Registrable Securities will be
made in accordance with the method selected by the Majority
Holders; and (ii) furnish to each Holder of Registrable
Securities included in the Shelf Registration Statement and to
each underwriter of an underwritten offering of Registrable
Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as
such Holder or underwriter may reasonably request, in order to
facilitate the public sale or other disposition of the
Registrable Securities; and (iii) consent to the use of the
Prospectus or any amendment or supplement thereto by each of
the selling Holders of Registrable Securities included in the
Shelf Registration Statement in connection with the offering
and sale of the Registrable Securities covered by the Prospec-
tus or any amendment or supplement thereto;
(d) in the case of a Shelf Registration, use its
reasonable best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky"
laws of such jurisdictions by the time the applicable Regis-
tration Statement is declared effective by the SEC as any
Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request in writing in
advance of such date of effectiveness, and do any and all
other acts and things which may be reasonably necessary or
advisable to enable such Holder and underwriter to consummate
the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the
Corporation and the Trust shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (ii) file any general
consent to service of process in any jurisdiction where it
would not otherwise be subject to such service of process or
(iii) subject itself to taxation in any such jurisdiction if
it is not then so subject;
(e) (1) in the case of a Shelf Registration or (2) if
Participating Broker-Dealers from whom the Corporation or the
Trust has received prior written notice that they will be
utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are
seeking to sell Exchange Securities and are required to
deliver Prospectuses, promptly notify each Holder of Registra-
ble Securities, or such Participating Broker-Dealers, as the
case may be, their counsel and the managing underwriters, if
any, and promptly confirm such notice in writing (i) when a
Registration Statement has become effective and when any post-
effective amendments and supplements thereto become effective,
(ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration
Statement or Prospectus or for additional information after
the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any
stop order suspending the effectiveness of a Registration
Statement or the qualification of the Registrable Securities
or the Exchange Securities to be offered or sold by any
Participating Broker-Dealer in any jurisdiction described in
paragraph 3(d) hereof or the initiation of any proceedings for
that purpose, (iv) in the case of a Shelf Registration, if,
between the effective date of a Registration Statement and the
closing of any sale of Registrable Securities covered thereby,
the representations and warranties of the Corporation and the
Trust contained in any purchase agreement, securities sales
agreement or other similar agreement cease to be true and
correct in all material respects, (v) of the happening of any
event or the failure of any event to occur or the discovery of
any facts or otherwise, during the Effectiveness Period which
makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which
causes such Registration Statement or Prospectus to omit to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, and (vi) the Corporation and the
Trust's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the with-
drawal of any order suspending the effectiveness of a Regis-
tration Statement at the earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities included within the coverage
of such Shelf Registration Statement, without charge, one
conformed copy of each Registration Statement relating to such
Shelf Registration and any post-effective amendment thereto
(without documents incorporated therein by reference or
exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Securities to facilitate
the timely preparation and delivery of certificates represent-
ing Registrable Securities to be sold and not bearing any
restrictive legends (other than with respect to restrictions
requiring minimum transfers in blocks having an aggregate
principal or liquidation amount, as the case may be, of
$100,000) and in such denominations (consistent with the
provisions of the Indenture and the Declaration) and regis-
tered in such names as the selling Holders or the underwriters
may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such
Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange
Offer Registration, upon the occurrence of any circumstance
contemplated by Section 3(e)(ii), 3(e)(iii), 3(e)(v) or
3(e)(vi) hereof, use its reasonable best efforts to prepare a
supplement or post-effective amendment to such Registration
Statement or the related Prospectus or any document incorpo-
rated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and to notify each Holder to suspend use of the
Prospectus as promptly as practicable after the occurrence of
such an event, and each Holder hereby agrees to suspend use of
the Prospectus until the Corporation has amended or supple-
mented the Prospectus to correct such misstatement or omission
and has delivered copies of the amended or supplemented
Prospectus to such Holder (or Participating Broker-Dealer, as
the case may be) or the Company has given notice that the sale
of the Registrable Securities may be resumed, as the case may
be, such delivery and notice to be given or made promptly;
(j) obtain a CUSIP number for all Exchange Capital
Securities and the Capital Securities (and if the Trust has
made a distribution of the Subordinated Debentures to the
Holders of the Capital Securities, the Subordinated Debentures
or the Exchange Debentures) as the case may be, not later than
the effective date of a Registration Statement, and provide
the Trustee with printed certificates for the Exchange Securi-
ties or the Registrable Securities, as the case may be, in a
form eligible for deposit with the Depositary;
(k) cause the Indenture, the Declaration, the Guarantee
and the Exchange Guarantee to be qualified under the Trust
Indenture Act of 1939 (the "TIA") in connection with the
registration of the Exchange Securities or Registrable
Securities, as the case may be, and effect such changes to
such documents as may be required for them to be so qualified
in accordance with the terms of the TIA and execute, and use
its best efforts to cause the relevant trustee to execute, all
documents as may be required to effect such changes, and all
other forms and documents required to be filed with the SEC to
enable such documents to be so qualified in a timely manner;
(l) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) as are custom-
ary in underwritten offerings and take all such other appro-
priate actions in connection therewith as are reasonably
requested by the holders of at least 25% in aggregate prin-
cipal or liquidation amount, as the case may be, of the
Registrable Securities in order to expedite or facilitate the
registration or the disposition of the Registrable Securities;
(m) in the case of a Shelf Registration, whether or not
an underwriting agreement is entered into and whether or not
the registration is an underwritten registration, if requested
by (x) the Initial Purchasers, in the case where such Initial
Purchasers holds Securities acquired by it as part of its
initial allotment and (y) Holders of at least 25% in aggregate
principal or liquidation amount, as the case may be, of the
Registrable Securities covered thereby: (i) make such repre-
sentations and warranties to Holders of such Registrable Secu-
rities and the underwriters (if any), with respect to the
business of the Trust, the Corporation and its subsidiaries as
then conducted and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, as are customarily made by
issuers of debt securities to underwriters in underwritten
offerings, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Corporation and the
Trust and updates thereof (which may be in the form of a
reliance letter) in form and substance reasonably satisfactory
to the managing underwriters (if any) and the Holders of a
majority in principal amount of the Registrable Securities
being sold, addressed to each selling Holder and the under-
writers (if any) covering the matters customarily covered in
opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such underwriters
(it being agreed that the matters to be covered by such
opinion may be subject to customary qualifications and excep-
tions); (iii) obtain "cold comfort" letters and updates
thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public
accountants of the Corporation and the Trust (and, if neces-
sary, any other independent certified public accountants of
any subsidiary of the Corporation and the Trust or of any
business acquired by the Corporation and the Trust for which
financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to
each of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and
such other matters as reasonably requested by such underwrit-
ers in accordance with Statement on Auditing Standards No. 72;
and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 4 hereof (or
such other provisions and procedures acceptable to Holders of
a majority in aggregate principal amount or liquidation
amount, as the case may be, of Registrable Securities covered
by such Registration Statement and the managing underwriters
and agents) customary for such agreements with respect to all
parties to be indemnified pursuant to said Section (including,
without limitation, such underwriters and selling Holders).
The above shall be done at each closing under such underwrit-
ing agreement, or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to
Section 2(b) or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, make reasonably
available for inspection by any selling Holder of such
Registrable Securities or Participating Broker-Dealer, as
applicable, who certifies to the Corporation and the Trust
that it has a current intention to sell Registrable Securities
pursuant to the Shelf Registration, any underwriter partici-
pating in any such disposition of Registrable Securities, if
any, and any attorney, accountant or other agent retained by
any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collec-
tively, the "Inspectors"), at the offices where normally kept,
during the Corporation's normal business hours, all financial
and other records, pertinent corporate documents and proper-
ties of the Trust, the Corporation and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary
to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and
employees of the Trust, the Corporation and its subsidiaries
to supply all relevant information in each case reasonably
requested by any such Inspector in connection with such
Registration Statement. Records which the Corporation and the
Trust determine, in good faith, to be confidential and any Re-
cords which it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure
of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement,
(ii) subject to the last sentence of this Section 3(n), the
release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction or is
necessary in connection with any action, suit or proceeding or
(iii) the Information in such Records has been made generally
available to the public (other than by an Inspector or a
selling Holder in breach of its obligations hereunder). Each
selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to agree in
writing that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used
by it as the basis for any market transactions in the securi-
ties of the Trust or the Corporation unless and until such is
made generally available to the public through no fault of an
Inspector or a selling Holder or Participating Broker-Dealer.
Each selling Holder of such Registrable Securities and each
such Participating Broker-Dealer will be required to further
agree in writing that it will, upon learning that disclosure
of such Records is sought in a court of competent jurisdic-
tion, or in connection with any action, suit or proceeding
give notice to the Corporation and allow the Corporation at
its expense to undertake appropriate action to prevent disclo-
sure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of
the SEC so long as any provision of this Agreement shall be
applicable and make generally available to its securityholders
earning statements satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45
days after the end of any 12-month period (or 90 days after
the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Corporation
after the effective date of a Registration Statement, which
statements shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private
Exchange, if requested by a Trustee, obtain an opinion of
counsel to the Corporation addressed to the Trustee for the
benefit of all Holders of Registrable Securities participating
in the Exchange Offer or the Private Exchange, as the case may
be, substantially to the effect that (i) the Corporation and
the Trust, as the case requires, has duly authorized, executed
and delivered the Exchange Securities and Private Exchange
Securities, and (ii) each of the Exchange Securities or the
Private Exchange Securities, as the case may be, constitutes
a legal, valid and binding obligation of the Corporation or
the Trust, as the case requires, enforceable against the
Corporation or the Trust, as the case requires, in accordance
with its respective terms (in each case, with customary excep-
tions);
(q) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by
Holders to the Corporation or the Trust, as applicable (or to
such other Person as directed by the Corporation or the Trust,
respectively), in exchange for the Exchange Securities or the
Private Exchange Securities, as the case may be, the Corpora-
tion or the Trust, as applicable, shall mark, or cause to be
marked, on such Registrable Securities delivered by such
Holders that such Registrable Securities are being canceled in
exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be; in no event shall such
Registrable Securities be marked as paid or otherwise
satisfied;
(r) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if
any, participating in the disposition of such Registrable
Securities and their respective counsel in connection with any
filings required to be made with the NASD;
(s) take all other steps necessary to effect the
registration of the Registrable Securities covered by a
Registration Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration
Statement a section entitled "Plan of Distribution," which
section shall be reasonably acceptable to the Initial Purchas-
ers or another representative of the Participating
Broker-dealers, and which shall contain a summary statement of
the positions taken or policies made by the staff of the SEC
with respect to the potential "underwriter" status of any
broker-dealer (a "Participating Broker-Dealer") that holds
Registrable Securities acquired for its own account as a
result of market-making activities or other trading activities
and that will be the beneficial owner (as defined in Rule 13d-
3 under the Exchange Act) of Exchange Securities to be
received by such broker-dealer in the Exchange Offer, whether
such positions or policies have been publicly disseminated by
the staff of the SEC or such positions or policies, in the
reasonable judgment of the Initial Purchasers or such other
representative, represent the prevailing views of the staff of
the SEC, including a statement that any such broker-dealer who
receives Exchange Securities for Registrable Securities
pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the require-
ments of the Securities Act in connection with any resale of
such Exchange Securities, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Corporation the notice
referred to in Section 3(e), without charge, as many copies of
each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such Participating Broker-
Dealer may reasonably request (each of the Corporation and the
Trust hereby consents to the use of the Prospectus forming
part of the Exchange Offer Registration Statement or any
amendment or supplement thereto by any Person subject to the
prospectus delivery requirements of the Securities Act,
including all Participating Broker-Dealers, in connection with
the sale or transfer of the Exchange Securities covered by the
Prospectus or any amendment or supplement thereto), (iii) use
its reasonable best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement
the Prospectus contained therein in order to permit such
Prospectus to be lawfully delivered by all Persons subject to
the prospectus delivery requirements of the Securities Act for
such period of time as such Persons must comply with such re-
quirements under the Securities Act and applicable rules and
regulations in order to resell the Exchange Securities;
provided, however, that such period shall not be required to
exceed 90 days (or such longer period if extended pursuant to
the last sentence of Section 3 hereof) (the "Applicable
Period"), and (iv) include in the transmittal letter or
similar documentation to be executed by an exchange offeree in
order to participate in the Exchange Offer (x) the following
provision:
"If the exchange offeree is a broker-dealer
holding Registrable Securities acquired for
its own account as a result of market-making
activities or other trading activities, it
will deliver a prospectus meeting the re-
quirements of the Securities Act in connection
with any resale of Exchange Securities re-
ceived in respect of such Registrable Secu-
rities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer
making the acknowledgment described in clause (x) and by
delivering a Prospectus in connection with the exchange of
Registrable Securities, the broker-dealer will not be deemed
to admit that it is an underwriter within the meaning of the
Securities Act; and
(B) in the case of any Exchange Offer Registration
Statement, the Corporation and the Trust agree to deliver to
the Initial Purchasers or to another representative of the
Participating Broker-Dealers, if requested by the Initial
Purchasers or such other representative of Participating Bro-
ker-Dealers, on behalf of the Participating Broker-Dealers
upon consummation of the Exchange Offer (i) an opinion of
counsel in form and substance reasonably satisfactory to the
Initial Purchasers or such other representative of the Par-
ticipating Broker-Dealers, covering the matters customarily
covered in opinions requested in connection with Exchange
Offer Registration Statements and such other matters as may be
reasonably requested (it being agreed that the matters to be
covered by such opinion may be subject to customary qualifica-
tions and exceptions), (ii) an officers' certificate contain-
ing certifications substantially similar to those set forth in
Section 5(f) of the Purchase Agreement and such additional
certifications as are customarily delivered in a public
offering of debt securities and (iii) as well as upon the
effectiveness of the Exchange Offer Registration Statement, a
comfort letter, in each case, in customary form if permitted
by Statement on Auditing Standards No. 72.
The Corporation or the Trust may require each seller of
Registrable Securities as to which any registration is being
effected to furnish to the Corporation or the Trust, as applicable,
such information regarding such seller as may be required by the
staff of the SEC to be included in a Registration Statement. The
Corporation or the Trust may exclude from such registration the
Registrable Securities of any seller who fails to furnish such
information within a reasonable time after receiving such request.
The Corporation shall have no obligation to register under the
Securities Act the Registrable Securities of a seller who so fails
to furnish such information.
In the case of (1) a Shelf Registration Statement, or (2)
Participating Broker-Dealers who have notified the Corporation and
the Trust that they will be utilizing the Prospectus contained in
the Exchange Offer Registration Statement as provided in Section
3(t) hereof, are seeking to sell Exchange Securities and are
required to deliver Prospectuses, each Holder agrees that, upon
receipt of any notice from the Corporation or the Trust of the
happening of any event of the kind described in Section 3(e)(ii),
3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 3(i)
hereof or until it is advised in writing (the "Advice") by the
Corporation and the Trust that the use of the applicable Prospectus
may be resumed, and, if so directed by the Corporation and the
Trust, such Holder will deliver to the Corporation or the Trust (at
the Corporation's or the Trust's expense, as the case requires) all
copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering
such Registrable Securities or Exchange Securities, as the case may
be, current at the time of receipt of such notice. If the
Corporation or the Trust shall give any such notice to suspend the
disposition of Registrable Securities or Exchange Securities, as
the case may be, pursuant to a Registration Statement, the
Corporation and the Trust shall use their reasonable best efforts
to file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Registration
Statement and shall extend the period during which such Registra-
tion Statement is required to be maintained effective and usable
for resales pursuant to this Agreement by the number of days in the
period from and including the date of the giving of such notice to
and including the date when the Corporation and the Trust shall
have made available to the Holders (x) copies of the supplemented
or amended Prospectus necessary to resume such dispositions or (y)
the Advice.
4. Indemnification and Contribution. (a) In connection
with any Registration Statement, the Corporation and the Trust
shall, jointly and severally, indemnify and hold harmless the
Initial Purchasers, each Holder, each underwriter who participates
in an offering of the Registrable Securities, each Participating
Broker-Dealer, each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each of their respective
partners, directors, officers, employees and agents, as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred,
arising out of any untrue statement or alleged untrue state-
ment of a material fact contained in any Registration State-
ment (or any amendment thereto), covering Registrable Securi-
ties or Exchange Securities, including all documents incorpo-
rated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Prospec-
tus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability,
claim, damage and expense whatsoever, joint or several, as
incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or pro-
ceeding by any court or governmental agency or body, commenced
or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the
prior written consent of the Corporation; and
(iii) from and against any and all expenses whatsoever,
as incurred (including reasonable fees and disbursements of
counsel chosen by such Holder, such Participating
Broker-Dealer, or any underwriter (except to the extent other-
wise expressly provided in Section 4(c) hereof)), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any court or
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under subpara-
graph (i) or (ii) of this Section 4(a);
provided, however, that (i) this indemnity does not apply to any
loss, liability, claim, damage or expense to the extent arising out
of an untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written
information furnished in writing to the Corporation or the Trust by
such Holder, such Participating Broker-Dealer or any underwriter
with respect to such Holder, Participating Broker-Dealer or any
underwriter, as the case may be, expressly for use in a Registra-
tion Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) and (ii) the Company and the Trust
shall not be liable to any such Holder, Participating Broker-
Dealer, any underwriter or controlling person, with respect to any
untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary Prospectus to the extent that any such
loss, liability, claim, damage or expense of any Holder, Partici-
pating Broker-Dealer, any underwriter or controlling person results
from the fact that such Holder, any underwriter or Participating
Broker-Dealer sold Securities to a person to whom there was not
sent or given, at or prior to the written confirmation of such
sale, a copy of the final Prospectus as then amended or supple-
mented if the Corporation had previously furnished copies thereof
to such Holder, underwriter or Participating Broker-Dealer and the
loss, liability, claim, damage or expense of such Holder, under-
writer, Participating Broker-Dealer or controlling person results
from an untrue statement or omission of a material fact contained
in the preliminary Prospectus which was corrected in the final
Prospectus. Any amounts advanced by the Company or the Trust to an
indemnified party pursuant to this Section 4 as a result of such
losses shall be promptly returned to the Corporation or the Trust
if it shall be finally determined by such a court in a judgment not
subject to appeal or final review that such indemnified party was
not entitled to indemnification by the Corporation or the Trust.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Corporation, the Trust, any under-
writer and the other selling Holders and each of their respective
directors, officers (including each officer of the Corporation and
the Trust who signed the Registration Statement), employees and
agents and each Person, if any, who controls the Corporation, the
Trust, any underwriter or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity contained
in Section 4(a) hereof, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or
omissions, made in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information
furnished to the Corporation or the Trust by or on behalf of such
selling Holder with respect to such Holder expressly for use in
such Registration Statement (or any amendment thereto), or any such
Prospectus (or any amendment or supplement thereto); provided,
however, that in the case of a Shelf Registration Statement, no
such Holder shall be liable for any claims hereunder in excess of
the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Shelf Registration
Statement.
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, enclosing a
copy of all papers properly served on such indemnified party, but
failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have under this
Section 4, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own
expense in the defense of such action, or, if it so elects within
a reasonable time after receipt of such notice, assume the defense
of any suit brought to enforce any such claim; but if it so elects
to assume the defense, such defense shall be conducted by counsel
chosen by it and approved by the indemnified party or parties which
approval shall not be unreasonably withheld. In the event that an
indemnifying party elects to assume the defense of any such suit
and retain such counsel, the indemnified party or parties shall
bear the fees and expenses of any additional counsel thereafter
retained by such indemnified party or parties; provided, however,
that the indemnified party or parties shall have the right to
employ counsel (in addition to local counsel) to represent the
indemnified party or parties who may be subject to liability
arising out of any action in respect of which indemnity may be
sought against the indemnifying party if, in the reasonable
judgment of counsel for the indemnified party or parties, there may
be legal defenses available to such indemnified party or parties
which are different from or in addition to those available to the
indemnifying party, in which event the fees and expenses of
appropriate separate counsel shall be borne by the indemnifying
party. In no event shall the indemnifying parties be liable for
the fees and expenses of more than one counsel (in addition to
local counsel), separate from its own counsel, for all indemnified
parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall
(i) without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribu-
tion could be sought under this Section 4 (whether or not the
indemnified parties are actual or potential parties thereto),
unless such settlement, compromise or consent (x) includes an
unconditional written release in form and substance satisfactory to
the indemnified parties of each indemnified party from all
liability arising out of such litigation, investigation, proceeding
or claim and (y) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any
indemnified party or (ii) be liable for any settlement of any such
action effected without its written consent (which consent shall
not be unreasonably withheld), but if settled with the consent of
the indemnifying party of if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(d) In order to provide for just and equitable contri-
bution in circumstances under which any of the indemnity provisions
set forth in this Section 4 is for any reason held to be unavail-
able to the indemnified parties although applicable in accordance
with its terms, the Corporation, the Trust, and the Holders shall
contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement
incurred by the Corporation, the Trust, and the Holders, as
incurred; provided that no Person guilty of fraudulent misrepre-
sentation (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between the
Corporation, the Trust, and the Holders, such parties shall con-
tribute to such aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement in
such proportion as shall be appropriate to reflect the relative
fault of the Corporation and Trust, on the one hand, and the
Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or
expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault of the
Corporation and the Trust, on the one hand, and of the Holders, on
the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Corporation or
the Trust, on the one hand, or by or on behalf of the Holders, on
the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Corporation, the Trust and the Holders of the Regis-
trable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 4 were to be determined by
pro rata allocation or by any other method of allocation that does
not take into account the relevant equitable considerations. For
purposes of this Section 4, each Affiliate of a Holder, and each
director, officer, employee, agent and Person, if any, who controls
a Holder or such Affiliate within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as such Holder, and each director of
each of the Corporation or the Trust, each officer of each of the
Corporation or the Trust who signed the Registration Statement, and
each Person, if any, who controls each of the Corporation and the
Trust within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to
contribution as each of the Corporation or the Trust.
5. Participation in an Underwritten Registration. No
Holder may participate in an underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in the underwriting arrangement
approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents reasonably required
under the terms of such underwriting arrangements.
6. Selection of Underwriters. The Holders of Regis-
trable Securities covered by the Shelf Registration Statement who
desire to do so may sell the securities covered by such Shelf
Registration in an underwritten offering, subject to the provisions
of section 3(l) hereof. In any such underwritten offering, the
underwriter or underwriters and manager or managers that will
administer the offering will be selected by the Holders of a
majority in aggregate principal amount or liquidation amount, as
applicable, of the Registrable Securities included in such offer-
ing; provided, however, that such underwriters and managers must be
reasonably satisfactory to the Corporation and the Trust.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the
Corporation or the Trust is subject to the reporting requirements
of Section 13 or 15 of the Exchange Act and any Registrable Securi-
ties remain outstanding, each of the Corporation and the Trust, as
the case may be, will file the reports required to be filed by it
under the Securities Act and Section 13(a) or 15(d) of the Exchange
Act and the rules and regulations adopted by the SEC thereunder,
provided that if it ceases to be so required to file such reports,
it will, upon the request of any Holder of Registrable Securities
(a) make publicly available such information as is necessary to
permit sales of its securities pursuant to Rule 144 under the
Securities Act, (b) deliver such information to a prospective
purchaser as is necessary to permit sales of its securities
pursuant to Rule 144A under the Securities Act, and (c) take such
further action that is reasonable in the circumstances, in each
case, to the extent required from time to time to enable such
Holder to sell its Registrable Securities without registration
under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may
be amended from time to time, (ii) Rule 144A under the Securities
Act, as such rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the SEC. Upon
the request of any Holder of Registrable Securities, the Corpora-
tion and the Trust will deliver to such Holder a written statement
as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Corporation or the
Trust has not entered into, nor will the Corporation or the Trust
on or after the date of this Agreement enter into, any agreement
which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Corporation's or the
Trust's other issued and outstanding securities under any such
agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the
Corporation and the Trust has obtained the written consent of
Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or departure; provided that no
amendment, modification or supplement or waiver or consent to the
departure with respect to the provisions of Section 4 hereof shall
be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder of Registrable Securities.
Notwithstanding the foregoing sentence, (i) this Agreement may be
amended, without the consent of any Holder of Registrable Securi-
ties, by written agreement signed by the Corporation, the Trust and
the Initial Purchasers, to cure any ambiguity, correct or supple-
ment any provision of this Agreement that may be inconsistent with
any other provision of this Agreement or to make any other
provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with other provisions of
this Agreement, (ii) this Agreement may be amended, modified or
supplemented, and waivers and consents to departures from the
provisions hereof may be given by written agreement signed by the
Corporation, the Trust and the Initial Purchasers to the extent
that any such amendment, modification, supplement, waiver or
consent is, in their reasonable judgment, necessary or appropriate
to comply with applicable law (including any interpretation of the
Staff of the SEC) or any change therein and (iii) to the extent any
provision of this Agreement relates to the Initial Purchasers, such
provision may be amended, modified or supplemented, and waivers or
consents to departures from such provisions may be given, by
written agreement signed by the Initial Purchasers, the Corporation
and the Trust.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier, or
any courier guaranteeing overnight delivery (i) if to a Holder, at
the most current address given by such Holder to the Corporation or
the Trust by means of a notice given in accordance with the provi-
sions of this Section 7(d), which address initially is, with
respect to the Initial Purchasers, the address set forth in the
Purchase Agreement; and (ii) if to the Corporation or the Trust,
initially at the Corporation's address set forth in the Purchase
Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and on the next Business
Day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands, or other communi-
cations shall be concurrently delivered by the Person giving the
same to the Trustee, at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and
transferees of the Initial Purchasers, including, without limita-
tion and without the need for an express assignment, subsequent
Holders; provided, however, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or
the Indenture. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law
or otherwise, such Registrable Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such
Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and
provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. The Initial Purchasers and
any Participating Broker-Dealer shall be a third party beneficiary
of the agreements made hereunder between the Corporation and the
Trust, on the one hand, and the Holders, on the other hand, and
shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect
its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one
and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO
HAVE BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND
INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET
FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED
HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT. THE COMPANY, ON BEHALF OF ITSELF AND THE SUBSIDIARIES
(INCLUDING, WITHOUT LIMITATION, THE TRUST), IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
PATRIOT BANK CORP.
By:_______________________________
Name:
Title:
PATRIOT CAPITAL TRUST I
By:______________________________
Name:
Title: Administrative Trustee
By:_______________________________
Name:
Title: Administrative Trustee
Confirmed and accepted as of
the date first above
written:
SANDLER O'NEILL & PARTNERS, L.P.
JANNEY MONTGOMERY SCOTT INC.
By: SANDLER O'NEILL & PARTNERS L.P.
by Sandler O'Neill & Partners Corp.
the sole general partner
By:
Name: Catherine A. Lawton
Title: Vice President
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We have issued our reports dated January 23, 1997
accompanying the consolidated financial statements of Patriot
Bank Corp. and Subsidiaries appearing in the 1996 Annual Report
of the Company to its shareholders and included in the Annual
Report on Form 10-K for the year ended December 31, 1996 which
are incorporated by reference in the Registration Statement and
Prospectus. We consent to the incorporation by reference in the
Registration Statement and Prospectus of the aforementioned
reports and to the use of our name as it appears under the
caption "Experts."
Grant Thornton LLP
Philadelphia, Pennsylvania
October 9, 1997
EXHIBIT 24
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Power of Attorney has been signed by the following persons in the
capacities and on the dates indicated. By so signing, each of
the undersigned, in his or her capacity as a director or officer,
or both, as the case may be, of Patriot Bank Corp. (the
"Corporation"), does hereby appoint Gary N. Gieringer, Joseph W.
Major, and Richard A. Elko, and each of them severally, or if
more than one acts, a majority of them, his or her true and
lawful attorneys or attorney to execute in his or her name, place
and stead, in his or her capacity as a director or officer or
both, as the case may be, of the Corporation, the Registration
Statement on Form S-4 to be filed with the Securities and
Exchange Commission (the "Commission"), and any and all
amendments to said Registration Statement and all instruments
necessary or incidental in connection therewith, and to file the
same with the Commission. Each of said attorneys shall have full
power and authority to do and perform in the name and on behalf
of each of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as each of the undersigned
might or could do in person, hereby ratifying and approving the
acts of said attorneys and each of them.
Signature Title Date
/s/ John H. Diehl Director September 25, 1997
John H. Diehl
/s/ James B. Elliott Director September 25, 1997
James B. Elliott
/s/ Gary N. Gieringer Chairman of Board, September 25, 1997
Gary N. Gieringer Chief Executive
Officer and
Director
/s/ Leonard A. Huff Director September 25, 1997
Leonard A. Huff
/s/ Samuel N. Landis Director September 25, 1997
Samuel N. Landis
/s/ Joseph W. Major Director, September 25, 1997
Joseph W. Major President and
Chief Operating
Officer (Principal
Executive Officer)
/s/ Larry V. Thren Director September 25, 1997
Larry V. Thren
/s/ Richard A. Elko Chief Financial September 25, 1997
Richard A. Elko Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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