<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE ___, 1998
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_____________________
ABI CAPITAL TRUST
AMERICAN BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE [TO BE APPLIED FOR]
FLORIDA 6012 65-0624640
(States or Other Jurisdictions of (Primary Standard Industry (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Nos.)
</TABLE>
4502 CORTEZ ROAD WEST
BRADENTON, FLORIDA 34210-2801
(941) 795-3050
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
_________________________
GERALD L. ANTHONY, PRESIDENT
AMERICAN BANCSHARES, INC.
4502 CORTEZ ROAD WEST
BRADENTON, FLORIDA 34210-2801
(941) 795-3050
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code, of Agent For Service)
__________________________
COPIES TO:
RICHARD A. DENMON, ESQ. STEVEN KAPLAN, ESQ.
CARLTON, FIELDS, WARD, EMMANUEL, ARNOLD & PORTER
SMITH & CUTLER, P.A. THURMAN ARNOLD BUILDING
ONE HARBOUR PLACE 555 TWELFTH STREET, N.W.
777 SOUTH HARBOUR ISLAND DRIVE WASHINGTON, D.C. 20004-1202
TAMPA, FLORIDA 33602
__________________________
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 on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
____% Preferred Securities of ABI Capital Trust . . . . . $17,250,000 $5,088.75
____% Junior Subordinated Debentures of American
Bancshares, Inc. . . . . . . . . . . . . . . . . . (2)
Guarantee of American Bancshares, Inc. of certain
obligations under the Preferred Securities . . . . (3)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
amended, (the "Securities Act") exclusive of interest and dividends, if
any.
(Continued on next page)
<PAGE> 2
(2) The Junior Subordinated Debentures will be purchased by ABI Capital Trust
with the proceeds from the sale of the Preferred Securities. Such
securities may later be distributed for no additional consideration to the
holders of the Preferred Securities upon dissolution of ABI Capital Trust
and the distribution of its assets.
(3) This Registration Statement is deemed to cover the Guarantee. Pursuant to
Rule 457(n) under the Securities Act, no separate registration fee is
payable for the Guarantee.
The Prospectus contained in this Registration Statement will be used
for the offering of the following securities: (1) ____% Preferred Securities of
ABI Capital Trust, (2) ____% Junior Subordinated Debentures of American
Bancshares, Inc., and (3) a Guarantee of American Bancshares, Inc. of certain
obligations under the Preferred Securities.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 3
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED JUNE __, 1998
PROSPECTUS
$15,000,000
ABI CAPITAL TRUST
______% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
AMERICAN BANCSHARES, INC.
______________________
The Preferred Securities offered hereby represent preferred undivided
beneficial interests in the assets of ABI Capital Trust, a statutory business
trust created under the laws of the State of Delaware (the "Issuer Trust").
American Bancshares, Inc. (the "Company") will initially be the holder of all
the beneficial interests represented by common securities of the Issuer Trust
(the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities").
(Continued on Next Page)
______________________
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE PREFERRED SECURITIES
OFFERED HEREBY.
______________________
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
______________________
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.
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UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC(1) COMMISSIONS(2) ISSUER TRUST(3)(4)
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Per Preferred Security . . . . . . . . . . . . . . $ 10.00 (4) $10.00
- -----------------------------------------------------------------------------------------------------------------------
Total(5) . . . . . . . . . . . . . . . . . . . . . $ 15,000,000 (4) $15,000,000
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(1) Plus accrued Distributions, if any, from _____, 1998.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) Before deducting offering expenses payable by the Company estimated at
$___________.
(4) In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase Junior Subordinated Debentures, the
Company has agreed to pay the Underwriter, as compensation for arranging
the investment therein of such proceeds, $______ per Preferred Security (or
$_____________ in the aggregate). The Underwriter will receive a
supplemental advisory fee of $25,000 payable upon consummation of the
offering. See "Underwriting".
(5) The Company has granted to the Underwriter a 30-day option to purchase up
to an additional $2,250,000 in aggregate liquidation amount of the
Preferred Securities, on the same terms and conditions set forth above,
solely to cover over-allotments, if any. If such option is exercised in
full, the total Price to Public and Proceeds to Issuer Trust will be
$17,250,000 and $17,250,000, respectively. See "Underwriting".
______________________
The Preferred Securities are offered by the Underwriter named herein,
subject to prior sale, when, as, and if delivered to and accepted by the
Underwriter. The Underwriter reserves the right to withdraw, cancel, or modify
this offering without notice and to reject any order in whole or in part. It
is expected that delivery of Preferred Securities will be made in book-entry
form through the book-entry facilities of The Depository Trust Company on or
about ___________, 1998.
ADVEST, INC.
THE DATE OF THIS PROSPECTUS IS JUNE _____, 1998.
<PAGE> 4
[Red Herring Language to be Inserted on Prospectus Cover Page]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
<PAGE> 5
(Cover Page Continued)
The Issuer Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in ______% Junior Subordinated
Deferrable Interest Debentures (the "Junior Subordinated Debentures," and
together with the Trust Securities, the "Securities") to be issued by the
Company. The Junior Subordinated Debentures will mature on ___________, 2028,
which date may be shortened (such date, as it may be shortened, the "Stated
Maturity") to a date not earlier than ___________, 2028, if certain conditions
are met (including the Company having received the prior approval of the Board
of Governors of the Federal Reserve Systems (the "FRB"), if then required under
applicable capital guidelines or policies of the FRB (such shortening of the
maturity date, the "Maturity Adjustment")). The Preferred Securities will have
a preference under certain circumstances over the Common Securities with
respect to cash distributions and amounts payable on liquidation, redemption,
or otherwise. See "Description of Preferred Securities - Subordination of
Common Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company,
as depositary ("DTC"). Beneficial interests in the global securities will be
shown on, and transfer thereof will be effected only through, records
maintained by DTC and its participants. Except as described under "Description
of Preferred Securities," Preferred Securities in definitive form will not be
issued and owners of beneficial interests in the global securities will not be
considered holders of the Preferred Securities. Application will be made to
include the Preferred Securities for quotation on the Nasdaq National Market.
Settlement for the Preferred Securities will be made in immediately available
funds. The Preferred Securities will trade in DTC's Same-Day Funds Settlement
System, and secondary market trading activity for the Preferred Securities will
therefore settle in immediately available funds.
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions, at the annual rate of ___% of the
liquidation amount of $10 per Preferred Security (the "Liquidation Amount"),
accruing from _______, 1998, and payable quarterly in arrears on March 31, June
30, September 30, and December 31 of each year commencing on ________, 1998
("Distributions"). The Company has the right, so long as no Debenture Event of
Default (as defined herein) has occurred or is continuing, to defer payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 20 consecutive quarterly periods with respect to
each deferral period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity of the Junior Subordinated
Debentures. No interest shall be due and payable during any Extension Period,
except at the end thereof. Upon the termination of any such Extension Period
and the payment of all amounts then due, the Company 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, Distributions
on the Preferred Securities will also be deferred and the Company will not be
permitted, subject to certain exceptions described herein, to declare or pay
any cash distributions with respect to the Company's capital stock or with
respect to debt securities of the Company 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 preferred securities
are entitled will accumulate) at the rate of _______% per annum, compounded
quarterly, and holders of preferred securities will be required to accrue
interest income for United States Federal Income Tax purposes in advance of the
receipt of cash distributions with respect to such deferred interest payment.
See "Description of Junior Subordinated Debentures - Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences - Interest Income
and Original Issue Discount." The Company has no current intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debentures.
The Company has, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures, and the Junior Subordinated Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all the Issuer Trust's obligations under the Preferred Securities as
described below. See "Relationship Among the Preferred Securities, the Junior
Subordinated Debentures, and the Guarantee - Full and Unconditional Guarantee."
The Guarantee of the Company guarantees the payment of Distributions and
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payments on liquidation or redemption of the Preferred Securities, but only in
each case to the extent of funds held by the Issuer Trust, as described herein
(the "Guarantee"). See "Description of Guarantee." If the Company does not
make payments on the Junior Subordinated Debentures held by the Issuer Trust,
the Issuer Trust will have insufficient funds to pay Distributions on the
Preferred Securities. The Guarantee does not cover payment of Distributions
when the Issuer Trust does not have sufficient funds to pay such Distributions.
In such event, a holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce payment of such
Distributions to such holder. See "Description of Junior Subordinated
Debentures-Enforcement of Certain Rights by Holders of Preferred Securities."
The obligations of the Company under the Guarantee and the Preferred Securities
are subordinate and junior in right of payment to all Senior Indebtedness (as
defined in "Description of Junior Subordinated Debentures - Subordination") of
the Company.
The Preferred Securities are subject to mandatory redemption (i) in
whole, but not in part, upon repayment of the Junior Subordinated Debentures at
Stated Maturity or, at the option of the Company, their earlier redemption in
whole upon the occurrence of a Tax Event, an Investment Company Event, or a
Capital Treatment Event (each as defined herein) and (ii) in whole or in part
at any time on or after ________, 2003 contemporaneously with the optional
redemption by the Company of the Junior Subordinated Debentures in whole or in
part. The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after _______, 2003, in whole at any time
or in part from time to time, or (ii) in whole, but not in part, at any time
within 90 days following the occurrence and continuation of a Tax Event,
Investment Company Event, or Capital Treatment Event, in each case at a
redemption price set forth herein, which includes the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed
for redemption. The ability of the Company to exercise its rights to redeem
the Junior Subordinated Debentures or to cause the redemption of the Preferred
Securities prior to the Stated Maturity may be subject to prior regulatory
approval by the FRB, if then required under applicable FRB capital guidelines
or policies. See "Description of Junior Subordinated Debentures - Redemption"
and "Description of Preferred Securities - Liquidation Distribution Upon
Dissolution."
The Company, as the holder of all of the outstanding Common
Securities, has the right at any time to dissolve the Issuer Trust and, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, to cause the Junior Subordinated Debentures to be distributed
to the holders of the Preferred Securities and Common Securities in liquidation
of the Issuer Trust. The ability of the Company, as holder of the Common
Securities, to dissolve the Issuer Trust may be subject to prior regulatory
approval of the FRB, if then required under applicable FRB capital guidelines
or policies. See "Description of Preferred Securities - Liquidation
Distribution Upon Dissolution."
In the event of the dissolution of the Issuer Trust, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, the holders of the Preferred Securities will be entitled to
receive a Liquidation Amount of $10 per Preferred Security plus accumulated and
unpaid Distributions thereon to the date of payment, subject to certain
exceptions, which may be in the form of a distribution of such amount in Junior
Subordinated Debentures. See "Description of Preferred Securities -
Liquidation Distribution Upon Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to
all Senior Indebtedness (as defined herein) of the Company. See "Description
of Junior Subordinated Debentures - Subordination."
Prospective purchasers must carefully consider the information set
forth in "Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED
OBLIGATIONS OF THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT
AGENCY.
3
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[INSERT GRAPHIC PRESENTATION]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTTING SHARES OF
PREFERRED SECURITIES, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS, AND PENALTY BIDS. SUCH TRANSACTIONS MAY BE EFFECTED THROUGH THE
NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING".
4
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should
be read in conjunction with, the more detailed information and consolidated
financial statements and notes thereto appearing elsewhere in this Prospectus.
Prospective investors should read this Prospectus in its entirety.
This Prospectus contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements relating to the financial condition and prospects, loan loss
reserve adequacy, year 2000 readiness, simulation of changes in interest rates,
results of operations, plans for future business development activities, capital
spending and financing sources, capital structure, the effects of regulation and
competition, and the business of the Company. Where used in this Prospectus, the
words "anticipate", "believe", "estimate", "expect", "intend", and similar words
and expressions, as they relate to the Issuer Trust, the Company, or the
management of the Company, identify forward-looking statements. Such
forward-looking statements reflect the current views of the Issuer Trust and the
Company and are based on information currently available to the management of
the Company and upon current expectations, estimates, and projections about the
Issuer Trust, the Company and its industry, management's beliefs with respect
thereto, and certain assumptions made by management. These forward-looking
statements are not guarantees of future performance and are subject to risks,
uncertainties, and other factors which could cause actual results to differ
materially from those expressed or implied by such forward-looking statements as
a result of various factors. Potential risks and uncertainties include, but are
not limited to: (i) competitive pressure in the banking and financial services
industries increasing significantly; (ii) changes in the interest rate
environment which reduce margins; (iii) changes in political conditions or
changes occurring in the legislative or regulatory environment; (iv) general
economic conditions, either nationally or regionally, becoming less favorable
than expected resulting in, among other things, a deterioration in credit
quality; (v) changes occurring in business conditions and inflation; (vi)
acquisitions and integration of acquired businesses or assets; (vii) changes in
technology; (viii) changes in monetary and tax policies, (ix) changes occurring
in the securities markets; and (x) other risks and uncertainties detailed from
time to time in the filings of the Company with the Commission.
THE COMPANY AND THE BANK
AMERICAN BANCSHARES, INC.
The Company is a Florida corporation and a bank holding company
registered under the Bank Holding Company Act of 1956, as amended (the "BHCA"),
headquartered in Bradenton, Florida. The Company's primary subsidiary and
principal asset is American Bank (the "Bank"). Through its ownership of the
Bank, the Company is engaged in a general commercial banking and related
business. In addition to the Bank, the Company also owns a finance company
subsidiary which only recently has commenced operations. Unless the context
otherwise requires, references to the Company herein include the Company and the
Bank on a consolidated basis. The principal executive offices of the Company is
located at 4502 Cortez Road West, Bradenton, Florida 34210, and its telephone
number is (941) 795-3050.
AMERICAN BANK
The Bank, which commenced operations in May 1989 as a Florida
state-chartered banking corporation, was formed by local business persons who
identified the need for a consumer-oriented independent community bank in
Manatee County, Florida to serve its growing population and expanding business
base. It was their belief that the large banking institutions located in this
area were inflexible, slow in their decision-making processes, and not meeting
the banking needs of individuals and small-to-medium sized businesses. They
recognized the opportunity to build a profitable banking business through the
establishment of a local banking institution operated by local business persons
and by experienced banking personnel who are familiar with the community and are
dedicated to providing fast, efficient, and personalized service to the market
area. Consistent with this objective, the Bank sought after and attracted
experienced bank personnel, most of whom reside in the area, know the Bank's
customers, and
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are able to provide them with personalized service. Further, the Board of
Directors of both the Company and the Bank have been comprised of local business
persons who actively promote the Bank in the community.
As a result of the implementation of this strategy, the Bank
experienced rapid growth which was financed through a series of equity offerings
primarily supported by local investors who, in turn, provided additional capital
to the Bank, broadened the community's awareness of the Bank, and attracted new
business. In 1994, the Bank added a mortgage banking division to originate,
close, and service fixed and adjustable rate construction-to-permanent
residential real estate mortgage loans which are generally sold in the secondary
mortgage market. In late 1995, the Bank implemented a growth strategy to expand
its operations geographically, to expand its product and services and to
penetrate additional segments of the financial services market. In order to
finance this growth strategy, the Company was formed for the purpose of owning
the Bank and conducting a public offering of the Company's common stock, which
offering was completed in early 1996. Since its initial public offering, the
Company has implemented its growth strategy by:
- Adding 4 new branch locations which has expanded the Bank's
operations within Manatee County and into Hillsborough
County.
- Palma Sola branch (Manatee) was opened in March 1996
- Whitfield branch (Manatee) was opened in
September 1996
- Palmetto branch (Manatee) was opened in June 1997
- Ruskin branch (Hillsborough) was opened in April 1998
- Acquiring DesChamps & Gregory, Inc. ("DesChamps") in
January 1997, a Bradenton-based mortgage brokerage company
which originates retail residential mortgage loans.
- Entering into an arrangement with Advest, Inc. in March
1997 to make trust services available to the Bank's
customers.
- Acquiring Murdock Florida Bank, a Florida state banking
corporation ("Murdock") in March 1998, which has been
converted into a branch of the Bank and has expanded the
Bank's operations into Charlotte County.
- Forming and, in March 1998, commencing the operations of
Freedom Finance Company, a Florida corporation and
wholly-owned subsidiary of the Company ("Finance Company")
to provide consumer finance products and services.
- Making available to its customers computer-based home
banking services commencing in September 1997.
The Company also has constructed a new administrative office
facility to centralize its operations by combining in one location, the
Company's administrative personnel, its consumer lending operations, the
mortgage banking and residential lending operations, and its credit card and
human resources departments. The Company has achieved its growth while
maintaining its credit quality standards, as is reflected by its low ratios of
delinquencies and losses to total loan portfolio and to assets.
As a result of the successful implementation of its strategies, the
Company has established a special niche in its market area which fills the needs
of a significant segment of that market. The consumer-oriented community
banking focus of the Bank provides customers with locally-based decision makers
who are familiar with their customers, their business environment, and
competitive demands, who are able to quickly evaluate and respond to
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loan applications, and who have the ability to craft personalized banking
solutions to the customer's needs without extensive bureaucratic delays. Due to
the growth of the Bank, it is able to extend larger credits than other
community-based financial institutions.
From its eight retail banking branches located in Manatee,
Charlotte, and Hillsborough counties in Florida, the Bank offers a broad range
of corporate and personal banking services to individuals and small to mid-sized
businesses. The Bank places a special emphasis on the importance of
individualized attention to its customers by offering loan and deposit products
tailored to meet the needs of its customers. In addition, the Bank offers
customized accounts receivable financing and billing services, and credit card
merchant services.
The Bank's deposits are insured up to the applicable limits by the
Federal Deposit Insurance Corporation (the "FDIC") and the Bank is a member of
the Federal Home Loan Bank of Atlanta ("FHLB"). The principal executive office
of the Bank is 4702 Cortez Road West, Bradenton, 34210, and its telephone number
is (904) 795-3050.
GROWTH AND EXPANSION
At December 31, 1995, the quarter-end prior to the Company's
initial public offering, and at March 31, 1998, the Company had total assets of
approximately $219.0 and $379.2 million, respectively, or a 73% increase, net
portfolio loans of approximately $138.1 and $230.5 million, respectively, or a
67% increase, total deposits of approximately $186.7 and $316.6 million,
respectively, or a 70% increase, and shareholders' equity of approximately $14.6
and $26.4 million, respectively, or an 81% increase. The Company intends to
continue its geographic and product expansion while maintaining its community
banking focus and preserving its market niche. The Company also will seek
opportunities to further expand its operations into other segments of the
financial services markets that it believes will be beneficial to its growth
strategy. The Company intends to expand its presence along the west coast of
Florida through internal growth, branching, and strategic acquisitions.
Management believes that there are branching and acquisition opportunities
available for further expansion of its geographic market both in the areas
existing between its current branches and in other areas along the west coast of
Florida. Of course, branching activities and acquisitions involve certain
upfront start-up and acquisition related expenses which are not recovered until
several months after the opening of the branch or consummation of the
acquisition. Accordingly, the Company's short-term profitability and efficiency
ratios have been adversely affected by its growth strategy. As these branches
recover such upfront costs, profitability measurements should improve and, as a
result of the Bank's increasing asset base, each additional branch established
by the Bank should have less impact on the short-term profitability of the
Company as a whole.
ABI CAPITAL TRUST
The Issuer Trust is a statutory business trust created under
Delaware law on May 21, 1998. The Issuer Trust will be governed by a trust
agreement ("Trust Agreement"), as amended and supplemented from time to time,
among the Company, as Depositor, Bankers Trust (Delaware), as Delaware trustee
("Delaware Trustee"), and Bankers Trust Company, as property trustee ("Property
Trustee") (the Delaware Trustee and Property Trustee together, the "Trustees").
The Issuer Trust exists for the exclusive purpose 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 Company, and (iii)
engaging in only those other activities necessary, convenient, or incidental
thereto (such as registering the transfer of the Trust Securities).
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Issuer Trust, and payments under the Junior Subordinated Debentures will be the
sole source of revenue of the Issuer Trust. The Issuer Trust has a term of 31
years unless earlier terminated as provided in the Trust Agreement. The
principal executive offices of the Issuer Trust is 4502 Cortez Road West,
Bradenton, Florida 34210, and its telephone number is (941) 795-3050.
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THE OFFERING
<TABLE>
<S> <C>
Securities Offered . . . . . . . . . . . $15,000,000 aggregate Liquidation Amount of Preferred Securities
representing preferred undivided beneficial interests in the Issuer
Trust's assets, which will consist solely of the Junior
Subordinated Debentures. The Issuer Trust has granted the
Underwriter an option, exercisable within 30 days after the date of
this Prospectus, to purchase up to an additional $2,250,000
aggregate Liquidation Amount of Preferred Securities at the
offering price, solely to cover over-allotments, if any.
Offering Price . . . . . . . . . . . . . $10 per Preferred Security (Liquidation Amount $10), plus
accumulated Distributions, if any, from _____, 1998.
Distributions . . . . . . . . . . . . . . The Distributions payable on each Preferred Security will be fixed
at a rate per annum of _____% of the stated Liquidation Amount per
Preferred Security. Such distributions will be cumulative, will
accrue from ________, 1998 (the date of issuance of the Preferred
Securities), and will be payable quarterly in arrears on March 31,
June 30, September 30, and December 31 of each year, commencing
_______, 1998. See "Description of Preferred Securities -
Distributions".
Preferred Securities Rank . . . . . . . . The Preferred Securities will rank pari passu, and payments
thereon, will be made pro rata, with the Common Securities except
as described under "Description of Preferred Securities -
Subordination of Common Securities".
Junior Subordinated Debentures . . . . . The Issuer Trust will invest the proceeds from the issuance of the
Preferred Securities and Common Securities in an equivalent amount
of _____% Junior Subordinated Debentures of the Company. The
Junior Subordinated Debentures will mature on ______, 2028, subject
to the Maturity Adjustment. The Junior Subordinated Debentures
will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company. In addition, the Company's
obligations under the Junior Subordinated Debentures will be
structurally subordinated to all existing and future liabilities
and obligations of the Company's subsidiaries.
Guarantee . . . . . . . . . . . . . . . . Under the terms of the Guarantee, the Company has guaranteed the
payment of Distributions and payments on liquidation or redemption
of the Preferred Securities, but only in each case to the extent of
funds held by the Issuer Trust, as described herein. The Company
and the Issuer Trust believe that the obligations of the Company
under the Guarantee, the Trust Agreement, the Junior Subordinated
Debentures, and the Junior Subordinated Indenture, when taken
together, fully, irrevocably, and unconditionally guarantee all of
the Issuer Trust's obligations relating to the Preferred
Securities. The obligations of the Company under the Guarantee and
the Preferred Securities are subordinate and junior in right of
payment to all Senior Indebtedness. See "Description of
Guarantee".
</TABLE>
8
<PAGE> 12
<TABLE>
<S> <C>
Right to Defer Interest . . . . . . . . . The Company has the right, at any time, so long as no Debenture
Event of Default has occurred and is continuing, to defer payments
of interest on Junior Subordinated Debentures for a period not
exceeding 20 consecutive quarters; provided, that no Extension
Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of the Company's
extension of the interest payment period, quarterly Distributions
on the Preferred Securities will be deferred (though such
Distributions would continue to accrue with interest thereon
compounded quarterly, since interest will continue to accrue and
compound on the Junior Subordinated Debentures during any such
Extension Period). During an Extension Period, the Company will be
prohibited, subject to certain exceptions described herein, from
declaring or paying any cash distributions with respect to its
capital stock or debt securities that rank pari passu with or
junior to the Junior Subordinated Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due,
the Company may commence a new Extension Period, subject to the
foregoing requirements. See "Description of Junior Subordinated
Debentures - Option to Extend Interest Payment Period".
In the event that an Extension Period should occur, Preferred
Security holders will continue to include interest income (and de
minimis original issue discount, if any) for United States federal
income tax purposes in advance of receipt of the cash distributions
with respect to such deferred interest payments. See "Certain
Federal Income Tax Consequences - Interest Income and Original
Issue Discount". The Company has no current intention of
exercising its right to defer payments of interest by extending the
interest payment period of the Junior Subordinated Debentures.
Redemption . . . . . . . . . . . . . . . The Preferred Securities are subject to mandatory redemption (i) in
whole, but not in part, at the Stated Maturity upon repayment of
the Junior Subordinated Debentures, (ii) in whole, but not in part,
contemporaneously with the optional redemption at any time by the
Company of the Junior Subordinated Debentures upon the occurrence
and continuation of a Tax Event, Investment Company Event, or
Capital Treatment Event, and (iii) in whole or in part at any time
on or after _____, 2003, contemporaneously with the optional
redemption by the Company of the Junior Subordinated Debentures in
whole or in part, in each case at the applicable Redemption Price.
See "Description of Preferred Securities - Redemption".
Liquidation of the Issuer Trust . . . . . The Company, as holder of the Common Securities, has the right at
any time to dissolve the Issuer Trust and cause the Junior
Subordinated Debentures to be distributed to holders of Preferred
Securities in liquidation of the Issuer Trust, subject to the
Company having received prior approval of the FRB to do so if then
required under applicable capital guidelines or policies of the
FRB. See "Description of Preferred Securities - Liquidation
Distribution Upon Dissolution".
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C>
Voting Rights . . . . . . . . . . . . . . Generally, except in limited circumstances, the holders of the
Preferred Securities will not have any voting rights. See
"Description of Preferred Securities - Voting Rights; Amendment of
Trust Agreement" and "Risk Factors - Limited Voting Rights".
Use of Proceeds . . . . . . . . . . . . . All of the net proceeds to the Issuer Trust from the sale of the
Preferred Securities offered hereby will be used by the Issuer
Trust to purchase the Junior Subordinated Debentures issued by the
Company. The net proceeds received by the Company from the sale of
the Junior Subordinated Debentures will be used for general
corporate purposes which may include, among other things,
contributions to the Bank to support its growth, branch
acquisitions, acquisitions of other financial institutions by
either the Company or the Bank, acquisitions of other financial
service companies, and for working capital. In addition, a portion
of the proceeds may be contributed through investments in or
advances to the Bank or other subsidiaries of the Company to
support mutual growth opportunities. It also is anticipated that a
portion of the proceeds will be used to retire all or a part of the
Company's outstanding indebtedness under a line of credit used to
finance the construction of its administrative offices. As of
May 31, 1998, approximately $2.55 million has been borrowed under
this credit facility. The Trust Securities will qualify as Tier 1
or core capital of the Company, subject to the 25% Capital
Limitation (as defined herein), under the risk-based capital
guidelines of the FRB. The portion of the Trust Securities that
exceeds the 25% Capital Limitation will qualify as Tier 2 or
supplemental capital of the Company. See "Use of Proceeds".
ERISA Considerations . . . . . . . . . . Prospective purchasers must carefully consider the information
set forth under "Certain ERISA Considerations".
Nasdaq National Market Symbol . . . . . . Application has been made to have the Preferred Securities approved
for quotation on the Nasdaq National Market under the symbol
"ABANP".
</TABLE>
RISK FACTORS
Prospective investors should carefully consider the matters set
forth under "Risk Factors", beginning on page 12.
10
<PAGE> 14
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table presents selected financial information for the
Company. The selected financial information is based on, derived from, and
should be read in conjunction with, the consolidated financial statements of the
Company and the related notes beginning on page F-1. The consolidated selected
financial data have been restated to include the accounts and operations of
Murdock for all periods. The selected financial information provided for the
three months ended March 31, 1998 and 1997 have been derived from unaudited
interim financial statements of the Company, which include all adjustments,
consisting of the restatement for the Murdock acquisition and other normal
recurring accruals, which the Company and the Bank consider necessary for a fair
presentation of the financial position and results of operations for those
periods. Results for the three months ended March 31, 1998 are not necessarily
indicative of results that can be expected for any other interim period or for
the entire fiscal year ending December 31, 1998.
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH 31, AT OR FOR THE YEAR
(UNAUDITED) ENDED DECEMBER 31,
---------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
AMERICAN BANCSHARES, INC. --------- --------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATIONS DATA:
Interest income...................... $ 7,101 $ 5,552 $ 24,631 $ 19,431 $ 15,826 $ 11,187 $ 9,253
Interest expense..................... 3,583 2,878 12,917 9,965 8,452 5,558 4,474
-------- -------- -------- -------- -------- -------- --------
Net interest income.................. 3,518 2,674 11,714 9,466 7,374 5,629 4,779
Provision for loan losses............ 124 171 921 515 702 291 710
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision
for loan losses.................... 3,394 2,503 10,793 8,951 6,672 5,338 4,069
Non-interest income.................. 1,103 672 4,156 2,148 2,086 1,124 1,000
Non-interest expenses................ 3,876 2,630 11,912 9,856 7,437 5,354 4,104
Provision for income taxes........... 217 212 1,117 461 471 396 248
-------- -------- -------- -------- -------- -------- --------
Net Income........................... $ 404 $ 333 $ 1,920 $ 782 $ 850 $ 712 $ 717
======== ======== ======== ======== ======== ======== ========
CONSOLIDATED PER SHARE DATA:
Net income:
Basic.............................. $0.08 $0.07 $0.38 $0.17 $0.27 $0.26 $0.30
Diluted............................ $0.08 $0.07 $0.38 $0.17 $0.27 $0.26 $0.30
Book value, end of period............ $5.28 $4.77 $5.22 $4.77 $4.40 $3.80 $5.08
SELECTED BALANCE SHEET DATA:
Total assets......................... $379,179 $298,006 $353,901 $273,630 $218,993 $183,901 $135,755
Cash (including interest bearing
accounts).......................... 20,660 12,739 18,396 23,563 11,230 7,762 5,911
Loans receivable, net................ 230,535 200,096 213,405 175,265 138,086 107,370 90,437
Mortgage loans held for sale......... 49,718 10,321 39,588 20,351 21,011 21,640 0
Investment securities and other
interest-bearing assets............ 62,266 62,385 68,664 43,509 40,423 36,746 31,317
Deposits............................. 316,595 254,356 302,746 232,433 186,727 165,608 120,428
Borrowed funds....................... 32,715 18,490 23,028 16,413 16,067 5,977 5,264
Shareholders' equity................. 26,378 23,803 26,079 23,504 14,632 11,484 9,167
SELECTED FINANCIAL RATIOS AND OTHER
DATA:
Return on average assets............. 0.44%(2) 0.47%(2) 0.61% 0.32% 0.42% 0.43% 0.55%
Return on average equity............. 6.55 (2) 6.76 (2) 9.03 3.63 6.58 6.91 8.59
Net interest margin.................. 4.13 (2) 4.02 (2) 3.98 4.13 3.90 3.85 3.83
Asset quality ratio(1)............... 0.32 0.59 0.43 0.57 1.15 1.82 1.25
Average equity to average total
assets............................. 6.76 6.92 6.76 8.76 6.38 6.48 6.39
Risk-based capital ratios:
Tier 1 capital..................... 10.12 12.41 10.11 10.82 10.02 10.41 10.52
Total risk based capital........... 10.99 13.12 10.90 11.60 10.97 11.58 11.95
Leverage ratio(3).................... 7.15 8.54 6.87 7.31 6.69 6.67 6.89
Efficiency ratio(4).................. 83.88 78.60 75.06 84.86 78.62 79.28 71.02
Allowance for loan losses to
portfolio loans.................... 0.98 0.87 1.07 1.00 1.16 1.27 1.30
Allowance for loan losses to non-
performing loans................... 2.67 2.55 1.38 1.29 1.29 1.25 0.84
Net charge-offs to average loans,
net................................ 0.28(2) 0.36(2) 0.21 0.23 0.37 0.14 0.69
RATIOS OF EARNINGS TO FIXED CHARGES(5):
Excluding interest on deposits....... 2.81(2) 3.75(2) 4.00 3.54 4.62 6.33 10.19
Including interest on deposits....... 1.17(2) 1.19(2) 1.24 1.12 1.16 1.20 1.22
</TABLE>
- ---------------
(1) Non-performing loans and other real estate owned to total assets.
Non-performing loans consist of non-accrual loans and accruing loans
contractually past due 90 days or more.
(2) Annualized.
(3) Leverage ratio is Tier 1 Capital to average total assets.
(4) Non-interest expense divided by net interest income plus non-interest
income.
(5) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes, and fixed charges by fixed charges.
Fixed charges represent all interest expense (ratios are presented both
excluding and including interest on deposits). There was no amortization of
notes expense nor was any portion of net rental expense deemed to be
equivalent to interest on debt. Interest expense (other than on deposits)
includes interest on notes, federal funds purchased, securities sold under
agreements to repurchase, and other funds borrowed.
11
<PAGE> 15
RISK FACTORS
In addition to the other information in this Prospectus, a prospective
investor should review and consider carefully the following factors in
evaluating an investment in the Preferred Securities offered hereby. To the
extent any of the information contained in this Prospectus constitutes
forward-looking information, the risk factors set forth below are cautionary
statements identifying important factors that could cause the Company's actual
results for various financial reporting periods to differ materially from those
expressed in any forward-looking statements made by or on behalf of the Company
or the Issuer Trust.
RISK FACTORS RELATING TO THE OFFERING
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES. The obligations of the Company under the Guarantee
issued by the Company for the benefit of the holders of Preferred Securities and
under the Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness. At March 31, 1998, the Senior Indebtedness
of the Company aggregated $1,450,000. None of the Junior Subordinated
Indenture, the Guarantee, or the Trust Agreement places any limitation on the
amount of secured or unsecured debt, including Senior Indebtedness, that may be
incurred by the Company. See "Description of Guarantee - Status of the
Guarantee" and "Description of Junior Subordinated Debentures - Subordination".
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the Junior
Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES. So long
as no Event of Default (as defined in the Junior Subordinated Indenture) has
occurred and is continuing with respect to the Junior Subordinated Debentures
(a "Debenture Event of Default"), the Company has the right under the Junior
Subordinated 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 20 consecutive quarterly periods with respect to each Extension
Period; provided that no Extension Period may extend beyond the Stated Maturity
of the Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures - Debenture Events of Default". As a consequence of any such
deferral, quarterly Distributions on the Preferred Securities by the Issuer
Trust will be deferred during any such Extension Period. Distributions to
which holders of the Preferred Securities are entitled will accumulate
additional Distributions thereon during any Extension Period at the rate of
_____% per annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distribution" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company 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 Company's capital stock, or (ii) make any payment of principal
of or interest or premium, if any, on or repay, repurchase, or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions, or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan, or other similar
arrangements with or for the benefit of any one or more employees, officers,
directors, or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of an exchange or
conversion of any class or series of the Company's capital stock (or any
capital stock of a subsidiary of the Company) for any class or series of the
12
<PAGE> 16
Company's capital stock or any class or series of the Company's indebtedness
for any class or series of the Company's capital stock, (c) 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, (d) any declaration of a dividend in connection with
any stockholder's rights plan, or the issuance of rights, stock, or other
property under any stockholder's rights plan, or the redemption or repurchase
of rights pursuant thereto, or (e) any dividend in the form of stock, warrants,
options, or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options, or other rights is the same stock as that
on which the dividend is being paid or ranks pari passu with or junior to such
stock). Prior to the termination of any such Extension Period, the Company may
further defer the payment of interest, provided that no Extension Period may
exceed 20 consecutive quarterly periods or 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 annual rate of ____%, compounded quarterly, to the
extent permitted by applicable law), the Company may elect to begin a new
Extension Period subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election to begin an Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the record
date or the date such Distributions are payable, but in any event not less than
one Business Day prior to such record date. The Property Trustee will give
notice of the Company's election to begin a new Extension Period to the holders
of the Preferred Securities. Subject to the foregoing, there is no limitation
on the number of times that the Company may elect to begin an Extension Period.
See "Description of Preferred Securities - Distributions" and "Description of
Junior Subordinated Debentures - Option to Extend Interest Payment Period".
In the event an Extension Period should occur, a holder of Preferred
Securities will continue to accrue and recognize income (in the form of
original issue discount ("OID")) for United States federal income tax purposes
in respect of its pro rata share of the Junior Subordinated Debentures held by
the Issuer Trust, which will include a holder's pro rata share of both the
stated interest and de minimis OID, if any, on the Junior Subordinated
Debentures. As a result, a holder of Preferred Securities will include such
OID in gross income for United States federal income tax purposes in advance of
the receipt of cash, and will not receive the cash related to such income from
the Issuer Trust if the holder disposes of the Preferred Securities prior to
the record date for the payment of Distributions. See "Certain Federal Income
Tax Consequences - Interest Income and Original Issue Discount" and "- Sales of
Preferred Securities".
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, if the Company should elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of his, her, or its Preferred
Securities during an Extension Period, therefore, might not receive the same
return on his, her, or its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of the
Company's right to defer interest payments, the market price of the Preferred
Securities (which represent preferred undivided beneficial interest in the
assets of the Issuer Trust) may be more volatile than the market price of other
securities on which original issue discount or interest accrues that are not
subject to such deferrals.
REDEMPTION DUE TO TAX EVENT, INVESTMENT COMPANY EVENT, OR CAPITAL
TREATMENT EVENT. Upon the occurrence and during the continuation of a Tax
Event, Investment Company Event, or Capital Treatment Event, the Company has
the right to redeem the Junior Subordinated Debentures in whole, but not in
part, at any time within 90 days following the occurrence of such Tax Event,
Investment Company Event, or Capital Treatment Event and thereby cause a
mandatory redemption of the Preferred Securities. Any such
13
<PAGE> 17
redemption shall be at a price equal to the Liquidation Amount of the Preferred
Securities, together with accumulated Distributions to but excluding the date
fixed for redemption. The ability of the Company to exercise its right to
redeem the Junior Subordinated Debentures prior to the Stated Maturity may be
subject to prior regulatory approval by the FRB, if then required, as it
currently is, under applicable FRB capital guidelines or policies. See
"Description of Junior Subordinated Debentures - Redemption" and "Description
of Preferred Securities - Liquidation Distribution Upon Dissolution".
A "Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company 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 or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with respect to income
receive or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion will not be, deductible by the Company, in whole
or in part, for United States federal income tax purposes, or (iii) the Issuer
Trust is, or will be within 90 days of the delivery of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges. See "Certain Federal Income tax Consequences-Pending Tax Litigation
Affecting the Preferred Securities" for a discussion of pending United States
Tax Court litigation that, if decided adversly to the taxpayer, could give rise
to a Tax Event, which may permit the Company to redeem the Junior Subordinated
Debentures prior to_____, 20 ___.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency, or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof)
except as otherwise restricted under the 25% Capital Limitation (as defined
herein), for purposes of the risk-based capital adequacy guidelines of the FRB,
as then in effect and applicable to the Company.
EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES.
The Company, as holder of all the outstanding Common Securities, has the right
at any time to dissolve the Issuer Trust and, after satisfaction of liabilities
to creditors of the Issuer Trust as provided by applicable law, cause the
Junior Subordinated Debentures to be distributed to the holders of the
Preferred Securities and Common Securities in liquidation of the Issuer Trust.
The ability of the Company, as holder of the Common Securities, to dissolve the
Issuer Trust may be subject to prior regulatory approval of the FRB, if then
required under applicable FRB capital guidelines or policies. See "Description
of Preferred Securities - Liquidation Distribution Upon Dissolution."
14
<PAGE> 18
Under current United States federal income tax law and interpretation
and assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of
Preferred Securities. However, if a Tax Event were to occur that would cause
the Issuer Trust to be subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures, a
distribution of the Junior Subordinated Debentures by the Issuer Trust would be
a taxable event to the Issuer Trust and the holders of the Preferred
Securities. See "Certain Federal Income Tax Consequences - US Holders --
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the
Issuer Trust".
RIGHTS UNDER THE GUARANTEE. Bankers Trust Company will act as the
trustee under the Guarantee (the "Guarantee Trustee") and will hold the
Guarantee for the benefit of the holders of the Preferred Securities. Bankers
Trust Company also will act as Debenture Trustee for the Junior Subordinated
Debentures and as Property Trustee under the Trust Agreement. Bankers Trust
(Delaware) will act as Delaware Trustee under the Trust Agreement. The
Guarantee guarantees to the holders of the Preferred Securities the following
payments, to the extent not paid by or on behalf of the Issuer Trust: (i) any
accumulated and unpaid Distributions required to be paid on the Preferred
Securities, to the extent that the Issuer Trust has funds on hand available
therefor at the payment date, (ii) the Redemption Price with respect to any
Preferred Securities called for redemption, to the extent that the Issuer Trust
has funds on hand available therefor at such time, and (iii) upon a voluntary
or involuntary dissolution, winding up, or liquidation of the Issuer Trust
(unless the Junior Subordinated Debentures are distributed to holders of the
Preferred 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 Issuer Trust has funds on hand available therefor at such
time, and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Preferred Securities on liquidation of the
Issuer Trust. The Guarantee is subordinated as described under " - Ranking of
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures" and "Description of Guarantee - Status of the Guarantee." The
holders of not less than a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust
power conferred upon the Guarantee Trustee under the Guarantee. Any holder of
the Preferred Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Issuer Trust, the Guarantee Trustee, or any other
person or entity.
If the Company were to default on its obligation to pay amounts
payable under the Junior Subordinated Debentures, the Issuer Trust may lack
funds for the payment of Distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and, in such event, holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, if a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
any amounts payable in respect of the Junior Subordinated Debentures on the
payment date on which such payment is due and payable, then a holder of
Preferred Securities may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of any amounts payable in
respect of such Junior Subordinated Debentures having a principal amount equal
to the aggregate Liquidation Amount of the Preferred Securities of such holder
(a "Direct Action"). The exercise by the Company of its right, as described
herein, to defer the payment of interest on the Junior Subordinate Debentures
does not constitute a Debenture Event of Default. In connection with such
Direct Action, the Company will have a right of set-off under the Junior
Subordinated Indenture to the extent of any payment made by the Company to such
holder of Preferred Securities in the Direct Action. Except as described
herein, holders of Preferred Securities will not be able to exercise directly
any other remedy available to the holders of the Junior Subordinated Debentures
or assert directly any other rights in respect of the Junior Subordinated
Debentures. See "Description of Junior
15
<PAGE> 19
Subordinated Debentures - Enforcement of Certain Rights by Holders of Preferred
Securities," " - Debenture Events of Default" and "Description of Guarantee."
The Trust Agreement provides that each holder of Preferred Securities by
acceptance thereof agrees to the provisions of the Guarantee and the Junior
Subordinated Indenture.
LIMITED VOTING RIGHTS. Holders of Preferred Securities will have
limited voting rights relating generally to the modification of the Preferred
Securities and the Guarantee and the exercise of the Issuer Trust's rights as
holder of Junior Subordinated Debentures. Holders of Preferred Securities will
not be entitled to appoint, remove, or replace the Property Trustee or the
Delaware Trustee except upon the occurrence of certain events specified in the
Trust Agreement. The Property Trustee and the holders of all the Common
Securities may, subject to certain conditions, amend the Trust Agreement
without the consent of holders of Preferred Securities to cure any ambiguity or
make other provisions not inconsistent with the Trust Agreement or to ensure
that the Issuer Trust (i) will not be taxable as a corporation for United
States federal income tax purposes, or (ii) will not be required to register as
an "investment company" under the Investment Company Act. See "Description of
Preferred Securities - Voting Rights; Amendment of Trust Agreement" and " -
Removal of Issuer Trustees; Appointment of Successors."
ABSENCE OF MARKET. The Preferred Securities are a new issue of
securities with no established trading market. Application has been made for
quotation of the Preferred Securities on the Nasdaq National Market, but one of
the requirements for initial listing is the presence of three market makers for
the Preferred Securities. Nasdaq National Market maintenance standards require
the existence of two market makers for continued listing. Advest, Inc., has
advised the Company that it intends to make a market in the Preferred
Securities. However, Advest, Inc. is not obligated to do so and such market
making may be interrupted or discontinued at any time without any notice at the
sole discretion of Advest, Inc. Moreover, there can be no assurance that an
established and liquid trading market will develop or, if developed, will be
sustained following the issuance of the Preferred Securities.
MARKET PRICES. There can be no assurance as to the market prices for
Preferred Securities, or the market prices for Junior Subordinated Debentures
that may be distributed in exchange for Preferred Securities if a liquidation
of the Issuer Trust occurs. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures that a holder of Preferred Securities may receive on
liquidation of the Issuer Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Debentures on
termination of the Issuer Trust, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Junior Subordinated
Debentures and should carefully review all the information regarding the Junior
Subordinated Debentures contained herein. See "Description of Junior
Subordinated Debentures."
SECURITIES ARE NOT INSURED. Neither the Preferred Securities nor the
Junior Subordinated Debentures are insured by the FDIC or by any other
governmental agency or any private insurer.
RISK FACTORS RELATING TO THE COMPANY
STATUS OF THE COMPANY AS A BANK HOLDING COMPANY. The Company is a
legal entity separate and distinct from the Bank. The ability of the Company to
pay the interest on, and principal of, the Junior Subordinated Debentures will
be significantly dependent on the ability of the Bank to pay dividends to the
Company in amounts sufficient to service the Company's debt obligations.
Payment of dividends by the Bank is restricted by various legal and regulatory
limitations. In general, as a Florida state-chartered banking corporation, the
amount of cash dividends that may be paid by the Bank is based on the Bank's
net profits of
16
<PAGE> 20
the current year combined with its net retained profits of the preceding two
years. See "Supervision and Regulation - Bank Regulation -- Dividend
Restrictions and Transfers of Funds".
The right of the Company to participate in the assets of any
subsidiary upon the latter's liquidation, reorganization, or otherwise (and
thus the ability of the holders of Preferred Securities to benefit indirectly
from any such distribution) will be subject to the claims of the subsidiaries'
creditors, which will take priority except to the extent that the Company may
itself be a creditor with a recognized claim. At March 31, 1998, the Company's
subsidiaries had indebtedness and other liabilities of approximately $352.8
million.
The Bank also is subject to restrictions under federal law which limit
the transfer of funds by them to the Company, whether in the form of loans,
extensions of credit, investments, asset purchases, or otherwise. Such
transfers by the Bank to the Company or any nonbank subsidiary of the Company
are limited in amount to 10% of the bank's capital and surplus and, with
respect to the Company and all its nonbank subsidiaries, to an aggregate of 20%
of the bank's capital and surplus. Furthermore, such loans and extensions of
credit are required to be secured in specified amounts. Federal law also
prohibits banks from purchasing "low-quality" assets from affiliates.
GROWTH AND ACQUISITION STRATEGIES; RISK OF EXPANSION. The Company has
pursued, and intends to continue to pursue, a plan to expand its presence along
the west coast of Florida through internal growth, branching, and strategic
acquisitions. The net proceeds from the sale of the Junior Subordinated
Debentures will be used for general corporate purposes, which may include
possible funding of future acquisitions. Acquisitions of branches or
financial institutions such as bank holding companies, banks, thrifts, or
companies deemed closely related to banking, or managing or controlling banks
or thrifts are subject to a number of conditions including availability, price,
and regulatory approvals. There can be no assurance that potential
acquisitions that meet the Company's investment criteria will be available or
that the required regulatory approvals for any such acquisitions will be
obtained. Competition for acquisitions on the west coast of Florida, including
the Company's market area, is highly competitive, and the Company may not be
able to acquire other institutions on attractive terms. The Company currently
has no plans, understandings, arrangements, or agreements, written or oral,
with respect to any specific acquisition prospect. See "Supervision and
Regulation".
In addition, acquisitions may involve a number of special risks,
including adverse short-term effects on the Company's reported operating
results, diversion of management's attention, difficulties in the integration
of acquired operations, dependance on retaining, hiring, and training key
personnel, risks associated with unanticipated problems or legal liabilities,
taxes and accounting issues, and amortization of acquired intangible assets,
some or all of which could have a material adverse effect on the Company's
operations or financial performance. Accordingly, the Company's growth and
financial performance will depend to a significant degree on the ability of
management to manage the growth and expansion resulting from such acquisitions.
The success of the Company's internal growth strategy will depend
primarily on its ability to generate an increasing level of loans and deposits
at acceptable risk levels and terms without significant increases in
noninterest expenses relative to revenues generated. There is no assurance
that the Company will be successful in implementing its internal growth
strategy. The Company's financial performance also depends, in part, on the
Company's ability to manage its various portfolios and the Company's ability to
successfully introduce additional financial products and services. There can
be no assurance that additional financial products and services will be
introduced or, if introduced, that such financial products and services will be
successful. Furthermore, the success of the Company's growth strategy will
depend on maintaining sufficient regulatory capital levels and on economic
conditions.
17
<PAGE> 21
INTEREST RATE RISK. The consolidated net income of the Company
depends to a substantial extent on its net interest income, which reflects the
difference between the interest income the Bank receives from interest-earning
assets (such as loans and investments) and the interest expense on
interest-bearing liabilities (such as deposits, borrowings, and other sources
of funds). Accordingly, like most financial institutions, the operations and
profitability of the Bank are largely impacted by changes in interest rates and
management's ability to control interest rate sensitivity of the Bank's assets
and liabilities and manage its interest rate risk. Although the Bank manages
other risks in the normal course of business, such as credit and liquidity
risks, management considers interest rate risk to be its most significant
market risk and could potentially have the largest material effect on the
Bank's financial condition and results of operations. Interest rates are
highly sensitive to many factors which are beyond the Bank's control,
including, general economic conditions and the policies of various governmental
regulatory authorities. Interest rate risk arises from mismatches (i.e.,
interest rate sensitivity gap) between the dollar amount of repricing or
maturing assets and liabilities, and is measured in terms of the interest rate
sensitivity gap to total assets. More assets repricing or maturing than
liabilities over a given time frame is considered asset-sensitive and is
reflected as a positive gap, and more liabilities repricing or maturing over a
given time frame is considered liability-sensitive and is reflected as a
negative gap. An asset-sensitive position (i.e., positive gap) will generally
enhance earnings in a rising interest rate environment and will negatively
impact earnings in a falling interest rate environment, while a
liability-sensitive position (i.e., negative gap) will generally enhance
earnings in a falling interest rate environment and negatively impact earnings
in a rising interest rate environment. Fluctuations in interest rates are not
predictable or controllable. The Company has attempted to structure its asset
and liability strategies to mitigate the impact on net interest income of
changes in market interest rates. In this regard, at December 31, 1997, the
Company had a one-year cumulative negative gap of 15.16% which suggests that
the Bank's net interest yield could be adversely affected during periods of
rising interest rates. Management, however, believes that its asset liability
strategy reduces the Bank's risk exposure due to interest rate fluctuations.
There can be no assurance that the Bank's strategy will be successful. Despite
implementation of strategies to a better match repricing or maturing assets and
liabilities, the Bank's results of operations will remain subject to the level
and movement of interest rates. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Asset/Liability Management".
ADEQUACY OF ALLOWANCE FOR LOSSES ON LOANS. In originating loans,
there is a substantial likelihood that loan losses will be experienced. The
risk of loss will vary with, among other things, general economic conditions,
the type of loan being made, the creditworthiness of the borrower over the term
of the loan and, in the case of a collateralized loan, the quality of the
collateral for the loan. The Company maintains an allowance for losses on
loans at a level considered adequate by management to cover losses that are
currently anticipated based on, among other things, management's experience,
past loan loss experience, an evaluation of general economic conditions,
information about specific loan relationships, including financial position and
collateral values, regular reviews of delinquencies and loan portfolio quality,
and other factors and estimates that are subject to change over time. Based
upon such factors, management makes various assumptions and judgments about the
ultimate collectability of the loan portfolio and provides an allowance for
potential loan losses based on a percentage of outstanding loan balances and
for specific loans when their ultimate collectability is considered
questionable. Since certain lending activities involve greater risks, the
percentage applied to specific loan types may vary. The amount of future
losses is susceptible to changes in economic, operating, and other conditions
beyond the Company's control, and such losses may exceed the Company's current
allowance for loan losses.
At March 31, 1998, the Company had total non-performing loans of
approximately $848,200, which represented approximately 0.30% of total portfolio
loans. As of that same date, the Company's allowance for losses on loans was
$2,268,000, or approximately 0.98% of total portfolio loans and approximately
267% of total non-performing loans. The Bank actively manages its past due and
non-performing loans in an effort to minimize loan losses
18
<PAGE> 22
and monitors its asset quality to maintain an adequate allowance for losses on
loans. Although management believes that its allowance for losses on loans is
adequate, there can be no assurance that the allowance will be adequate to cover
actual losses. Furthermore, although management uses the best information
available to make determinations with respect to the allowance for losses on
loans, future adjustments may be necessary if economic conditions differ
substantially from the assumptions used or adverse developments arise with
respect to the Bank's non-performing or performing loans. Material additions to
the Bank's allowance for losses on loans would result in a decrease of the
Bank's net income and capital of the Company and the Bank, and could result in
the Bank's inability to pay dividends, among other adverse consequences, which
in turn would adversely affect the Company's ability to pay interest on the
Junior Subordinated Debentures. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Allowance for Loan Losses".
COMPETITION. The banking business is highly competitive and the
profitability of the Company depends principally upon its ability to compete in
its market area in the State of Florida. The Company competes with other
commercial banks, savings and loan associations, credit unions, finance
companies, mutual funds, insurance companies, brokerage and investment banking
firms, asset-based nonbank lenders, and governmental organizations that may
offer subsidized financing at lower rates than those offered by the Company. The
Company not only competes with financial institutions headquartered in the State
of Florida, but also competes with a number of financial institutions
headquartered outside the State of Florida who are active in the state. Many of
those competitors have significantly greater resources (financial and other) and
lending limits than the Company and may offer certain services that the Bank
does not provide at this time. Although the Company has been able to compete
effectively in the past, no assurance can be given that the Company will be able
to compete effectively in the future. Various legislative acts and regulatory
rules and interpretations in recent years have led to increased competition
among financial institutions. There can be no assurance that the United States
Congress will not enact legislation that may further increase competitive
pressures on the Company. Competition from both financial and non-financial
institutions is expected to continue. See "Business - Competition" and
"Supervision and Regulation".
EXPOSURE TO LOCAL ECONOMIC CONDITIONS. The success of the Company and
the Bank are dependent to a certain extent upon general economic conditions and
the geographic markets served by the Bank. Since the Bank's lending activities
are conducted primarily on the west coast of Florida, any adverse economic
changes in this geographic market may have a material adverse effect on the
Company's results of operations, financial condition, and cash flow. The
Bank's market area is particularly dependent on service, retail, manufacturing
businesses, and tourism. The banking industry in Florida is affected by
general economic conditions such as inflation, recession, unemployment, and
other factors beyond the Company's control. Economic recession over a
prolonged period of time in the Bank's geographic markets would likely cause
significant increases in nonperforming assets, thereby causing operating
losses, impairing liquidity, and eroding capital.
DEVELOPMENTS IN TECHNOLOGY. The market for financial services,
including banking services and consumer finance services, is increasingly
affected by advances in technology, including developments in
telecommunications, data processing, computers, automation, Internet-based
banking, telebanking, debit cards, and so-called "smart" cards. The ability of
the Company, including the Bank and the Finance Company, to compete
successfully in its markets may depend on the extent to which it is able to
exploit such technological changes. However, there can be no assurance that
the development of these or any other new technologies, or the Company's
success or failure in anticipating or responding to such developments, will
materially affect the Company's business, financial condition, and operating
results.
YEAR 2000 ISSUES. The "Year 2000" issue is the result of computer
programs and equipment which are dependent on "embedded chip technology" using
two digits rather than four to define the applicable year.
19
<PAGE> 23
Any of the Company's computer programs or equipment that are date dependent may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, a temporary inability to process transactions, send invoices, or
engage in similar normal business activity. Most of the Company's data
processing is provided by third-party vendors who have indicated that their
software, systems, and equipment will be made Year 2000 complaint in a timely
manner. However, the Company has no control over the effective implementation
of such vendors' Year 2000 compliance programs and there can be no assurance
that such vendors will make the necessary modifications, conversions, or
equipment replacements in a timely fashion. The failure of its vendors to be
Year 2000 compliant in a timely fashion could have a material adverse impact on
the Company.
RISKS ASSOCIATED WITH FINANCE COMPANY OPERATIONS. The Company has
recently commenced the operation of the Finance Company, a company which will
provide a full range of consumer financing products and services. The Finance
Company will have the ability to extend financing to individuals and entities
unable to satisfy the Bank's underwriting requirements and loan standards, and
is expected to do so. Since the underwriting criteria for loans originated by
the Finance Company will generally be less stringent than those historically
adhered to by the Bank, such loans also carry a higher level of credit risk
which the Finance Company intends to mitigate through larger and more
frequently incurred late charges and higher interest rates. These portfolios
also will represent an increased risk of loss in the event of adverse economic
developments such as a recession. Although the lending criteria required by
the Finance Company may be less stringent than the Bank, the Finance Company
intends to selectively approve extensions of credit and occasionally package
such credits for sale in the secondary market. The Company believes that an
important determinant of success by the Finance Company will be its familiarity
with, and its evaluation of, the creditworthiness of the borrowers and the
maintenance of an active program to monitor performance and collect payments.
Such loans are inherently more risky than traditional lending and there can be
no assurance that all appropriate underwriting criteria have been identified or
weighted properly in the assessment of credit risk, or will afford adequate
protection against the higher risks inherent in lending to such borrowers.
Customers of consumer finance companies are typically unable or
unwilling to secure credit from traditional lending services. In making a
credit decision, in addition to the size of the obligation, the Finance Company
is expected to consider the Company's prior and current relationship with such
customer and its knowledge of the customer's creditworthiness, and a customer's
income level, type and length of employment, stability of resident, personal
references, purpose of loan, available collateral, overall credit rating and
prior credit history with the Company, the Bank, and the Finance Company. The
Finance Company, however, will be more susceptible to the risk that its
customers will not satisfy their repayment obligations than the Bank which has
more stringent underwriting criteria. Since the Finance Company has only
recently commenced operations, it has no historical results to evaluate to
determine the effectiveness of its underwriting criteria or the profitability
of its operations. There can be no assurance that the Finance Company will not
experience substantial delinquencies or net write-offs adversely affecting the
results of its operations.
SUPERVISION AND REGULATION. Bank holding companies and banks operate
in a highly regulated environment and are subject to the supervision of federal
and state regulatory agencies. As a bank holding company, the Company is
subject to regulation, examination, and supervision by the FRB, and the Bank is
subject to regulation and examination by the FDIC and by the Florida Department
of Banking and Finance (the "Department"). These laws and regulations govern
matters ranging from the regulation of certain debt obligations, changes of
control and mergers, and the maintenance of adequate capital to the general
business operations and financial condition of the Bank, including permissible
types, amounts, and terms of loans and investments, the amount of reserves
against deposits, restrictions on dividends, establishment of branch offices,
and subsidiary investments and activities. These regulations are intended
primarily for the protection of depositors, rather than the benefit of
investors, and they restrict the manner by which the Company and the
20
<PAGE> 24
Bank may conduct their business and obtain financing. The Company and the Bank
are subject to changes in federal and state law, as well as regulation and
governmental policies, income tax laws, and accounting principles. The effects
of any potential changes cannot be predicted but could adversely affect the
business and operations of the Company and the Bank in the future. See
"Supervision and Regulation".
Consumer finance loans are subject to numerous Federal and state
consumer protection laws which impose requirements on the solicitation, making,
enforcement and collection of consumer loans. Such laws, as well as any new
laws or rulings which may be adopted may adversely affect the Finance Company's
ability to collect on the loans or attain the anticipated level of periodic
finance charges and other fees. In addition, failure by the Finance Company to
comply with such requirements could adversely affect its ability to enforce the
loans. Congress and the states may enact new laws and amendments to existing
laws to regulate further the consumer finance industry, or to reduce finance
charges or other fees or charges applicable to the accounts. The potential
effect of any such legislation could be to reduce the total revenues related to
yield on the loans.
DEPENDENCE ON KEY PERSONNEL. The Company and the Bank are dependent
on the services and performance of Gerald L. Anthony, their President Chief
Executive Officer, and certain other executive officers. If the services of
Mr. Anthony or any of such executive officers should become unavailable for any
reason, a failure to replace them promptly could have a material adverse effect
on the Company. The Bank and the Company have entered into employment
agreements with Mr. Anthony and its senior executive officers. See
"Management".
ABI CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware
law pursuant to the filing of a Certificate of Trust with the Delaware
Secretary of State on May 21, 1998. The Issuer Trust will be governed by the
Trust Agreement among the Company, as Depositor, Bankers Trust (Delaware), as
Delaware Trustee, and Bankers Trust Company, as Property Trustee (together with
the Delaware Trustee, the "Issuer Trustees"). Two individuals will be selected
by the holder of the Common Securities to act as administrators with respect to
the Issuer Trust (the "Administrators"). The Company, while holder of the
Common Securities, intends to select two individuals who are employees or
officers of or affiliated with the Company to serve as the Administrators. See
"Description of Preferred Securities -- Miscellaneous". The Issuer 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, convenient or incidental thereto (such as
registering the transfer of the Trust Securities). Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Issuer Trust, and
payments under the Junior Subordinated Debentures will be the sole source of
revenue of the Issuer Trust.
All the Common Securities will initially be owned by the Company. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities, except that upon the occurrence and during
the continuation of a Debenture Event of Default arising as a result of any
failure by the Company to pay any amounts in respect of the Junior Subordinated
Debentures when due, the rights of the 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 Preferred
Securities. See "Description of Preferred Securities - Subordination of Common
Securities". The Company will acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer Trust. The
Issuer Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. the address of the Delaware Trustee is Bankers Trust
(Delaware), 1101 Centre Road, Suite 200, Trust
21
<PAGE> 25
Department, Wilmington, Delaware 19805, telephone number (302) 636-3301. The
address of the Property Trustee, the Guarantee Trustee and the Debenture
Trustee is Bankers Trust Company, Four Albany Street, 4th Floor, New York, New
York 10006, telephone number (212) 250-2500.
USE OF PROCEEDS
All the net proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The proceeds from the sale of the Preferred Securities are expected
to qualify as Tier 1 or core capital with respect to the Company under the
risk-based capital guidelines established by the FRB, however capital received
from the proceeds of the sale of the Preferred Securities cannot constitute more
than 25% of the total Tier 1 capital of the Company (the "25% Capital
Limitation"). Amounts in excess of the 25% Capital Limitation will constitute
Tier 2, or supplementary capital, of the Company. The net proceeds to be
received by the Company from the sale of the Junior Subordinated Debentures will
be used for general corporate purposes which may include, among other things,
contributions to the Bank to support its branch acquisitions, acquisitions of
other financial institutions, acquisitions of other financial services
companies, and for working capital. In addition, a portion of the proceeds is
likely to be contributed to the Bank and to the Finance Company to support
internal growth opportunities. It also is anticipated that a portion of the net
proceeds will be used by the Company to retire all or part of its outstanding
indebtedness under a $5 million Commercial Revolving Line of Credit (the
"Barnett Credit Line") from Nationsbank, N.A. (formerly Barnett Banks, N.A.
South Florida) which was used, in part, to finance the construction of the
Company's new administrative offices. As of May 31, 1998, approximately $2.55
million has been borrowed under this credit facility. Interest on this credit
line is calculated quarterly on either a one or three months LIBOR, plus 175
basis points. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Financial Condition -- Deposit Activities and Other
Sources of Funds -- Borrowings". Pending any such use, the net proceeds may be
invested in short-to-medium-term investments. The precise amounts and timing of
the application of proceeds will depend upon the funding requirements of the
Company and its subsidiaries and the availability of other funds.
MARKET FOR THE PREFERRED SECURITIES
The Preferred Securities are a new issue of securities and prior to
this offering there has been no established public market for the Preferred
Securities. Application has been made seeking approval for quotation of the
Preferred Securities on the Nasdaq Stock Market's National Market under the
symbol ABANP. Although the Underwriter has informed the Company that it
presently intends to make a market in the Preferred Securities, the Underwriter
is not obligated to do so and any such market making may be discontinued at any
time. Accordingly, there is no assurance that an active and liquid trading
market will develop or, if developed, that such a market will be sustained.
The offering price and distribution rate have been determined by negotiations
among representatives of the Company and the Underwriter, and the offering
price of the Preferred Securities may not be indicative of the market price
following the offering. See "Underwriting".
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<PAGE> 26
CAPITALIZATION
The following table sets forth the consolidated capitalization and
certain capital ratios of the Company as of March 31, 1998 and as adjusted to
give effect to the consummation of the offering of the Preferred Securities
offered hereby and the application by the Issuer Trust of the net proceeds
therefrom to the purchase of the Junior Subordinated Debentures and the payment
of the $1,450,000 line of credit from the proceeds.
<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------------------
ACTUAL AS ADJUSTED (1)
------------------ ---------------------
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C>
Line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,450 $ 0
========= =========
Guaranteed preferred beneficial interest in
the Company's subordinated debt (2) . . . . . . . . . . . . . . . . $ 0 $ 15,000
--------- ---------
SHAREHOLDERS' EQUITY:
Common Stock, $1.175 par value, 20,000,000
shares authorized and 4,994,483 shares issued
and outstanding . . . . . . . . . . . . . . . . . . . . . . . . 5,869 5,869
Preferred Stock, 5,000,000 shares, $1.175 par
value authorized; none issued . . . . . . . . . . . . . . . . . 0 0
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . 15,937 15,937
Unrealized gain on investment securities
available for sale, net . . . . . . . . . . . . . . . . . . . . . 34 34
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 4,538 4,538
--------- ---------
Total shareholders' equity . . . . . . . . . . . . . . . . . 26,378 26,378
--------- ---------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . $ 26,378 $ 41,378
========= =========
COMPANY CAPITAL RATIOS:
Equity to total assets . . . . . . . . . . . . . . . . . . . . . . 6.96% 6.72%
Tier 1 risk-based capital ratio (3)(4) . . . . . . . . . . . . . . 10.12% 12.58%
Total risk-based capital (4) . . . . . . . . . . . . . . . . . . . 10.99% 13.65%
Leverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15% 11.64%
</TABLE>
- ---------------
(1) The amount and ratios reflected assumes that the over-allotment option
granted to the Underwriters is not exercised.
(2) Preferred Securities representing beneficial interests in the aggregate
principal amount of $15,000,000 of the _____% Junior Subordinated
Debentures of the Company. The Junior Subordinated Debentures will mature
on ___________, 2028.
(3) FRB guidelines for calculation of Tier 1 capital limit the amount of
cumulative preferred stock which can be included in Tier 1 capital to 25%
of total Tier 1 capital.
(4) Assumes net proceeds of the offering of Preferred Securities are invested
in assets with zero risk weighting under the risk-based capital rules of
the FRB.
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as
a subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated balance sheets of the
Company and appropriate disclosures about the Preferred Securities, the
Guarantee, and the Junior Subordinated Debentures will be included in the notes
to the consolidated financial statements of the Company. For financial
reporting purposes, Distributions on the Preferred Securities will be recorded
as interest expense in the consolidated statements of earnings of the Company.
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<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's principal asset is its ownership of the Bank.
Accordingly, the Company's results of operations is primarily dependent on the
results of the operations of the Bank. The Bank conducts a commercial banking
business which consists of attracting deposits from the general public and
applying those funds to the origination of loans for commercial, consumer, and
real estate loans (including commercial loans collateralized by real estate).
The Bank's profitability depends primarily on net interest income, which is the
difference between interest income generated from interest-earning assets (i.e.,
loans and investments) less the interest expense incurred on interest-bearing
liabilities (i.e., customer deposits and borrowed funds). Net interest income
is affected by the relative amounts of interest-earning assets and
interest-bearing liabilities, and the interest rate paid on these balances.
Net interest income is dependent upon the Bank's interest rate spread,
which is the difference between the average yield earned on its interest-earning
assets and the average rate paid on its interest-bearing liabilities. When
interest-earning assets approximate or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income. The interest
rate spread is impacted by interest rates, deposit flows, and loan demands.
Additionally, and to a lesser extent, the Bank's profitability is affected by
such factors as the level of non-interest income and expenses, the provision for
loan losses, and the effective tax rate. Non-interest income consists primarily
of loan and other fees and income from the sale of loans, servicing rights, and
investment securities. Non-interest expenses consist of compensation and
benefits, occupancy related expenses, deposit insurance premiums paid to the
FDIC, expenses of opening branch offices, and other operating expenses.
The Bank enjoys an excellent reputation in its market areas and strives
to provide quality personalized services to its customers. In recent years the
Company has implemented a growth strategy to expand the geographic market area
of the Bank and to expand the products and services that it offers to its
customers. From the beginning of 1996, through the date of this Prospectus, the
Company has opened 4 new branch offices, acquired Murdock and DesChamps, and
commenced the operations of the Finance Company. The Company also has added
several new products and services. From the beginning of 1996 through March 31,
1998, the Company's assets, deposits, and loan portfolio have increased
$160,186,000, $129,868,000, and $92,449,000, respectively, or 73%, 70%, and 67%,
respectively. However, the opening of new branches, the start-up of new
operations, the development and marketing of new products, and acquisitions
involve substantial upfront costs and expenses which have depressed net yields
and net income of the Company. With respect to the new branches, it is
anticipated that as they gain critical mass they will begin to recover upfront
costs and eventually become profitable, thereby reducing their negative impact
on the Company's profitability. Similarly, the Finance Company only recently
commenced operations and, although it has incurred and is continuing to incur
operating costs, it has not yet begun to generate any significant revenues.
With respect to Murdock, as the Company begins to realize the cost savings from
the acquisition of Murdock, such acquisition is expected to be accretive to the
Company's earnings. Furthermore, the Company believes that the addition of its
commercial lending operations at the Murdock location which had previously been
residential real estate loan oriented provides the Bank with an opportunity to
significantly increase the revenues generated at that location.
The Company intends to continue to expand its presence along the west
coast of Florida through internal growth, branching, and strategic acquisitions.
Accordingly, such growth activities may continue to
24
<PAGE> 28
have an adverse impact on short-term profitability. However, as the Bank grows
in the aggregate, each new branch should have less of a negative impact on the
Company's overall profitability.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations presents a review of the consolidated operating results
and financial condition of the Company for the three-months periods ended March
31, 1998, and 1997 and for the fiscal years ended December 31, 1997, 1996, and
1995. This discussion and analysis is intended to assist in understanding the
financial condition and results of operation of the Company and the Bank. This
section should be read in conjunction with the consolidated financial
statements and the related notes and the other statistical information
contained herein.
RESULTS OF OPERATIONS
COMPARISON OF QUARTERS ENDED MARCH 31, 1998 AND 1997
The Company's net income for the quarter ended March 31, 1998 was
$404,000 or $.08 per share, compared to net income of $333,000 or $0.07 per
share for the same period for 1997, a 21% increase. Earnings were affected by
the costs incurred in the first quarter of 1998 related to the acquisition of
Murdock Florida Bank. Net interest income increased $844,000 to $3,518,000 for
the quarter ended March 31, 1998, over the same quarter in 1997, as a result of
the increase in interest earning assets. Non-interest income increased from
$672,000 for the quarter ended March 31, 1997 to $1,103,000 for the same period
in 1998. The increase in non-interest income is primarily attributable to
increases in service charges on deposits and fees of $99,000, an increase of
$58,000 on the sale of mortgage loans, an increase of $120,000 on gain on sale
of securities, an increase in credit card merchant services of $63,000 and an
increase of $115,000 in other income.
Total general and administrative expense for the quarter ended March
31, 1998, increased $1,246,000 over the same period of 1997. This increase
resulted primarily from increases in other operating expenses related to the
growth in the Company's assets, through the opening of a new branch in Ruskin,
Florida, the acquisition of Murdock Florida Bank, and the start up of the
Finance Company. Specifically, salary expense increased by $300,000, data
processing increased by $193,000, mainly due to the conversion of Murdock
Florida Bank onto the same computer system as the Bank. Other expenses
increased by $687,000 due to continued asset growth, professional fees
associated with the Murdock Florida Bank acquisition and the start-up costs of
the Finance Company. The provision for loan loss expense decreased from
$171,000 for the three month period ended March 31, 1997 to $124,000 for the
same period in 1998. Management evaluates on a monthly basis the adequacy of
the allowance based on its estimates of potential losses in the loan portfolio.
COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1997 AND 1996
For the year ended December 31, 1997, the Company reported net income
of $1,920,000, or $0.38 per share, as compared to net income of $782,000 or
$.17 per share for 1996. From 1996 to 1997, net interest income increased by
$2,248,000 and non-interest income increased by $2,008,000. The increase in
non-interest income from 1996 to 1997 is primarily attributable to increases in
collection of service charges on deposits of $620,000, credit card merchant fee
income of $217,000, and gains on sale of loan servicing of $250,000. These
changes contributing to income were offset by increases in start-up costs in
the form of general and administrative expenses associated with the opening of
a new full service branch in early 1997 and an increase of $406,000 in the
provision for loan losses. Management believes the long term benefits
25
<PAGE> 29
associated with the new branch will provide additional income which will
contribute to the growth and profitability of the Bank.
The Company's total assets at December 31, 1997 were $353,901,000, an
increase of $80,271,000 or approximately 29% from December 31, 1996. The
majority of the increase was invested in loans receivable and in U.S.
government agency securities. Asset growth was funded by an increase in
deposits from the opening of new branches as well as continued growth at
existing branches.
The Company's loans at December 31, 1997 totalled $252,991,000, net, or
approximately 71% of total assets. Of this total, portfolio loans consisted of
$50,104,000 in commercial loans, $61,935,000 in commercial real estate,
$54,243,000 in residential real estate, and $48,827,000 in consumer loans, net
of deferred costs, and allowance for loan losses of $1,704,000. Loans held for
sale were $21,127,000 in residential real estate loans and $18,461,000 in real
estate construction loans. The allowance for loan losses increased from
$1,761,000 at December 31, 1996 to $2,311,000 at December 31, 1997. The
allowance for loan losses represents 1.07% of portfolio loans at December 31,
1997, as compared to 1.00% at December 31, 1996.
COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1996 AND 1995
For the year ended December 31, 1996, the Company reported net income
of $782,000 or $.17 per share, as compared to net income of $850,000 or $.27
per share for 1995. Per share results reflect the effect of the 67% increase
in the weighted average number of shares outstanding resulting from the initial
public offering completed in February 1996. From 1995 to 1996, net interest
income increased by $2,092,000 and non-interest income increased by $62,000.
The increase in non-interest income from 1995 to 1996 is primarily attributable
to increases in collection of service charges on deposits of $155,000, decrease
of gains on loans held for sale of $131,000, and increased gains on sale of
securities of $65,000. In addition, loan loss provision decreased by $187,000
from 1995 to 1996. These changes contributing to income were offset by
increases in start-up costs in the form of general and administrative expenses
associated with two new full service branches which were opened by the Bank in
March and September of 1996.
The Company's total assets at December 31, 1996 were $273,630,000, an
increase of $54,637,000 or approximately 25% from December 31, 1995. This
increase was due primarily to the increase in loans originated by the Bank.
The Company's loans at December 31, 1996 totalled $195,616,000, net, or
approximately 71% of total assets. Of this total, portfolio loans consisted of
$41,382,000 in commercial loans, $40,790,000 in commercial real estate,
$49,575,000 in residential real estate, and $44,691,000 in consumer loans, net
of deferred costs and allowance for loan losses of $1,174,000. Loans held for
sale were $4,335,000 in residential real estate loans and $16,016,000 in real
estate construction loans. The allowance for loan losses increased from
$1,609,000 at December 31, 1995 to $1,761,000 at December 31, 1996. The
allowance for loan losses represented approximately 1.0% of portfolio loans at
December 31, 1996 as compared to 1.16% of portfolio loans at December 31, 1995.
26
<PAGE> 30
NET INTEREST INCOME
Net interest income, which constitutes the principal source of income
for the Company, represents the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
The principal interest-earning assets are loans made to businesses and
individuals. Interest-bearing liabilities primarily consist of time deposits,
interest-paying check accounts ("NOW Accounts"), retail savings deposits, and
money market accounts. Funds deposited to these interest-bearing liabilities
are invested in interest-earning assets. Accordingly, net interest income
depends on the volume of average interest-earning assets and average
interest-bearing liabilities and the interest rates earned or paid on them.
Net interest income for the three month period ended March 31, 1998 was
approximately $3,518,000, an increase of $844,000 over the $2,674,000 of net
interest income recorded for the same three month period in 1997. The primary
reasons for the increase in net interest income was from the growth of loans.
Total interest income increased to $7,101,000 for the three month period ended
March 31, 1998 from the $5,552,000 for the same period in 1997. Interest income
from loans during the three month periods ended March 31, 1998 and 1997
comprised 81.3% and 80.2%, respectively, of the total interest income and earned
an average yield of 8.83% and 8.90%, respectively. Interest income from
investments and federal funds sold earned an average of 6.67% and 6.63% for the
three months ended March 31, 1998 and 1997, respectively. Total interest
expense for the three month period ended March 31, 1998 was $3,583,000, compared
to interest expense of $2,878,000 for the same period in 1997. The average cost
of interest-bearing liabilities for the three months ended March 31, 1998 and
1997 was 4.99% and 5.10%, respectively. The Company has experienced an increase
in the annualized net yield on average earning assets to 4.13% for the three
month period ended March 31, 1998 from 4.02% for the same period in 1997, due
primarily to a reduction in the average rate paid on its certificates of
deposit.
The Company has experienced a steady increase in total income and net
interest income during the past three fiscal years primarily as a result of the
growth of loans. Net interest income for the fiscal year ended December 31,
1997, 1996, and 1995 was $11,714,000, $9,466,000, and $7,374,000, respectively,
on average outstanding balances of interest-earning assets of $294,634,000,
$229,103,000, and $189,058,000, respectively. Total interest income for the
fiscal years ended December 31, 1997, 1996, 1995, was $24,632,000, $19,431,000,
and $15,826,000, respectively. Interest income from loans for the fiscal years
1997, 1996, and 1995 comprised approximately 81.6%, 83.1%, and 82.7%,
respectively, of the total interest income and earned an average yield of 8.89%,
9.05%, and 8.99%, respectively. Interest income from investments and federal
funds sold earned an average yield of 6.70%, 6.47%, and 6.30%, respectively.
Total interest expense for fiscal years 1997, 1996, and 1995 was $12,917,000,
$9,965,000, and $8,452,000, respectively, on outstanding balances of
interest-bearing liabilities of $253,255,000, $196,712,000, and $169,530,000,
respectively. The average cost of interest-bearing liabilities for 1997, 1996,
and 1995 was 5.10%, 5.07%, and 4.99%, respectively. The Company's net yield on
average earning assets was 3.98%, 4.13%, and 3.90% for 1997, 1996, and 1995,
respectively. The decrease in net yield on average earning assets from 1996 to
1997 was due, in part, to a decrease in average yield on interest-earning assets
as a result of interest rate changes in the marketplace.
27
<PAGE> 31
COMPARATIVE AVERAGE BALANCES, INTEREST, AND AVERAGE YIELDS
The following tables show for each category of interest-earning assets
and interest-bearing liabilities, the average amount outstanding, the interest
earned or paid on such amount, and the average rate earned or paid for the
three months ended March 31, 1998 and 1997, and for the years ended December
31, 1997, 1996, and 1995. These tables also show the average rate earned on
all interest-earning assets, the average rate paid on all interest-bearing
liabilities, and the net yield on average interest-earning assets for the same
periods.
<TABLE>
<CAPTION>
MARCH 31,
--------------------------------------------------------------
1998 1997
----------------------------- ------------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE(1) EXPENSE RATE(2) BALANCE(1) EXPENSE RATE(2)
---------- ------- ------- ---------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cash and due from banks . . . . . . . . . . . $ 11,265 $ 8,160
Bank premises and equipment, net . . . . . . 7,010 6,495
Other assets . . . . . . . . . . . . . . . . 5,702 3,869
--------- ---------
Total non-interest earning assets . . 23,977 18,524
--------- ---------
INTEREST-EARNING ASSETS:
Federal funds sold . . . . . . . . . . . . . $ 9,687 $ 143 5.90% $ 11,557 $ 150 5.19%
Investment securities (3) . . . . . . . . . . 67,685 1,148 6.78 54,824 950 6.93
Loans, net (4)(5) . . . . . . . . . . . . . . 263,218 5,810 8.83 200,003 4,452 8.90
--------- -------- ---- --------- -------- ----
Total interest-earning assets/interest
income/average rates earned. . . . . . . $ 340,590 $ 7,101 8.34% $ 266,384 $ 5,552 8.34%
========= ======== ==== ========= ======== ====
Total assets . . . . . . . . . . . . . . . . $ 364,567 $ 284,908
========= =========
Total non-interest bearing liabilities . . . $ 50,528 $ 36,432
--------- ---------
INTEREST-BEARING LIABILITIES:
NOW . . . . . . . . . . . . . . . . . . . . . $ 26,717 $ 163 2.44% $ 22,097 $ 137 2.48%
Money market . . . . . . . . . . . . . . . . 66,284 670 4.04 52,378 585 4.47
Savings . . . . . . . . . . . . . . . . . . . 14,092 78 2.21 12,080 72 2.38
Time . . . . . . . . . . . . . . . . . . . . 156,840 2,329 5.94 126,024 1,886 5.99
--------- -------- ---- -------- -------- ----
Total interest-bearing deposits . . . . 263,933 3,240 4.91 212,579 2,680 5.04
Securities sold under agreement
to repurchase . . . . . . . . . . . . . 19,959 258 5.17 10,660 113 4.24
FHLB advances . . . . . . . . . . . . . . . . 5,491 85 6.19 5,529 85 6.15
--------- -------- ---- -------- -------- ----
Total interest-bearing liabilities/interest
expense/average rate paid . . . . . . . . $ 289,383 $ 3,583 4.95% $228,768 $ 2,878 5.03%
========= ======== ==== ======== ======== ====
Total liabilities . . . . . . . . . . . . . . $ 339,911 $265,200
Shareholders' equity . . . . . . . . . . . . 24,656 19,708
--------- --------
Total liabilities and shareholders' equity . $ 364,567 $284,908
========= ========
Net interest income . . . . . . . . . . . . . $ 3,518 $ 2,674
======== ========
Net yield on average earning assets (6) . . . 4.13% 4.02%
==== ====
</TABLE>
- -------------
(1) Average balances represent the average daily balance year to date.
(2) Annualized for comparability with full year data.
(3) Principally taxable. The yield information does not give effect to
changes in fair value that are reflected as a component of
shareholders' equity.
(4) Non-accruing loans included in computation of average balance.
(5) Interest income on loans includes fees of $112,000 in 1998 and $105,000
in 1997.
(6) The net yield on average earning assets is the net interest income
divided by average interest earning assets.
28
<PAGE> 32
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- --------------------------- -------------------------------
INTEREST INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE(1) EXPENSE RATE BALANCE(1) EXPENSE RATE BALANCE(1) EXPENSE RATE
---------- ------ ---- --------- ------ ---- --------- --------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks . . . . . . $ 8,938 $ 7,989 $ 8,179
Bank premises and equipment, net . 6,869 5,902 3,882
Other assets . . . . . . . . . . . 4,438 2,335 1,570
--------- --------- ---------
Total non-interest
earning assets . . . . . . . 20,245 16,226 13,631
--------- --------- ---------
INTEREST-EARNING ASSETS:
Federal funds sold and other
interest-earning assets . . . . $ 9,459 $ 535 5.66% $ 5,842 $ 336 5.75% $ 5,113 $ 285 5.57%
Investment securities (2) . . . . . 58,119 3,996 6.88 44,898 2,946 6.56 38,271 2,449 6.40
Loans, net (3)(4) . . . . . . . . . 227,055 20,101 8.89 178,363 16,150 9.05 145,674 13,092 8.99
--------- -------- ------ --------- ------- ---- --------- -------- ----
Total interest-earning
assets/interest/
income average rates earned . $ 294,634 $ 24,632 8.36% $ 229,103 $19,431 8.48% $ 189,058 $ 15,826 8.37%
========= ======== ====== ========= ======= ==== ========= ======== ====
Total assets . . . . . . . . . . . $ 314,879 $ 245,329 $ 202,689
========= ========= =========
Total non-interest bearing
liabilities . . . . . . . . . $ 40,351 $ 27,082 $ 20,234
--------- ---------- ---------
INTEREST-BEARING LIABILITIES:
NOW . . . . . . . . . . . . . . . $ 22,901 $ 433 1.89% $ 19,161 $ 368 1.92% $ 15,636 $ 338 2.16%
Money market . . . . . . . . . . . 59,466 2,773 4.66 36,692 1,720 4.69 32,371 1,457 4.50
Savings . . . . . . . . . . . . . . 12,773 304 2.38 12,682 312 2.46 13,193 331 2.51
Time. . . . . . . . . . . . . . . . 137,986 8,395 6.08 117,407 7,075 6.03 99,887 5,962 5.97
--------- ------- ------- --------- ------- ----- --------- -------- ----
Total interest-bearing deposits 233,126 11,905 5.11 185,942 9,475 5.10 161,087 8,088 5.02
Securities sold under agreement
to repurchase . . . . . . . . 14,374 653 4.54 8,628 352 4.08 7,123 293 4.11
Federal funds purchased . . . . . . 77 4 5.19 47 3 6.38 630 37 5.87
FHLB advances . . . . . . . . . . . 5,678 355 6.25 2,095 136 6.49 691 34 4.92
--------- ------- ------ --------- ------- ---- --------- -------- ----
Total interest-bearing liabilities/
interest/expense/average
rate paid . . . . . . . . . . $ 253,255 12,917 5.10% $ 196,712 $ 9,965 5.07% $ 169,530 $ 8,452 4.99%
========= ======== ====== ========= ======= ==== ========= ======== ====
Total liabilities . . . . . . . . . $ 293,606 $ 223,794 $ 189,765
Shareholders' equity . . . . . . . 21,273 21,535 12,924
--------- --------- ---------
Total liabilities and
shareholders' equity . . . . $ 314,879 $ 245,329 $ 202,689
========= ========= =========
Net interest income . . . . . . . . $ 11,715 $ 9,466 $ 7,374
========= ======= ========
Net yield on average earning
assets (5) . . . . . . . . . . 3.98% 4.13% 3.90%
====== ==== ====
</TABLE>
- ------------------
(1) Average balances represent the average daily balance year to date.
(2) Principally taxable. The yield information does not give effect to
changes in fair value that are reflected as a component of shareholders
equity.
(3) Non-accruing loans included in computation of average balance.
(4) Interest income on loans includes fees of $352,000 in 1997, $525,000 in
1996, and $131,000 for 1995.
(5) The net yield on average earning assets is the net interest income
divided by average interest-earning assets.
29
<PAGE> 33
The effect on interest income, interest expense, and net interest
income for the periods indicated, of changes in average balance and rate, is
shown below for the Company. The effect of a change in average balance has been
determined by applying the average rate at the year-end for the earlier period
to the change in average balance at the year-end for the later period. Changes
resulting from average balance/rate variances are included in changes resulting
from volume.
RATE/VOLUME INTEREST ANALYSIS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1997 COMPARED TO 1996 1996 COMPARED TO 1995
INCREASE (DECREASE) DUE TO CHANGE IN: INCREASE (DECREASE) DUE TO CHANGE IN:
------------------------------------- -------------------------------------
AVERAGE AVERAGE TOTAL AVERAGE AVERAGE TOTAL
VOLUME (1) RATE CHANGE VOLUME (1) RATE CHANGE
---------- ---------- --------- ---------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Federal funds sold . . . . . . $ 208 $ (9) $ 199 $ 41 $ 10 $ 51
Investment securities . . . . . 867 184 1,051 424 72 496
Loans, net (2) . . . . . . . . 4,409 (458) 3,951 2,938 120 3,058
------- ------ ------- ------- ------- -------
Total interest income . . . . $ 5,484 $ (283) $ 5,201 $ 3,403 $ 202 $ 3,605
======= ======= ======= ======= ======= =======
INTEREST BEARING LIABILITIES:
NOW . . . . . . . . . . . . . . $ 72 $ (7) $ 65 $ 76 (40) 30
Money market . . . . . . . . . 1,067 (13) 1,054 194 68 262
Savings . . . . . . . . . . . . 2 (10) (8) (13) (6) (19)
Time . . . . . . . . . . . . . 1,240 80 1,320 1,046 67 1,113
-------- ------- ------- ------- ------- -------
Total interest on deposits . 2,381 50 2,431 1,303 83 1,386
Securities sold under agreement to
repurchase and borrow funds . . 427 94 521 100 27 127
-------- ------- ------- ------- ------- -------
Total interest expense . . . 2,808 $ 144 $ 2,952 $ 1,403 $ 110 $ 1,513
======== ======= ======= ======= ======= =======
Change in net interest income 2,676 $ (427) $ 2,249 $ 2,000 $ 92 $ 2,092
======== ======= ======= ======= ======= =======
</TABLE>
- -------------
(1) Non-accruing loans are excluded form the average volumes used in
calculating this table.
(2) Includes loan fees of $352,000 in 1997 and $525,000 in 1996.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three month period ended March
31, 1998, was $124,000, compared to $171,000 recorded during the first three
months of 1997. The decrease is a result of management's estimate of the
required allowance coupled with a reduction of loans written off the first
quarter of 1998 as compared to the first quarter of 1997. The allowance
represented 0.98% and 0.87% of portfolio loans as of March 31, 1998 and 1997,
respectively.
For the years ended December 31, 1997, 1996, and 1995, the loan loss
provisions recorded were in the amounts of $921,000, $515,000, and $702,000,
respectively. The allowance for loan losses represented 1.07%, 1.00%, and
1.16% of portfolio loans as of December 31, 1997, 1996, and 1995, respectively.
30
<PAGE> 34
NON-INTEREST INCOME
For the three month periods ended March 31, 1998, and 1997,
non-interest income totalled $1,103,000 and $672,000, respectively, an increase
of approximately 64%. This increase is primarily attributed to increases in
service charges on deposits and fees of $99,000, an increase of $58,000 on the
sale of mortgage loans, an increase of $120,000 on the gain on sale of
securities, an increase in credit card merchant services of $63,000, and an
increase of $115,000 in other income.
For the years ended December 31, 1997, 1996, and 1995, non-interest
income totalled $4,156,000, $2,148,000 and $2,086,000, respectively, an
increase of approximately 93% from 1996 to 1997, and 3% from 1995 to 1996.
During 1997, service fees on customer deposits contributed $1,812,000, mortgage
banking operations (including brokered loan fees and gains on the sale of loans
and servicing rights) contributed $1,198,000, fees on credit card merchant
services contributed $479,000, gains from sales of securities contributed
$145,000, and other income increased to $337,000. For the year ended 1996,
service fees on customer deposits contributed $1,192,000, mortgage banking
operations contributed $547,000, fees on credit card merchant services
$262,000, and miscellaneous other income $136,000. The increase in
non-interest income in 1997 as compared to 1996 reflects the Company's increase
in its mortgage banking operations through its acquisition of DesChamps in
early 1997, a full year of credit card merchant service fees in 1997 versus a
partial year in 1996, and continued sales of both its mortgage loans held for
sale and the mortgage servicing rights. Non-interest income increased
approximately 3% in 1996 from the amounts generated in 1995 resulting primarily
as the result of increases in collection service charges on deposits of
$154,000, decrease of gains on loans hold for sale of $130,000, and increased
gains on sales of securities of $65,000.
31
<PAGE> 35
The following table summarizes the major components of non-interest
income for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
----------------------- ----------------------------
1998 1997 1997 1996 1995
------- ------ ------ ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Service charges and fees . . . . . . . . . . . . . . $ 421 $ 322 $1,812 $ 1,192 $ 1,038
Gain on sale of mortgage loans . . . . . . . . . . . 62 4 297 191 321
Gain on sale of securities . . . . . . . . . . . . . 122 2 140 107 42
Gain on sale of servicing . . . . . . . . . . . . . . 22 52 573 323 210
Broker loan fees . . . . . . . . . . . . . . . . . . 54 48 327 32 38
Merchant fees . . . . . . . . . . . . . . . . . . . . 187 124 479 262 97
Other income . . . . . . . . . . . . . . . . . . . . 235 120 528 41 340
------- ------ ------ ------- -------
Total . . . . . . . . . . . . . . . . . . . . . $ 1,103 $ 672 $4,156 $ 2,148 $ 2,086
======= ====== ====== ====== =======
</TABLE>
NON-INTEREST EXPENSE
For the three month periods ended March 31, 1998 and 1997,
non-interest expense totalled $3,876,000 and $2,630,000, respectively, an
increase of approximately 47%. This increase is primarily due to increases in
other operating expenses related to the growth in the Company's assets, the
number of Bank branches, the acquisition of Murdock, and the start-up of the
Finance Company. Specifically, salary expense increased by $300,000 and data
processing increased by $193,000, mainly due to the conversion of Murdock
systems onto the same computer system as the Bank. Other expenses increased by
$687,000 due to continued asset growth, professional fees associated with the
Murdock acquisition, and the start-up costs of the Finance Company. Through
the three month periods ending March 31, 1998 and 1997, non-interest expenses
were 4.25% and 3.69%, respectively, of average assets on an annualized basis.
Non-interest expense for the years ended December 31, 1997, 1996, and
1995 totaled $11,912,000, $9,856,000, and $7,437,000, respectively,
substantially all of which was general and administrative expenses. The
increase in non-interest expense in 1997 was due primarily to the opening of
the new full service banking office in Palmetto replacing the prior drive-thru
facility located there, hiring of additional lending staff and support staff
for backroom operations, and the related costs associated with these areas.
The increase in 1996 and 1995 was due to increases in start-up costs in the
form of non-interest expenses associated with two new full service branches
which opened in March and September 1996. For the years ended December 31,
1997, 1996, and 1995, non-interest expenses were 3.78%, 4.02%, and 3.67%,
respectively, of average assets. The largest component, salaries and employee
benefits, amounted to $5,181,000 or 43% in 1997, and $4,361,000 or 44%, in
1996, and $3,165,000 or 43% in 1995, respectively, of total other expenses for
the years ended 1997, 1996, and 1995. Management continuously monitors
non-interest expenses and the efficiency ratio to maintain non-interest
expenses at a level within industry standards.
32
<PAGE> 36
The following table summarizes the various categories of non-interest
expense for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- -------- ------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits . . . . . . . . . . . $ 1,510 $ 1,210 $ 5,181 $ 4,361 $ 3,165
Net occupancy and equipment expense . . . . . . . . . 434 368 1,627 1,184 1,044
Data processing fees . . . . . . . . . . . . . . . . 351 158 917 925 584
Other expenses . . . . . . . . . . . . . . . . . . . 1,581 894 4,187 3,386 2,644
------- ------- ------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . $ 3,876 $ 2,630 $11,912 $ 9,856 $ 7,437
======= ======= ======= ======= =======
</TABLE>
INCOME TAX EXPENSE
For the three month period ended March 31, 1998, an income tax
provision totalling $217,000 was recorded, compared to a $212,000 provision for
the same three month period in 1997. The effective tax rates for those periods
was were 35% and 39%, respectively.
For the year ended December 31, 1997, 1996, and 1995 income tax
provisions totaling $1,117,000, $461,000, and $471,000 were recorded. The
increase in 1997 from 1996, and from 1996 to 1995, are a result of increased
earnings during each succeeding period. The effective tax rate was 37% for the
years ended 1995, 1996, and 1997.
ASSET/LIABILITY MANAGEMENT
One of the Company's primary objectives is to control fluctuations in
net interest income caused by changes in interest rates. To manage interest
rate risk, the Company's Board of Directors has established interest rate risk
policies and procedures which delegate to the Asset/Liability Management
Committee ("ALCO") the responsibility to monitor and report on interest rate
risk, devise strategies to manage interest rate risk, monitor loan origination
and deposit activity, and approve all pricing strategies.
The management of interest rate risk is one of the most significant
factors affecting the Company's ability to achieve future earnings. The
principal measure of the Company's exposure to interest rate risk is the
difference between interest rate sensitive assets and liabilities for the
periods being measured, commonly referred to as the "gap" for such period. An
asset or liability is considered interest rate sensitive if it will reprice or
mature within the time period being analyzed. Controlling the maturity or
repricing of an institution's liabilities and assets in order to minimize
interest rate risk is commonly referred to as gap management. A gap is
considered positive when the amount of interest rate sensitive assets exceed the
amount of interest rate sensitive liabilities. When the opposite occurs, the
gap is considered to be negative. During periods of increasing interest rates,
negative gap would tend to adversely affect income while a positive gap would
tend to result in net interest income. During periods of decreasing interest
rates, the inverse would tend to occur. If the maturities of interest rate
sensitive assets and liabilities were equally flexible and moved concurrently,
the impact of any material or prolonged increase or decrease in interest rates
or net interest income on existing assets or liabilities would be minimal. It
is common to focus on the one year gap, which is the difference between the
dollar amount of assets and the dollar amount of liabilities maturing or
repricing within the next twelve months.
33
<PAGE> 37
ALCO uses an external asset/liability modeling service to analyze the
Company's current financial position and develop strategies prior to
implementation. The systems attempt to simulate the Company's asset and
liability base and project future operating results under several interest rate
and spread assumptions. Management utilizes a simulation model, complete with
rate shock scenarios, to determine the Company's sensitivity to rate changes.
Using historical data and prepayment assumptions, management places each
category of asset and liability in a time frame that it expects its assets and
liabilities to reprice.
Under asset/liability management guidelines, the Company's policy is to
maintain a cumulative one-year gap of no more than 15% of total assets,
primarily by managing the maturity distribution of its investment portfolio and
emphasizing loan originations tied to interest sensitive indices.
Additionally, the Bank has joined the FHLB to enhance its liquidity position
and provide the ability to utilize fixed rate advances to improve the match
between interest-earning assets and interest-bearing liabilities in certain
periods.
The Company's cumulative one year gap at December 31, 1997 was a
negative $53,639,000 (or -15.16%, expressed as a percentage of total assets).
This represents a significant shift from the positive cumulative one year gap at
December 31, 1996 of $7,750,000. This $61,389,000 shift is reflected primarily
in the $32,000,000 increase in certificates of deposits which mature in 1 year
or less and the increase in NOW and money market accounts of $21,000,000.
Management believes its negative gap position is mitigated by its $86,000,000 in
NOW and money market accounts, the majority of which it considers to be core
deposits.
The following table presents the interest rate-sensitive assets and
liabilities of the Bank at December 31, 1997, which are expected to mature or
are subject to repricing in each of the time periods indicated. The tables may
not be indicative of the Company's rate sensitive position at other points in
time. The balances have been derived based on the financial characteristics of
the various assets and liabilities. Adjustable and floating rate assets are
included in the period in which interest rates are next scheduled to adjust
rather than their scheduled maturity dates. Fixed rate loans are shown in the
periods in which they are scheduled to be repaid. Repricing of time deposits
is based on their scheduled maturities. Deposits without a stated maturity are
shown as repricing within ninety (90) days.
34
<PAGE> 38
INTEREST RATE SENSITIVITY ANALYSIS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TERM TO REPRICING
---------------------------------------------------------------------------------
90-180 181 DAYS 1-2 2-3 3-4 4+
90 DAYS DAYS TO 365 DAYS YEARS YEARS YEARS YEARS TOTAL
------- ------- ----------- ------ ------- ------ ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federal funds sold . . . . . . . . . . 5,120 0 0 0 0 0 0 5,120
Interest-bearing due from banks . . . . 3,727 0 0 0 0 0 0 3,727
Fixed rate loans . . . . . . . . . . . 36,047 11,624 6,658 8,505 17,982 21,484 53,661 155,961
Variable rate loans . . . . . . . . . . 55,613 12,293 15,046 4,176 4,848 941 5,819 98,736
Treasuries . . . . . . . . . . . . . . 0 0 1,002 2,032 1,005 0 0 4,039
Governmental agencies . . . . . . . . . 0 500 923 4,082 5,084 7,237 43,926 61,752
State and municipal . . . . . . . . . . 0 0 501 663 0 0 0 1,164
Federal Home Loan Bank Stock . . . . . 1,709 0 0 0 0 0 0 1,709
------- ------- ------- ------- ------- -------- ------- -------
Total interest-earning assets . . . 102,216 24,417 24,130 19,458 28,919 29,662 103,406 331,885
NOW . . . . . . . . . . . . . . . . . . 24,390 0 0 0 0 0 0 24,390
Money market . . . . . . . . . . . . . 61,998 0 0 0 0 0 0 61,996
Savings . . . . . . . . . . . . . . . . 8,543 199 397 645 645 422 2,407 13,258
Certificates/IRA's < $100,000 . . . . . 22,783 17,623 34,506 29,760 9,812 20,941 7,631 143,056
Certificates/IRA's >= $100,000 . . . . 3,916 2,336 5,183 2,976 584 930 0 15,925
Securities sold under agreements
to repurchase . . . . . . . . . . . 17,528 0 0 0 0 0 0 17,528
Federal Home Loan Bank advances . . . . 0 0 5,000 0 0 0 0 5,000
------- ------- ------- ------- ------- -------- ------- -------
Total interest-bearing liabilities . . 139,158 20,158 45,086 33,381 11,041 22,293 10,038 281,155
------- ------- ------- ------- ------- ------- ------- -------
Interest sensitivity gap . . . . . . . (36,942) 4,259 (20,956) (13,923) 17,878 7,369 93,368 51,053
======= ======= ======= ======= ======= ======= ======= =======
Cumulative gap . . . . . . . . . . . . (36,942) (32,683) (53,639) (67,562) (49,684) (42,315) 51,053
======= ======= ======= ======= ======= ======== =======
Cumulative gap ratio . . . . . . . . . 0.73 0.79 0.74 0.72 0.80 0.81 1.18
======= ======= ======= ======= ======== ======= =======
Cumulative gap as a percentage of
total assets . . . . . . . . . . . . -10.44% -9.24% -15.16% -19.09% -14.04% -11.96% 14.43%
======== ======= ======= ======= ====== ======= =======
</TABLE>
FINANCIAL CONDITION
The Company had total assets of $379,179,000 and $353,901,000 at March
31, 1998 and December 31, 1997, respectively, an increase of 7%. Since the last
full quarter prior to its public offering in 1996 through March 31, 1998, the
Company's assets have increased from $218,993,000 to $379,179,000, or 73%, total
deposits have increased from $186,727,000 to $316,595,000, or 70%, and its loan
portfolio has increased from $138,086,000 to $230,535,000, or 67%. This growth
is attributable to opening of new branches and expansion within its market-area,
internal growth at existing branches, expansion into new market areas, and the
introduction of new consumer products and services. Branches opened since
January 1, 1996, have contributed $128,237,000 in deposits. Net income of the
Company has been negatively impacted due to the start-up costs related to the
new branches.
LENDING ACTIVITIES
The Company offers a broad range of personal and business loans and
mortgage loan products. The Company aggressively pursues quality indirect
lending through local automobile dealerships, small to medium sized commercial
business loans, and direct residential loans. Also, through the Bank's
Mortgage Banking Division (the "Mortgage Banking Division"), the Company has
focused efforts on residential loan originations that can be sold in the
secondary market while it retains or packages for sale the servicing rights.
The Mortgage Banking Division maintains relationships with correspondent lenders
throughout the State of Florida, ensuring continued lending efforts without a
concentration in any one area. Management believes this to be a prudent
practice in the mortgage banking area as it minimizes risks associated with the
localized economic downturns. The Mortgage Banking Division originates primary
construction-to-permanent financing loans,
35
<PAGE> 39
which are considered to have less risk of nonpayment than construction only
financings. In addition, with its acquisition in early 1997 of DesChamps, a
Bradenton based residential mortgage brokerage company, the Company also
increased its origination of residential mortgage loans in Manatee and Sarasota
counties.
LOAN PORTFOLIO COMPOSITION. At March 31, 1998 and December 31, 1997,
total loans included portfolio loans of approximately $230.5 million and $213.4
million, net, respectively, and loans held for sale of approximately $49.7
million and $39.6 million, respectively. Total loans represent approximately
74% and 71% of the Company's total assets at March 31, 1998 and December 31,
1997, respectively. Management's objective is to maintain its one-to-four
family residential and construction loans at 30% of total loans. At March 31,
1998, approximately 37%, or $105 million, of its total loans were in one-to-four
family residential and construction loans, including approximately $31 million
in mortgage loans held for sale and $18 million of construction loans held for
sale.
The following table summarizes the composition of Bank's loan
portfolio (excluding loans held for sale) by type of loan on the dates
indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- ---------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------------- --------------- --------------- ------------- -------------- ----------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT %
------- ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TYPE OF LOAN:
Residential mortgage (1) $ 54,642 23.5% $ 54,243 25.2% $49,575 28.1% $46,032 33.1% $ 37,041 34.2% $37,551 41.0%
Commercial (2) . . . 123,200 53.1 112,039 52.1 82,172 46.6 61,064 43.8 46,774 43.2 39,826 43.4
Consumer and other
loans (3) . . . . . 54,274 23.4 48,827 22.7 44,691 25.3 32,169 23.1 24,479 22.6 14,300 15.6
-------- ----- -------- ----- -------- ----- -------- ----- -------- ----- ------- -----
Total loans . . . $232,116 100.0% $215,109 100.0% $176,438 100.0% $139,265 100.0% $108,294 100.0% $91,677 100.0%
===== ===== ===== ===== ===== =====
LESS:
Allowance for loan losses (2,268) (2,311) (1,761) (1,609) (1,374) (1,191)
Net deferred costs (fees) 687 607 588 430 450 (50)
-------- -------- -------- -------- -------- -------
Total loans, net . $230,535 $213,405 $175,265 $138,086 $107,370 $90,437
======== ======== ======== ======== ======== =======
</TABLE>
- ---------
(1) Substantially all single family loans. Real estate construction loans are
included in loans held for sale.
(2) Commercial consists of commercial real estate and other commercial loans.
(3) Includes consumer installment loans.
REAL ESTATE LOANS. This category of loans is comprised of mainly 1 to
4 single family residential loans. The increase in this category of loans
during the period covered by the table, is due to the growing housing market in
Florida, especially the west coast region. The loans held as portfolio loans
are primarily variable rate loans.
COMMERCIAL LOANS. This category of loans is comprised of commercial
and commercial real estate loans to local businesses involved primarily in
light manufacturing, service, retail, and wholesale activities. The growth in
these loans is attributable to the continued economic growth of the region and
the Bank's solicitation efforts in this area.
CONSUMER LOANS. This category of loans is comprised of consumer and
other loans that include automobile, personal lines of credit, boat, and credit
cards. The increase in these loans is primarily due to the Bank's continued
branching activities and solicitation of local automobile dealers.
LOAN MATURITY SCHEDULE. The following table sets forth the maturities
of loans outstanding as of December 31, 1997.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
---------------------------------------------------
DUE AFTER 1
DUE IN 1 YEAR BUT DUE AFTER
YEAR OR LESS BEFORE 5 YEARS 5 YEARS TOTAL
------------ -------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
1-4 Family Residential . . . . . . . . . . . . . . . . . . $12,143 $11,189 $26,335 $49,667
Other loans collateralized by real estate . . . . . . . . . 10,198 24,587 22,874 57,659
Commercial and consumer loans . . . . . . . . . . . . . . . 38,761 56,520 12,502 107,783
------- ------- ------- --------
Total loans (1) . . . . . . . . . . . . . . . . . . . $61,102 $92,296 $61,711 $215,109
======= ======= ======= ========
</TABLE>
- ----------
(1) Excluding deferred fees, allowance for loan losses, and loans held for
sale.
36
<PAGE> 40
SENSITIVITY OF LOANS TO CHANGES IN INTEREST RATES. The following
table sets forth as of March 31, 1998 and December 31, 1997, the dollar amounts
of loans due after one year which had predetermined interest rates and loans
due after one year which had floating or adjustable interest rates.
<TABLE>
<CAPTION>
DOLLAR AMOUNT OF LOANS
----------------------------
DECEMBER 31,
1997
----------------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Type of Interest Rate:
Predetermined rate, maturity greater than one year . . . . $ 102,076
Floating or adjustable rate due after one year . . . . . . 51,931
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 154,007
=========
</TABLE>
LOAN CLASSIFICATION
Management seeks to maintain a level of high quality assets through
conservative underwriting and sound lending practices. Management intends to
follow this policy even though it may result in foregoing the funding of higher
yielding loans. Approximately 44% of the Company's loan portfolio, including
loans held for sale, is collateralized by first liens on primarily
owner-occupied residential homes which have historically carried a relatively
low credit risk. The Company also maintains a commercial real estate portfolio
comprised primarily of owner-occupied commercial businesses.
In an effort to maintain the quality of the loan portfolio, management
seeks to minimize higher risk types of lending and additional precautions have
been taken when such loans are made in order to reduce the Company's risk of
loss. Generally, construction loans present a higher degree of risk to a lender
depending upon, among other things, whether the borrower has permanent financing
at the end of the loan period, whether the project is an income producing
transaction in the interim, and the nature of changing economic conditions
including changing interest rates. While there is no assurance that the Company
will not suffer losses on its construction loans or its commercial real estate
loans, management believes that it has reduced the risks associated therewith
because, among other things, primarily all such loans relate to owner-occupied
projects where the borrower has demonstrated to the Company's management that
its business will generate sufficient income to repay the loan. The Company
primarily enters into agreements with individuals who are familiar to Bank
personnel, are residents of the Company's primary market area and are believed
by management to be good credit risks.
Commercial and financial loans also entail certain risks since they
usually involve large loan balances to single borrowers or a related group of
borrowers, resulting in a more concentrated loan portfolio. Further, since
their repayment is usually dependent upon the successful operation of the
commercial enterprise, they also are subject to adverse conditions in the
economy. Commercial loans are generally riskier than residential mortgages
because they are typically made on the basis of the ability to repay from the
cash flow of a business rather than on the ability of the borrower or
guarantor to repay. Further, the collateral underlying commercial loans may
depreciate over time, and occasionally cannot be appraised with as much
precision as residential real estate, and may fluctuate in value based on the
success of the business.
While there is no assurance that the Company will not suffer any losses
on its construction loans or its commercial real estate loans, management
believes that it has reduced the risks associated therewith because, among other
things, substantially all of such loans relate to owner-occupied projects,
projects where the borrower has received permanent financing commitments from
which the Company will be repaid, and projects
37
<PAGE> 41
where the borrower has demonstrated to management that its business will
generate sufficient income to repay the loan.
In addition to maintaining high quality assets, management attempts to
limit the Company's risk exposure to any one borrower or borrowers with similar
or related entities. As of March 31, 1998, the Bank has extended credit in
excess of $1.5 million to 20 borrowers.
Loan concentrations are defined as amounts loaned to a number of
borrowers engaged in similar activities which would cause them to be similarly
impacted by economic or other conditions. The Company, on a routine basis,
evaluates these concentrations in order to make necessary adjustments in its
lending practices that most clearly reflect the economic times, loan to deposit
ratios, and industry trends. As of March 31, 1998, total loans to any
particular group of customers engaged in similar activities or having similar
economic characteristics did not exceed 10% of total loans.
The Board of Directors of the Company concentrates its efforts and
resources, and that of its senior management and lending officials, on loan
review and underwriting procedures. The Company utilizes the services of an
independent consultant to perform periodic loan documentation and compliance
reviews as well as deposit and operations compliance reviews. Internal controls
include a loan review specialist employed by the Company, who performs on-going
reviews of new and existing loans to monitor documentation and ensure the
existence and valuations of collateral. Senior loan officers have established a
review process with the objective of quickly identifying, evaluating, and
initiating necessary corrective action for substandard loans. The goal of the
loan review process is to address the watch list, and substandard and
non-performing loans as early as possible. Combined, these components are
integral elements of the Company's loan program which has resulted in its loan
portfolio performance to date. Nonetheless, management maintains a cautious
outlook in anticipating the potential effects of uncertain economic conditions
(both locally and nationally) and the possibility of more stringent regulatory
standards.
Loans, including impaired loans, are generally classified by the
Company as non-accrual loans if they are past due as to maturity or payment of
principal or interest for a period of more than ninety days, unless such loans
are well collateralized and in the process of collection. If a loan or a
portion of a loan is classified as doubtful or is partially charged off, the
loan is classified as a non-accrual loan. Loans that are on a current payment
status or past due less than ninety days may also be classified as non-accrual
if repayment in full of principal and/or interest is in doubt. Loans are not
returned to accrual status until the principal and interest payments are brought
current and future payments appear certain.
Interest accrued and unpaid at the time a loan is placed in
non-accrual status is charged against interest income. While a loan is
classified as non-accrual and the future collectability of the recorded loan
balance is doubtful, collections of interest and principal are generally
applied as a reduction to principal outstanding. When the future
collectability of the recorded loan balance is expected, interest income may be
recognized on a cash basis. In the case where a non-accrual loan had been
partially charged off, recognition of interest on a cash basis is limited to
that which would have been recognized on the recorded loan balance at the
contractual interest rate. Cash interest receipts in excess of that amount are
recorded as recoveries to the allowance for loan losses until prior charge-offs
have been fully recovered.
Real estate acquired by the Company as a result of foreclosure or
acceptance of deeds in lieu of foreclosure is classified as foreclosed real
estate. These properties are recorded on the date acquired at the lower of
fair value less estimated selling costs or the recorded investment in the
related loan. If the fair value after deducting the estimated selling costs of
the acquired property is less than the recorded investment in the related loan,
the estimated loss is charged to the allowance for loan losses at that time.
The resulting carrying
38
<PAGE> 42
value established at the date of foreclosure becomes the new cost basis for
subsequent accounting. After foreclosure, if the fair value less estimated
selling costs of the property becomes less than its cost, the deficiency is
charged to the provision for losses on foreclosed real estate. Costs relating to
the developmental improvement of the property are capitalized, whereas those
relating to holding the property for sale are charged as an expense.
As of March 31, 1998, the Company had 20 loans on non-accrual status
totaling $709,000, or 0.3% of total loans, and at December 31, 1997, the Company
had 23 loans on non-accrual status totalling $986,000, or 0.46% of total loans.
At March 31, 1998 and December 31, 1997, the Company had other real estate owned
("OREO") of approximately $364,000, which consisted of four single family
residences.
In addition, the Company performs ongoing reviews of its new and
existing loans to identify, evaluate, and initiate corrective action for
substandard loans. As of March 31, 1998, the Company has identified 104 loans
to 58 borrowers to be monitored on its watch list and substandard list of loans,
representing aggregate borrowings of approximately $5,722,000. Of this
aggregate amount, management has assessed the maximum risk of loss to be
$785,000 based on management's assessment of the ability of such borrowers to
comply with their present loan repayment terms and assuming that the collateral
for such loans must be liquidated. These loans have been considered by
management in its assessment of the allowance for loan losses and none of these
borrowers have failed to comply with their present loan repayment terms.
The following table sets forth certain information, as of the date
indicated, regarding non-accrual loans, restructured loans, and loans 90 days
or more past due.
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
----------- ---------------------------------------------
1998 1997 1996 1995 1994 1993
--------- -------- ------ ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
NON-ACCRUAL LOANS:
Residential mortgage . . . . . . . . $ 487 $ 762 $ 934 $ 130 $ 685 $ 280
Commercial and commercial
real estate . . . . . . . . . 129 153 133 1,017 341 1,137
Consumer . . . . . . . . . . . . . . 93 71 67 96 71 4
-- ------- ------- ------- ------- -------
Total non-accrual loans . . . . . 709 986 1,134 1,243 1,097 1,421
TOTAL NON-PERFORMING LOANS (1) . . . 139 687 229 0 0 0
RESTRUCTURED LOANS . . . . . . . . . 2,211 22 24 0 0 0
----- ------- ------- ------- ------- -------
Total . . . . . . . . . . . . . $ 3,059 $ 1,695 $ 1,387 $ 1,243 $ 1,097 $ 1,421
======= ======= ======= ======= ======= =======
Percentage non-accrual, non performing
and restructured loans
to total loans . . . . . . . 1.3% 0.8% 0.8% 0.9% 1.0% 1.6%
</TABLE>
- ---------
(1) Accruing loans which are contractually past due 90 days or more as to
principal or interest.
ALLOWANCE FOR LOAN LOSSES
In originating loans, the Company recognizes that loan losses will be
experienced and that the risk of loss will vary with, among other things, the
type of loan being made, the creditworthiness of the borrower over the term of
the loan and, in the case of a collateralized loan, the quality of the
collateral for the loan as well as general economic conditions. It is
management's policy to maintain an adequate allowance for loan losses
39
<PAGE> 43
based on, among other things, the Company's historical loan loss experience,
evaluation of economic conditions and regular reviews of delinquencies and loan
portfolio quality.
Management continues to actively monitor the Company's asset quality
and to charge-off loans against the allowance for loan losses when appropriate
or to provide specific loss allowances when necessary. Although management
believes it uses the best information available to make determinations with
respect to the allowance for loan losses, future adjustments may be necessary if
economic conditions differ from the economic conditions in the assumptions used
in making the initial determinations.
The following table sets forth an analysis of the Bank's allowance for
loan losses for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------------- --------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ---------- ---------- --------- --------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Total loans at end of period (1) . . . $ 232,116 $ 201,907 $ 215,109 $176,438 $139,265 $108,294 $ 91,677
========== ========== ========= ======== ======== ======== ========
Allowance at beginning of period . . . $ 2,311 $ 1,716 $ 1,761 $ 1,609 $ 1,374 $ 1,191 $ 1,021
---------- ---------- --------- -------- -------- -------- ---------
Loans charged-off during the period . . (174) (211) (471) (412) (534) (165) (595)
Recoveries of loans previously charged-off 7 31 100 49 67 57 55
---------- ---------- --------- -------- -------- -------- ---------
Net loans charged-off during the period (167) (180) (371) (363) (467) (108) (540)
---------- ---------- --------- -------- -------- -------- ---------
Provisions charged to income . . . . . 124 171 921 515 702 291 710
---------- ---------- --------- -------- -------- -------- ---------
Allowance at end of period . . . . . . $ 2,268 $ 1,752 $ 2,311 $ 1,761 $ 1,609 $ 1,374 $ 1,191
========== ========== ========= ======== ======== ======== ========
Ratio of net charge-offs to
average loans outstanding . . . . . 0.07% 0.09% 0.21% 0.23% 0.37% 0.14% 0.69%
========== ========== ========= ======== ======== ======== ========
Allowance as a percentage of total
portfolio loans . . . . . . . . . . 0.98% 0.87% 1.07% 1.00% 1.16% 1.27% 1.30%
========== ========== ========= ======== ======== ======== ========
Allowance as a percentage of
non-performing and non-accrual
loans . . . . . . . . . . . . . . . 267.5% 255.0% 138.1% 129.2% 129.4% 125.2% 84.8%
</TABLE>
- -----------------
(1) Excludes loans held for sale.
The following table sets forth a breakdown of the allowance for loan
losses by loan category for the periods indicated. Management believes that
the allowance can be allocated by category only on an approximate basis. The
allocation of an allowance to each category is not necessarily indicative of
future losses and does not restrict the use of the allowance to absorb losses
in any other category.
40
<PAGE> 44
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
-------------- -----------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
--------------- --------------- --------------- ---------------- ----------------- ----------------
% OF % OF % OF % OF % OF % OF
LOANS TO LOANS TO LOANS TO LOANS TO LOANS TO LOANS TO
TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential mortgage (1) $ 745 25.3% $ 773 25.2% $ 615 28.1% $ 468 33.1% $ 463 34.2% $ 422 41.0%
Commercial and commercial
real estate . . . . 870 53.0 861 52.1 773 46.6 630 43.8 512 43.2 469 43.4
Consumer loans . . . . 617 21.7 641 22.7 342 25.3 233 23.1 251 22.6 235 15.6
Unallocated . . . . . . 36 0.0 36 0.0 31 0.0 278 0.0 148 0.0 65 0.0
------ ----- ------ ----- ------ ----- ------ ----- ------ ------ ------ -----
Total allowance for
loan losses . . $ 2,268 100.0% $2,311 100.0% $1,761 100.0% $1,609 100.0% $1,374 100.0% $1,191 100.0%
======= ===== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
- ------
(1) No allowance has been allocated to real estate construction since the
amount such loans held in the Bank's loan portfolio at the periods
indicated was not material.
The measurement of impaired loans is based on the fair value of the
loan's collateral. The measurement of non-collateral dependent loans is based
on the present value of expected future cash flows discounted at the historical
effective interest rate. The components for the allowance for loan losses are
as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------------------- --------------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Impaired loans . . . . . . $1,479,000 $ 537,000 $ 246,000 $ 331,400 $ 233,000
Other . . . . . . . . . . . 789,000 1,215,000 2,065,000 1,429,600 1,376,000
---------- ---------- ---------- ---------- ----------
$ 2,268,000 $1,752,000 $2,311,000 $1,761,000 $1,609,000
========== ========== ========== ========== ==========
</TABLE>
INVESTMENT ACTIVITIES
At March 31, 1998 and at December 31, 1997, 1996, and 1995, the
Company's investment portfolio totalled $62,266,000, $68,664,000, $43,509,000,
and $40,423,000, respectively. The investment portfolio consists of U.S.
Treasury and federal agency securities, municipal bonds, and FHLB stock.
Maturities range from three months to fifteen years with a portfolio average
maturity of approximately 5 years.
Funds generated by the Bank as a result of increases in deposits or
decreases in loans which are not immediately used by the Bank are invested in
securities held in its investment portfolio. The investment portfolio is used
as a source of liquidity for the Bank. The investment porfolio is structured
so that it provides for an ongoing source of funds for meeting loan and deposit
demands and for reinvestment opportunities to take advantage of changes in the
interest rate environment.
41
<PAGE> 45
The following table summarizes the Company's investment portfolio as of
the dates indicated.
INVESTMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
------------ -------------------------------------
1998 1997 1996 1995
----------- ---------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE (1):
U.S. Treasury securities . . . . . . . . . . . . . . $ 4,047 $ 4,039 $ 7,425 $ 13,114
U.S. Government Agencies . . . . . . . . . . . . . . 54,217 55,847 22,080 13,120
State and municipal . . . . . . . . . . . . . . . . 1,125 1,164 1,034 1,160
--------- -------- -------- --------
Total debt securities . . . . . . . . . . . . . . 59,389 61,050 30,539 27,394
FHLB stock (restricted) . . . . . . . . . . . . . . 1,709 1,709 1,075 1,066
Mortgage-backed securities . . . . . . . . . . . . . 1,168 5,905 11,895 11,963
--------- -------- -------- --------
Total available for sale (2): . . . . . . . . . . $ 62,266 $ 68,664 $ 43,509 $ 40,423
========= ======== ======== ========
</TABLE>
- --------------
(1) Carried at estimated market value. The Company does not have any
securities being held to maturity.
(2) Cost of such securities ($ in thousands) was $62,211 as of March 31, 1998,
$68,438 as of December 31, 1997, $43,664 as of December 31, 1996, and
$40,138 as of December 31, 1995.
The following table summarizes the Company's securities (excluding the
restricted FHLB Stock and mortgage-backed securities) by maturity and weighted
average yields at March 31, 1998 and December 31, 1997. Yields on tax exempt
securities are stated at their nominal rates and have not been adjusted for tax
rate differences.
<TABLE>
<CAPTION>
AFTER ONE YEAR AFTER FIVE YEARS
BUT WITHIN BUT WITHIN
WITHIN ONE YEAR 5 YEARS 10 YEARS AFTER 10 YEARS TOTAL
---------------- -------------- --------------- ------------- -------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
AT MARCH 31, 1998:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities . . .$ 1,506 5.17% $ 2,016 5.31% $ 525 6.38% $ 0 0.00% $ 4,047 5.39%
U.S. Government agencies . . . 1,496 5.33 15,612 6.29 33,133 6.92 3,976 7.16 54,217 6.71
State and municipals . . . . . 500 5.76 0 0.00 515 8.66 110 5.50 1,125 6.77
-------- ------ -------- ------ -------- ------ ------ ------ ------- ------
$ 3,502 5.32% $ 17,628 6.16% $ 34,173 6.93% $4,086 7.10% $59,389 6.60%
======== ====== ======== ====== ========= ====== ====== ====== ======= ======
AT DECEMBER 31, 1997:
U.S. Treasury securities . . . $ 1,003 5.19% $ 2,516 5.31% $ 520 6.38% $ 0 0.00% $ 4,039 5.40%
U.S. Government agencies . . . 1,096 5.24 18,099 6.35 34,654 6.93 1,998 7.39 55,847 6.71
State and municipals . . . . . 501 5.75 0 0.00 514 8.66 149 5.40 1,164 6.69
------ ------ ------- ------ --------- ------ ------ ------ ------- ------
$ 2,600 5.31% $ 20,615 6.20% $ 35,688 6.94% $2,147 7.21% $61,050 7.18%
====== ====== ======= ====== ========= ====== ====== ====== ======= ======
</TABLE>
DEPOSIT ACTIVITIES AND OTHER SOURCE OF FUNDS
GENERAL. Deposit accounts are the primary source of funds of the
Company for use in lending and other investment purposes. In addition to
deposits, the Company draws funds from interest payments, loan principal
payments, loan and security sales, and funds from operations (including various
types of loan fees). Scheduled loan payments of principal and interest are a
relatively stable source of funds, while deposit inflows and outflows are
significantly influenced by general interest rates and money market conditions.
The Company may use borrowings on a short-term basis, if necessary, to
compensate for reductions in the availability of other sources of funds, or
borrowings may be used on a longer term basis for general business purposes.
42
<PAGE> 46
DEPOSIT ACTIVITIES. Deposits are attracted principally from within the
Company's primary market area through the offering of a broad variety of deposit
instruments, including checking accounts, money market accounts, savings
accounts, certificates of deposit (including jumbo certificates in denominations
of $100,000 or more), and retirement savings plans. Total deposits were
$316,595,000 at March 31, 1998, compared to $302,746,000, $232,433,000, and
$186,727,000 at December 31, 1997, 1996, and 1995, respectively. The
introduction of new products and the continued focus on quality customer service
have contributed to strong deposit growth. The Company continues to develop
consumer and commercial deposit relationships through referrals and additional
contacts within its market area. As of March 31, 1998, and December 31, 1997,
1996, and 1995, jumbo certificates accounted for $33,639,000, $36,170,000,
$24,702,000, and $17,738,000, respectively, of the Company's deposits. The
Company has not aggressively attempted to obtain large denomination, high
interest-bearing certificates except to address a particular funding need. In
an effort to fund the rapid growth of the loan volume originated by the Mortgage
Banking Division during the fourth quarter of 1994, the Bank offered a five year
certificate of deposit and money market product at above market rates at that
time. In addition, in an effort to fund strong loan demand during 1996, the
Company offered a five year certificate and money market product at above market
rates at that time. Although all of such deposits were originated within the
Company's market area and substantially all were not jumbo products, the
regulators required the Company to classify these deposits as brokered deposits
because the rate exceeded 75 basis points over the then existing market rate.
Maturity terms, service fees, and withdrawal penalties are established
by the Company on a periodic basis. The determination of rates and terms is
predicated on funds acquisition and liquidity requirements, rates paid by
competitors, growth goals and federal regulations.
DEPOSIT FLOWS AND AVERAGE BALANCE AND RATES. The following table sets
forth the average balance and weighted average rates for the Bank's categories
of deposits for the period indicated.
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
------------------------ --------------------------------------------------------------------------
1998 1997 1996 1995
------------------------ ----------------------- ------------------------ ------------------------
AVERAGE AVERAGE % OF AVERAGE AVERAGE % OF AVERAGE AVERAGE % OF AVERAGE AVERAGE % OF
BALANCE RATE DEPOSITS BALANCE RATE DEPOSITS BALANCE RATE DEPOSITS BALANCE RATE DEPOSITS
------- ---- -------- ------- ---- -------- ------- ---- -------- ------- ---- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest checking . . . . $47,404 0.00% 15 $38,753 0.00% 14 $25,787 0.00% 12 $20,176 0.00% 11
Interest checking and
Money Market . . . . . . . 93,001 3.58% 30 82,367 3.90% 30 55,853 3.74% 26 48,007 3.74% 26
Savings . . . . . . . . . . . 14,092 2.21% 5 12,773 2.38% 5 12,682 2.46% 6 13,193 2.51% 7
Certificates of deposit . . . 156,840 5.94% 50 137,986 6.08% 51 117,407 6.03% 56 99,887 5.97% 55
-------- --- -------- --- -------- --- -------- ---
Total . . . . . . . . . $311,337 100 $271,879 100 $211,729 100 $181,265 100
======== === ======== === ======== === ======== ===
</TABLE>
CERTIFICATES OF DEPOSIT. At March 31, 1998, certificates of deposit
represented approximately 50.4% of the Company's total deposits, as compared to
50.8% of total deposits at December 31, 1997. The Company does not have a
concentration of deposits from any one source, the loss of which would have a
material adverse effect on the business of the Company. Management believes
that substantially all of the Company's depositors are residents, either full or
part time, in its primary market area.
The following table summarizes the amount of the Company's certificates
of deposit of $100,000 or more by time remaining until maturity at March 31,
1998 and December 31, 1997.
43
<PAGE> 47
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
------------ ---------------
1998 1997
------------ ---------------
MATURITY PERIOD (DOLLARS IN THOUSANDS)
- ---------------
<S> <C> <C>
Less than three months . . . . . . . . . . . . . . . . . . . . . . . . $ 5,136 $ 6,486
Over three months through six months . . . . . . . . . . . . . . . . . 6,012 5,197
Over six months through twelve months . . . . . . . . . . . . . . . . . 8,476 10,208
Over twelve months . . . . . . . . . . . . . . . . . . . . . . . . . . 14,015 14,279
-------- --------
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,639 $ 36,170
======== ========
</TABLE>
DEPOSIT ACTIVITY. The following table sets forth the deposit flows of
the Bank during the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ------------------------------
1997 1996 1995 1998 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net increase before interest credited . . . . . $ 10,706 $ 19,233 $ 58,717 $ 35,966 $ 12,805
Net credited . . . . . . . . . . . . . . . . . 3,143 2,690 11,596 9,740 8,314
-------- -------- -------- -------- --------
Net deposit increase . . . . . . . . . . . $ 13,849 $ 21,923 $ 70,313 $ 45,706 $ 21,119
======== ======== ======== ======== ========
</TABLE>
BORROWINGS. The Company has borrowed funds during the past to fund
short-term cash requirements. None of such funds were used to fund loan
activity. In the future, if there are periods when the supply of funds from
deposits cannot meet the demand for loans, the Company has the ability to seek a
portion of the needed funds through loans (advances) from the FHLB of Atlanta
where the Company currently has a $25,000,000 line of credit. As of March 31,
1998, $5,000,000 had been borrowed on the line.
In addition, the Company has obtained the Barnett Credit Line.
Although this credit facility has been used in part to fund the construction of
the Company's new administrative offices, the Company also has utilized the
credit facility for other general corporate purposes. At March 31, 1998,
approximately $1,450,000 has been drawn on this credit facility. A portion of
the proceeds from this offering may be used to retire the obligations
thereunder. This Barnett Credit Line is collateralized with the all of the
capital stock of the Bank. Interest is calculated quarterly on either a one or
three month LIBOR plus 175 basis points. After two years the loan is converted
into a ten-year term note with a five-year balloon payment.
44
<PAGE> 48
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is defined as the ability of the Company to generate
sufficient cash to fund current loan demand, deposit withdrawals, other cash
demands and disbursement needs, and otherwise to operate on an ongoing basis.
The Company's principal sources of funds are deposits, principal and interest
payments on loans, sale of loans, interest on investments and the sale of
investments. During the three month period ended March 31, 1998, and the fiscal
year ended December 31, 1997, the Company received $22 million and $70.0
million, respectively, from deposit growth, $9 million and $18.0 million,
respectively, from the sale of investments, and $0 and $14.0 million,
respectively, from maturing investments. In addition, the Company also has the
ability to borrow from the FHLB to supplement its liquidity needs. At both
March 31, 1998 and December 31, 1997, the Company had outstanding borrowings of
approximately $5 million under its line of credit with the FHLB. The Company's
liquidity needs and funding are provided through the sale of its equity
securities and through borrowings from a nonaffiliated correspondent bank. As
of March 31, 1998, the Company had drawn approximately $1,450,000 under the $5
million Barnett Credit Line.
At March 31, 1998, shareholders' equity was approximately $26,378,000,
or 6.96% of total assets, as compared to $26,079,000 at December 31, 1997, or
7.37% of total assets. At March 31, 1998 and December 31, 1997, respectively,
the Company's Tier 1 leverage ratio was 6.77% and 7.28%, the Tier 1 risk-based
capital ratio was 9.60% and 8.81%, and the total risk-based capital ratio was
10.48% and 10.67%, all in excess of FDIC guidelines for a "well capitalized"
bank.
At March 31, 1998 and at December 31, 1997, the liquidity ratio of the
Company was 33.37% and 35.79%, respectively, well in excess of regulatory
requirements.
Management believes that there are adequate funding sources to meet
its future liquidity needs for the foreseeable future. Primary among these
funding sources are the repayment of principal and interest on loans, the
renewal of time deposits, and the growth in the deposit base. Management does
not believe that the terms and conditions that will be present at the renewal
of these funding sources will significantly impact the Company's operations,
due to its management of the maturities of its assets and liabilities.
However, in order to finance the continued growth of the Bank at current
levels, additional funds may be necessary in order to provide sufficient
capital to fund loan growth. In this regard, the Company will receive the net
proceeds from this offering which will be available for, among other things,
general corporate purposes, including contributions to the capital of the Bank.
Further, the Company may from time to time consider and evaluate a
variety of additional sources of funds, including other debt financing
vehicles, sales of equity securities, and other financing alternatives. There
can be no assurance that the Company will be able to obtain such additional
financing, if needed, or, if available, that it can be obtained on terms
favorable to the Company.
45
<PAGE> 49
RETURN ON EQUITY AND ASSETS
The following table sets forth certain selected performance ratios of
the Company for the periods indicated:
<TABLE>
<CAPTION>
At March 31, AT DECEMBER 31,
------------ ----------------------------------------
1998(1) 1997 1996 1995
------------ --------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Return on average assets . . . . . . . . . . . . . . . . 0.44% 0.61% 0.32% 0.42%
Return on average equity . . . . . . . . . . . . . . . . 6.53% 9.03% 3.63% 6.58%
Dividend payout ratios (2) (2) (2) (2)
Average equity to average assets . . . . . . . . . . . . 6.76% 6.76% 8.76% 6.38%
</TABLE>
- ---------------
(1) Annualized
(2) The Company has not paid any dividends since its inception.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related financial data presented herein
concerning the Company have been prepared in accordance with generally accepted
accounting principles, which require the measurement of financial position and
operating results in terms of historical dollars, without considering changes
in the relative purchasing power of money over time due to inflation. The
primary impact of inflation on the operations of the Company is reflected in
increased operating costs. Unlike most industrial companies, virtually all of
the assets and liabilities of a financial institution are monetary in nature.
As a result, changes in interest rates have a more significant impact on the
performance of the Company than do the effects of changes in the general rate
of inflation and changes in prices. Interest rates do not necessarily move in
the same direction or in the same magnitude as the prices of goods and
services.
FUTURE ACCOUNTING REQUIREMENTS
The Financial Accounting Standards Board ("FASB") has issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130"). This statement establishes new standards for reporting and
disclosure of comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income is defined as the change in
equity during a period from transactions and other events and circumstances
from non-shareholder sources, such as changes in net unrealized securities
gain. It includes all changes in equity during a period except those resulting
from investments by shareholders and distributions to shareholders. This
statement is effective for the Company's fiscal year ending December 31, 1998.
Application of this statement will not impact amounts previously reported for
net income or affect the comparability of previously issued financial
statements.
The FASB also has issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). This statement establishes standards for the reporting of
financial information from operating segments in annual and interim financial
statements. It requires that financial information be reported on the same
basis that it is reported internally for evaluating segment performance and
deciding how to allocate resources to segments. Because this statement
addresses how supplemental financial information is disclosed in annual and
interim reports, the adoption will have no material impact on the financial
statements. This statement is effective for the Company's fiscal year ending
December 31, 1998.
46
<PAGE> 50
YEAR 2000 COMPLIANCE
The Company utilizes and is dependent upon data processing systems and
software to conduct its business. The data processing systems and software
include those developed and maintained by the Company's third-party data
processing vendor and purchased software which is run on in-house computer
networks. In 1997, the Bank initiated a review and assessment of all hardware
and software to confirm that it will function properly in the year 2000. To
date, those vendors which have been contacted have indicated that their
hardware or software is or will be Year 2000 compliant in time frames that meet
regulatory requirements. The costs associated with the compliance efforts are
not expected to have significant impact on the Company's ongoing results of
operations. See "Risk Factors - Risk Factors Relating to the Company -- Year
2000 Issues".
BUSINESS
GENERAL
The Company, was organized on June 30, 1995, is a bank holding company
registered under the BHCA, and, on December 1, 1995, became the bank holding
company for the Bank. The Bank is the largest independent bank in Manatee
County, Florida, based on 1997 year-end asset size. The Bank, whose capital
stock is wholly-owned by the Company, is the Company's primary subsidiary and
principal asset. Through its ownership of the Bank, the Company is engaged in
a general commercial banking business and its primary source of earnings is
derived from income generated by the Bank. The Company also recently commenced
the operation of the Finance Company. As of March 31, 1998, the Company, on a
consolidated basis, had total assets of approximately $379.2 million, net
portfolio loans of approximately $230.5 million, total deposits of approximately
$316.6 million, and shareholders' equity of approximately $26.4 million.
The Bank, which commenced operations in 1989, is a Florida
state-chartered commercial bank and is not a member of the Federal Reserve
System. The Bank is a general commercial bank which provides a variety of
corporate and personal banking services to consumers and small to mid-sized
businesses in its primary market areas from eight banking offices located in
Manatee, Charlotte, and Hillsborough counties, Florida. The Bank is operated
by local business persons and by experienced bank personnel who are familiar
with the community and are dedicated to providing fast, efficient, and flexible
personalized services to the market area. As a result of the Bank's
community-oriented philosophy to fulfill the banking needs of individuals and
small-to-medium sized businesses which it believed were not being adequately
served by the large banking institutions located in its market area, the Bank
grew rapidly. This growth was financed through a series of equity offerings
purchased by local investors who provided further support for the Bank and
attracted additional new business. In 1994, the Bank commenced the operation
of its Mortgage Banking Division and in late 1995 formed the Company. The
Company was formed as part of an overall strategy to expand the Bank's
operations geographically and to expand its products and services. The Company
acquired the Bank and conducted a public offering of the Company's common
shares in early 1996. Since the public offering, the Company has added 4
branches and expanded its geographic base. In 1997, the Bank's operations were
conducted only through the banking offices located in Manatee County, Florida.
During the first quarter of 1998, the Company expanded its operations in the
State of Florida to Charlotte County through the acquisition of Murdock. On
March 23, 1998, the Company acquired Murdock in a transaction pursuant to which
Murdock was merged into the Bank and its sole office was converted into a
branch of the Bank. As part of the merger transaction, the Bank changed its
name from the "American Bank of Bradenton" to "American Bank". Under the terms
of the merger, 924,024 of the Company's common shares were issued in exchange
for all the outstanding common stock of Murdock (an exchange ratio of 2.4 of
the Company's common shares for each share of Murdock common stock). The Bank
has undertaken further Florida
47
<PAGE> 51
expansion to Hillsborough County through its opening of a full service branch in
Ruskin, Florida during the second quarter of 1998.
In February 1997, the Bank acquired a Bradenton based mortgage
brokerage company, DesChamps, which originates residential mortgage loans with
business operations concentrated in Manatee and Sarasota Counties. DesChamps,
which is now the Retail Residential Lending Division, generated loans in
principal amount of $37,290,000 and $17,367,000, during the fiscal year 1997
and the three month period ended March 31, 1998, respectively.
The business of the Bank consists of attracting deposits from the
general public in areas served by its banking offices and using those deposits,
together with funds derived from other sources, to originate a variety of
commercial, consumer, and residential real estate loans. In addition, the Bank
offers customized accounts receivable financing and billing services, and
credit card merchant services. Such services are provided selectively to
quality credit risks who normally have another relationship or credit history
with the Bank. The Bank presently does not provide fiduciary, trust, or
appraisal services. The Bank, however, has entered into an arrangement with
Advest, Inc. whereby its customers may obtain trust services. The Bank also
has recently begun to offer computer-based home banking services.
The Mortgage Banking Division generates, closes, and services single
family residential home mortgages. Its primary function is to originate fixed
and adjustable rate construction-to-permanent residential real estate mortgage
loans which fit the needs of borrowers for the purchase and construction of
homes. These loans are originated, approved, and serviced from the Bank's
Mortgage Banking Division offices located in Bradenton, Florida. Since the
establishment of the Mortgage Banking Division in 1994, the Bank has
substantially expanded its mortgage banking operations by emphasizing the
origination of construction-to-permanent residential real estate mortgage loans
for sale in the secondary mortgage market while retaining or packaging for sale
the fee generating mortgage servicing rights associated with such loans. A
majority of the mortgage loans made by the Bank since 1994 have been sold in
the secondary market to the Federal National Mortgage Association ("FNMA") and
other institutional investors. Consideration may be given to making such sales
to other governmental agencies in the future. Similarly, most of the
associated mortgage servicing rights also have been sold to third parties.
During the fiscal year ended December 31, 1997, the Mortgage Banking
Division originated approximately $58,452,000 in mortgage loans and sold in the
secondary market approximately $44,113,000 of such loans, including those held
in inventory from the previous year. Servicing fee income was $63,000. During
1997, the Bank also packaged and sold mortgage servicing rights with respect to
approximately $20.6 million in unpaid principal amount FNMA loans originated by
the Bank for approximately $411,000, or a 2.0% premium on the unpaid balance of
the loan portfolio servicing rights sold.
As a result of the successful implementation of its strategies, the
Company has established a special niche in its market area which fills the
needs of a significant segment of that market. The consumer-oriented community
banking focus of the Bank provides customers with locally-based decision makers
who are familiar with their customers, their business environment, and
competitive demands, who are able to quickly evaluate and respond to loan
applications, and who have the ability to craft personalized banking solutions
to the customer's needs without extensive bureaucratic delays. Due to the
growth of the Bank, it is able to extend much larger credits than other
community-based financial institutions.
The revenues of the Bank are primarily derived from interest on, and
fees received in connection with, real estate and other loans, from the sales
of loans, and from interest and dividends from investment securities and short-
term investments. The principal sources of funds for the Bank's lending
activities are its deposits,
48
<PAGE> 52
amortization and prepayment of loans, sales of loans, and the sale of investment
securities. The principal expenses of the Bank are the interest paid on
deposits and operating and general administrative expenses.
As is the case with banking institutions generally, the Bank's
operations are materially and significantly influenced by general economic
conditions and by related monetary and fiscal policies of financial institution
regulatory agencies, including the FRB and the FDIC. Deposit flows and cost of
funds are influenced by interest rates on competing investments and general
market rates of interest. Lending activities are affected by the demand for
financing of real estate and other types of loans, which in turn is affected by
the interest rates at which such financing may be offered and other factors
affecting local demand and availability of funds.
GROWTH STRATEGY
At December 31, 1995, the quarter-end prior to the Company's initial
public offering, and as of March 31, 1998, the Company had total assets of
$219.0 and $379.2 million, respectively, net portfolio loans of $138.1 and
$230.5, respectively, total deposits of $186.7 and $316.6 million,
respectively, and shareholders equity of $14.6 and $26.4 million, respectively.
The Company intends to continue its geographic and product expansion while
maintaining its community banking focus and preserving its market niche. The
Company intends to expand its presence along the west coast of Florida through
internal growth, branching, and strategic acquisitions. The Company will
continue to evaluate and identify areas into which it can further expand its
operations and improve market share and, in the future, may consider further
strategic expansion through branching and/or acquisitions of banks or banking
assets in those geographic areas that management believes will complement its
existing business and would most effectively achieve market penetration within
its primary market areas or expand its existing markets. The Company believes
that it can continue to improve its market share and long-term profitability by
identifying locations for opening or acquiring additional branch offices.
Further, the Company will consider and evaluate potential strategic market
expansion and acquisitions which are brought to its attention to determine
whether such opportunities are in the best interests of the Company and should
be pursued. Management believes that there are branching and acquisition
opportunities available for further expansion of its geographic market both in
the areas existing between its current branches and in other areas along the
west coast of Florida. Although the Company has identified certain financial
institutions that it believes would be suitable acquisition candidates, it does
not have any understandings, arrangements, or agreements, whether written or
oral, with respect to any specific acquisition prospects. Accordingly, there is
no assurance that any acquisition candidate will be interested in such a
transaction, and if not, that the Company will be able to identify any
additional acquisition candidates, or to the extent that suitable acquisition
candidates have been or are identified, that an acquisition will receive
regulatory approval or be consummated.
MARKET AREA
The Company's primary market areas now consists of the Florida counties
of Manatee, Charlotte, and Hillsborough. Six of the eight banking offices of
the Bank currently are located in Manatee County, and its Murdock branch is
located in Charlotte County. These market areas have all experienced
substantial growth during recent decades. This population growth has resulted
in continued construction of residential housing and related commercial support
facilities. While changing conditions involving the infrastructure requirements
of various geographic locations around the country have limited economic growth
and population expansion, management believes that the Bank's primary market
areas have continued to grow because of the ability of Florida, and these areas
in particular, to attract new residents to its favorable year round climate and
its relatively stable economic environment. Although the major economic bases
in the primary market areas are service, retail, and manufacturing, there also
has been a growth of tourism. The Company believes
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that it is situated to take advantage of the expected economic and demographic
growth in the Bank's primary market areas.
MARKET FOR SERVICES
Management believes that the Bank's principal markets are: (i) the
established and expanding commercial and small-to-medium sized businesses
within its primary market areas; (ii) the real estate mortgage market within
the primary market areas for retail lending and throughout Florida and parts of
Georgia for wholesale lending; and (iii) the growing consumer loan market.
Businesses are solicited through the personal efforts of the Bank's
directors and officers. Management believes a locally-based independent bank
is often perceived by the local business community as possessing a clearer
understanding of local commerce and its needs. Consequently, the Company
expects that the Bank will be able to make prudent lending decisions quickly
and more equitably than its competitors without compromising asset quality or
the Bank's profitability.
The Bank focuses on the smaller commercial customer because management
believes that this segment offers the greatest concentration of potential
business. Also, the small to mid-size commercial market segment has
historically shown a willingness to borrow and carry larger balances. Finally,
the Company believes that this market segment tends to be more loyal in its
banking relationships.
LENDING ACTIVITIES
GENERAL. The primary source of income generated by the Bank is from
the interest earned from both the loan and investment portfolios. The Bank
maintains diversification when considering investments and the granting of loan
requests.
Lending activities include commercial and consumer loans, and loans
for residential purposes. Commercial loans are originated for commercial
construction, acquisition, remodeling, and general business purposes. In this
regard, the Bank, among other things, also originates loans to small businesses
in association with the Small Business Administration. In addition, the Bank
offers customized accounts receivable financing and billing services that
enable customers to convert their receivables into cash on a daily basis and
eliminate the expense of billing. Consumer loans include those for the
purchase of automobiles, boats, home improvements and personal investments.
The Bank also offers credit card merchant services which are competitive with
credit card agencies, but provide the merchant with the local attention of the
Bank's representatives. Residential loans include the origination of
conventional mortgages and residential acquisition, development, and
construction loans for the purchase or construction of single-family homes.
The Bank primarily enters into lending arrangements for its portfolio
loans with individuals who are familiar to the Bank and are residents of the
Bank's primary market areas. Emphasis is placed on the borrower's ability to
generate cash flow to supports its debt obligations and other cash related
expenses. The Bank aggressively pursues quality indirect lending through local
automobile dealerships, small to medium sized commercial business loans, and
direct residential loans. Also, through its Mortgage Banking Division, the
Bank has focused efforts on residential loan originations that can be sold in
the secondary market while it retains or packages for sale the servicing
rights. The Mortgage Banking Division of the Bank maintains relationships with
correspondent lenders throughout the State of Florida, ensuring continued
lending efforts without a concentration in any one area. Management believes
this to be a prudent practice in the mortgage banking area as it minimizes
risks associated with the localized economic downturns. The Mortgage Banking
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Division originates primary construction-to-permanent financing loans, which
are considered to have less risk of nonpayment than construction only
financings.
At March 31, 1998, the Bank's total loans included portfolio loans of
approximately $232.1 million, representing approximately 61% of its total
assets. As of such date, the loan portfolio consisted of 53% commercial and
commercial real estate loans, 24% residential real estate mortgage loans, and
23% consumer installment loans. In addition, at March 31, 1998, approximately
$50 million of residential real estate mortgage loans were being held for sale.
COMMERCIAL LENDING. The Bank offers a variety of commercial loan
services including term loans, lines of credit, and equipment receivables
financing. A broad range of short-to-medium term commercial loans, both
collateralized and uncollateralized, are made available to businesses for
working capital (including inventory and receivables), business expansion
(including acquisitions of real estate and improvements), and the purchase of
equipment and machinery. The purpose of a particular loan generally determines
its structure.
The Bank's commercial loans primarily are underwritten in the Bank's
primary market area on the basis of the borrowers' ability to service such debt
from income. As a general practice, the Bank takes as collateral a security
interest in any available real estate, equipment, or other chattel, although
such loans may be made on an uncollateralized basis. Collateralized working
capital loans are primarily collateralized by short term assets whereas term
loans are primarily collateralized by long term assets.
Unlike residential mortgage loans, which generally are made on the
basis of the borrower's ability to make repayment from his employment and other
income and which are collateralized by real property whose value tends to be
easily ascertainable, commercial loans typically are made on the basis of the
borrower's ability to make repayment from the cash flow of their business and
generally are collateralized by business assets, such as accounts receivable,
equipment, and inventory. As a result, the availability of funds for the
repayment of commercial loans may be substantially dependent on the success of
the business itself. Further, the collateral underlying the loans, which may
depreciate over time, occasionally cannot be appraised with as much precision
as residential real estate, and may fluctuate in value based on the success of
the business.
RESIDENTIAL LENDING. A large portion of the Bank's lending activities
consist of the origination of single- family residential mortgage loans
collateralized by owner-occupied property located in the Bank's primary service
areas. The Bank also offers adjustable rate mortgages ("ARMs") and either
retains these ARMs in its portfolio or sells them in the secondary market. The
ability to retain the ARMs in the Bank's portfolio allows the Bank the
opportunity to originate loans to borrowers who may not meet the underwriting
criteria of strict secondary market standards (but are still quality credits).
The Bank offers one-year ARMs with rate adjustments tied to the weekly
average rate of U.S. Treasury securities adjusted to a constant one-year
maturity with specified minimum and maximum interest rate adjustments. The
interest rates on a majority of these mortgages are adjusted yearly with
limitations on upward adjustments of 2% per adjustment period and 6% over the
life of the loan. The Bank also originates 15-year and 30-year fixed-rate
mortgage loans on single-family residential real estate. The Bank generally
charges a higher interest rate if the property is not owner-occupied.
Fixed-rate mortgage loans are generally underwritten according to FNMA or
Federal Home Loan Mortgage Corporation ("FHLMC") guidelines so that the loans
qualify for sale in the secondary market to FNMA or FHLMC. It has been the
Bank's experience that the proportion of fixed-rate and adjustable-rate loan
originations depend in large part on the level of interest rates. As interest
rates fall, there is generally a reduced demand for ARMs and, as interest rates
rise, there is generally an increased demand for ARMs.
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Fixed rate and adjustable rate mortgage loans collateralized by single
family residential real estate generally have been originated in amounts of no
more than 80% of appraised value. The Bank may, however, lend up to 95% of the
value of the property collateralizing the loan, but if such loans are required
to be made in excess of 80% of the value of the property, they must be insured
by private or federally guaranteed mortgage insurance. In the case of mortgage
loans, the Bank will procure mortgagee's title insurance to protect against
defects in its lien on the property which may collateralize the loan. The Bank
in most cases requires title, fire, and extended casualty insurance to be
obtained by the borrower, and, where required by applicable regulations, flood
insurance. The Bank maintains its own errors and omissions insurance policy to
protect against loss in the event of failure of a mortgagor to pay premiums on
fire and other hazard insurance policies. Although the contractual loan
payment period for single-family residential real estate loans is generally for
a 15 to 30 year period, such loans often remain outstanding for significantly
shorter periods than their contractual terms. In addition, the Bank charges no
penalty for prepayment of mortgage loans. Mortgage loans originated by the
Bank customarily include a "due on sale" clause giving the Bank the right to
declare a loan immediately due and payable in the event, among other matters,
that the borrower sells or otherwise disposes of the real property subject to a
mortgage. In general, the Bank enforces due on sale clauses. Borrowers are
typically permitted to refinance or prepay loans at their option without
penalty.
CONSUMER LOANS. Consumer loans made by the Bank have included
automobiles, recreation vehicles, boats, second mortgages, home improvements,
home equity lines of credit, personal (collateralized and uncollateralized),
and deposit account collateralized loans. The Bank's consumer loan portfolio
consists primarily of loans to individuals for various consumer purposes, but
includes some business purpose loans which are payable on an installment basis.
A majority of these loans are for terms of less than 60 months and although
generally collateralized by liens on various personal assets of the borrower
may be made uncollateralized. Consumer loans are made at fixed and variable
interest rates and may be made based on up to a 10 year amortization schedule.
Consumer loans are attractive to the Bank because they typically have
a shorter term and carry higher interest rates than that charged on other types
of loans. Consumer loans, however, do pose additional risks of collectability
when compared to traditional types of loans granted by commercial banks such as
residential mortgage loans. In many instances, the Bank is required to rely on
the borrower's ability to repay since the collateral may be of reduced value at
the time of collection. Accordingly, the initial determination of the
borrower's ability to repay is of primary importance in the underwriting of
consumer loans.
CONSTRUCTION LOANS. The Bank originates residential construction
contractor loans to finance the construction of single-family dwellings. Most
of the residential construction loans are made to individuals who intend to
erect owner-occupied housing on a purchased parcel of real estate. The Bank's
construction loans to individuals typically range in size from $100,000 to
$200,000. Construction loans also are made to contractors to erect
single-family dwellings for resale. Construction loans are generally offered
on the same basis as other residential real estate loans, except that a larger
percentage down payment is typically required.
The Bank may also make residential construction loans to real estate
developers for the acquisition, development, and construction of residential
subdivisions. The Bank has limited involvement with this type of loan. Such
loans may involve additional risk attributable to the fact that funds will be
advanced to fund the project under construction, which is of uncertain value
prior to completion and because it is relatively difficult to evaluate
accurately the total amount of funds required to complete a project.
The Bank finances the construction of individual, owner-occupied
houses on the basis of written underwriting and construction loan management
guidelines. Construction loans are structured either to be converted to
permanent loans with the Bank at the end of the construction phase or to be
paid off upon
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receiving financing from another financial institution. Construction loans on
residential properties are generally made in amounts up to 80% of appraised
value. Construction loans to developers generally have terms of up to 12
months. Loan proceeds on builders' projects are disbursed in increments as
construction progresses and as inspections warrant. The maximum loan amounts
for construction loans are based on the lesser of the current appraisal value or
the purchase price for the property.
Construction loans are generally considered to involve a higher degree
of risk than long-term financing collateralized by improved, occupied real
estate. A lender's risk of loss on a construction loan is dependent largely
upon the accuracy of the initial estimate of the property's value at the
completion of construction and estimated cost (including interest) of
construction. If the estimate of construction cost proves to be inaccurate,
the lender could be required to advance funds beyond the amount originally
committed in order to permit completion of the project. If the estimate of
anticipated value proves to be inaccurate, the lender may have collateral which
has value insufficient to assure full repayment.
Loans collateralized by subdivisions and multi-family residential real
estate generally are larger than loans collateralized by single-family,
owner-occupied housing and also generally involve a greater degree of risk.
Payments on these loans depend to a large degree on the results of operations
and management of the properties, and repayment of such loans may be more
subject to adverse conditions in the real estate market or the economy.
LOAN SOLICITATION AND PROCESSING
Loan originations are derived from a number of sources. Residential
loan originations can be attributed to real estate broker referrals, mortgage
loan brokers, direct solicitation by the Bank's loan officers, present savers
and borrowers, builders, attorneys, walk-in customers and, in some instances,
other lenders. Loan applications, whether originated through the Bank or
through mortgage brokers, are underwritten and closed based on the same
standards, which generally meet FNMA underwriting guidelines. Consumer and
commercial real estate loan originations emanate from many of the same sources.
The legal lending limit of the Bank, as of March 31, 1998, was $6.2 million.
The loan underwriting procedures followed by the Bank conform to
regulatory specifications and are designed to assess with the borrower's
ability to make principal and interest payments and the value of any assets or
property serving as collateral for the loan. Generally, as part of the
process, a bank loan officer meets with each applicant to obtain the
appropriate employment and financial information as well as any other required
loan information. Upon receipt of the borrower's completed loan application,
the Bank then obtains reports with respect to the borrower's credit record, and
orders and reviews an appraisal of any collateral for the loan (prepared for
the Bank through an independent appraiser). The loan information supplied by
the borrower is independently verified. Loan officers or other loan production
personnel in a position to directly benefit monetarily through loan
solicitation fees from individual loan transactions do not have approval
authority. Once a loan application has been completed and all information has
been obtained and verified, the loan request is submitted to a final review
process. As part of the loan approval process, all uncollateralized loans of
$100,000 or more and all collateralized loans of $500,000 or more require
preapproval by the Bank's loan committee, which is currently comprised of five
directors of the Bank and meets on such basis as is deemed necessary to
promptly service loan demand. All loans of $2,000,000 or more require
preapproval by the Bank's Board of Directors, and borrowers requesting amounts
which will result in a loan relationship of $2,000,000 or more also must be
approved by the Board of Directors of the Bank.
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Loan applicants are notified promptly of the decision of the Bank by
telephone and a letter. If the loan is approved, the commitment letter
specifies the terms and conditions of the proposed loan including the amount of
the loan, interest rate, amortization term, a brief description of the required
collateral, and required insurance coverage. Prior to closing any long-term
loan, the borrower must provide proof of fire and casualty insurance on the
property serving as collateral which insurance must be maintained during the
full term of the loan. Title insurance is required on loans collateralized by
real property. Interest rates on committed loans are normally locked in at the
time of application for a 30 to 45 day period. The commitment issued at the
time of approval will be for the time remaining, based on the application date.
MORTGAGE BANKING AND RESIDENTIAL LENDING OPERATIONS
The Company provides mortgage banking services through the Bank's
Mortgage Banking Division and residential lending services from its Retail
Residential Lending Division. The Retail Residential Lending Division was
formed in connection with the acquisition of DesChamps in 1997. Both the
Mortgage Banking Division and the Retail Residential Lending Division were
established for the purpose of increasing the Bank's residential loan portfolio
and resulting interest income, and to increase non-interest income through
sales of loans in the secondary market and the retention or sale of the fee
generating mortgage servicing rights. The Bank also established the Mortgage
Banking Division in an effort to pursue the strong residential mortgage loan
demand that management believes exists outside of its primary market areas in
Florida and established the Retail Residential Lending Division to pursue the
residential mortgage loan demand that the Bank believes exists in its primary
market areas.
The Mortgage Banking Division's lending efforts are widely disbursed
throughout Florida and parts of Georgia and are not reliant on a specific
region. Management considers this to be a prudent business practice by
reducing risks inherent in localized economic down turns or adverse weather
conditions. Such loans are originated through a variety of contacts that the
staff has in the mortgage banking industry throughout Florida and parts of
Georgia. Furthermore, the Mortgage Banking Division is not dependent on any
single source for a significant portion of its volume of loan originations.
This division originates, underwrites, closes, and services a broad line of
residential mortgage loan products, including construction-to-permanent
mortgages, both for the Bank's loan portfolio and for resale in the secondary
mortgage market. The division's primary function is to originate fixed and
adjustable rate construction-to-permanent residential real estate mortgage
loans which fit the needs of borrowers for the purchase and construction of
homes. These loans are originated, approved, and serviced from the Mortgage
Banking Division's offices in Bradenton.
The Mortgage Banking Division has expanded significantly during the
past three years by emphasizing the origination of loans for sale in the
secondary market while retaining or packaging for sale the fee generating
mortgage servicing rights associated with such loans. A majority of the
mortgage loans made by the Bank since 1994 have been sold in the secondary
market to FNMA and other institutional investors. The Bank is an approved
lender and seller servicer for FNMA. Consideration may be given to making
sales of such loans to other governmental agencies in the future.
The construction phase of loans made by the Mortgage Banking Division
has certain risks, including the viability of the contractor, the contractor's
ability to complete the project and changes in interest rates. The goal of the
Mortgage Banking Division is to take a residential mortgage loan from the
construction stage to permanent financing with a fixed interest rate, then to
sell the permanent financing in the secondary market. The sale of the loans in
the secondary market allows the Bank to hedge against the interest rate risks
related to such lending operations. Since the Bank intends to sell these loans
in the secondary market upon
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conversion to permanent financing, these construction loans have been included
in the classification "loans held for sale" on the Company's balance sheet.
In addition to the fees collected at the closing of a loan, the Bank
attempts to sell the loan for a gain at completion of construction. Such a
brokerage arrangement permits the Bank to accommodate its client's demands
while eliminating the interest rate risk for the fixed 15-to-30 year term of
the loan. By selling the mortgage while retaining the servicing rights, the
Bank will receive servicing fees and ancillary fees associated with the
servicing rights. The Bank has elected to group the servicing rights of a
selection of loans together and sell those rights for a lump sum periodically
throughout the year.
In addition to interest earned on loans and fees generated from
mortgage servicing activities, the Bank receives loan origination fees or
"points" for originating loans. Origination fees are calculated as a
percentage of the principal amount of the mortgage loan and are charged to the
borrower for creation of the loan. Loan origination fees are volatile sources
of income, and are affected by the volume and types of loans and commitments
made, competitive conditions in the mortgage markets, and the demand for and
availability of money.
All Mortgage Banking Division loans of $250,000 to $500,000 must be
approved by the President or Senior Vice President of Lending for the Bank.
Such loans of $500,000 to $2,000,000 must be approved by the Bank's loan
committee, and such loans over $2,000,000 must be approved by the Bank's Board
of Directors. The Bank does not intend to significantly increase the size of
its Mortgage Banking Division operations, but intends to continue to originate
a significant volume of loans for sale in the secondary market.
FINANCE COMPANY OPERATIONS
The Company recently has organized a wholly-owned Florida subsidiary
corporation, Freedom Finance Company (referred to herein as the Finance
Company) pursuant to which it has begun to engage in full service consumer
financing. The Finance Company commenced preliminary operations at the end of
March 1998. In order to provide the Finance Company with the funds necessary
to commence full scale operations, the Company made a small capital
contribution and the Bank extended a $2,500,000 loan to the Finance Company
in April 1998. This loan was made on substantially the same terms and
conditions, including interest rates and collateral on loans, as those
prevailing for comparable transactions with unrelated third parties. It is
anticipated that the Finance Company will offer consumer-driven products and
services ranging from mortgages to automobile loans, home equity loans, and
education financing. The Finance Company will have the ability to extend
financing to individuals and entities which may not be able to satisfy the
Bank's underwriting requirements or loan standards. However, the Finance
Company is expected to provide such loans on a selective basis to customers
that the Company believes are quality credits. Such customers will likely
consist of those individuals or entities which have another banking or credit
relationship with the Company or the Bank. Such operations may have greater
risks of collection then those of the Bank. See "Risk Factors -- Risks
Relating to the Company -- Risks Associated with the Finance Company
Operations".
COMPETITION
The Bank encounters strong competition both in making loans and
attracting deposits. The deregulation of the banking industry and the
widespread enactment of state laws which permit multi-bank holding companies as
well as the availability of nationwide interstate banking has created a highly
competitive environment for financial services providers in the Bank's primary
service areas. In one or more aspects of its business, the Bank competes with
other commercial banks, savings and loan associations, credit unions,
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finance companies, mutual funds, insurance companies, brokerage and investment
banking companies, and other financial intermediaries operating in the Bradenton
area and elsewhere. Most of the Bank's primary competitors, some of which are
affiliated with large bank holding companies, have substantially greater
resources and lending limits, and may offer certain services, such as trust
services, that the Bank does not currently provide. In addition, many of the
Company's non-bank competitors are not subject to the same extensive federal
regulations that govern bank holding companies and state chartered and federally
insured banks.
Management believes that the Company and the Bank are well positioned
to compete successfully in their primary market areas, although no assurances
can be given. Competition among financial institutions generally is based upon
interest rates offered on deposit accounts, interest rates charged on loans and
other credit and service charges, the quality of the services rendered, the
convenience of banking facilities, and, in the case of loans to commercial
borrowers, relative lending limits. Management believes that the Bank's
commitment to personal service, innovation, and involvement in the community
and its primary market areas, as well as its commitment to quality, are factors
that contribute to the Bank's competitiveness.
EMPLOYEES
At March 31, 1998, the Company and the Bank together employed 179
full-time and 12 part-time employees. None of these employees are covered by a
collective bargaining agreement and the Company believes that its employee
relations are good.
PROPERTY OF THE COMPANY
The principal executive offices of the Bank are located at 4702 Cortez
Road West, Bradenton, Florida 34210 and consist of approximately 7,700 square
feet on two floors, containing a lobby, executive and customer service offices,
teller stations, safe deposit booths and related non-vault area and vault
operations. A drive through facility and adequate paved parking also is on the
premises. Both the land and all improvements are owned by the Company.
The Bank has eight banking office locations. Four of these offices,
the main office, two full service branches and a drive-thru branch, are in
Bradenton. The Bank also maintains a separate office for its Mortgage Banking
Division in Bradenton. The remaining offices include a full service branch in
Palmetto and in Ellenton, both in Manatee County, the recently acquired branch
in Murdock, Florida which is located in Charlotte County, and the recently
opened branch in Ruskin, Florida located in Hillsborough County. All of the
branch offices and the Mortgage Banking Division offices are owned in fee
simple by the Bank, with the exception of the Murdock branch. In connection
with the acquisition of Murdock, the Bank assumed Murdock's lease. The Murdock
facility, consisting of approximately 10,300 square feet, is subject to a lease
which expires on July 31, 2000, with an option to renew the lease for two
additional five-year terms. The Murdock lease requires rental payments of
$145,000 per year.
The Company recently completed construction of a new 30,000 square
foot administrative office building located on 2 acres of land adjacent to the
Bank's main office at 4502 Cortez Road West, Bradenton, Florida, which office
now serves as the Company's administrative offices. In an effort to centralize
administrative and backroom operations of the Bank, the accounting and
operations department, the Mortgage Banking Division, and the Retail
Residential Lending Divisions have been relocated to the new offices.
Management also anticipates leasing space to other subsidiaries and unrelated
third parties. The Company currently is considering the transfer of this
building improvements, together with the real property to the Bank. The
location which previously housed the Mortgage Banking Division also is owned by
the Bank in fee simple
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and it is anticipated that the Bank will seek approval to convert the vacated
facility into a new full service branch location.
The Finance Company has recently assumed a lease for a 1,700 square
foot facility located in Bradenton from which it will conduct its operations.
The Finance Company lease, which was assumed as of February 10, 1998, expires on
April 1, 2002, with an option to renew the lease for two additional three-year
terms, and requires an annual rent of $16,662 payable in monthly installments.
Management believes that each of its banking locations provide
sufficient parking for its customers as well as visibility from highly
travelled thoroughfares.
LEGAL PROCEEDINGS
The Company and the Bank are periodically parties to or otherwise
involved in legal proceedings arising in the normal course of business, such as
claims to enforce liens, foreclose on loan defaults, claims involving the
making and servicing of real property loans, and other issues incident to the
Bank's business. Management does not believe that there is any proceeding
threatened or pending against the Company or the Bank which, if determined
adversely, would have a material effect on the business or financial position
of the Company or the Bank.
RECENT ACQUISITION
In accordance with the terms of an Agreement and Plan of Merger, dated
September 23, 1997, as amended on October 8, 1997 (the "Merger Agreement"), the
Company acquired Murdock and merged it with and into the Bank. Pursuant to the
merger, stockholders of Murdock received 2.4 common shares of the Company for
each share of Murdock common stock held by them. In lieu of the issuance of
fractional common shares, cash was paid for each such fraction. In addition,
the 14,000 outstanding options to acquire Murdock common stock existing prior
to the merger have been converted at the same exchange ratio into options to
acquire the Company's common shares, with the exercise prices adjusted
accordingly. The Company's consolidated financial statements and related
management's discussion and analysis of financial condition and results of
operations included herein give retroactive effect to the Merger using the
pooling of interests method of accounting.
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MANAGEMENT
DIRECTOR AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, their ages, and
positions with the Company and the Bank are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY AND BANK
- ---- --- ------------------------------
<S> <C> <C>
J. Gary Russ . . . . . . . . . . 48 Chairman of the Board, Director
Gerald L. Anthony . . . . . . . . 55 President, Chief Executive Officer, and Director(1)
Samuel S. Aidlin . . . . . . . . 84 Director
Philip W. Coon . . . . . . . . . 44 Senior Vice President, Mortgage Banking Division of Bank
Andrea M. Franco . . . . . . . . 49 Vice President, Credit Cards and Marketing for Bank
Stuart M. Gregory . . . . . . . . 39 Senior Vice President, Retail Residential Lending for Bank
Ronald L. Larson . . . . . . . . 54 Director
Michael R. Lewis . . . . . . . . 50 Senior Vice President, Consumer Lending for Bank
David R. Mady . . . . . . . . . . 36 Vice President, Secondary Market Manager for Bank
Timothy I. Miller . . . . . . . . 58 Director
Dan E. Molter . . . . . . . . . . 46 Director
Kirk D. Moudy . . . . . . . . . . 46 Director
John S. Nash . . . . . . . . . . 38 Senior Vice President, Senior Commercial Lending Officer for Bank
Lindell W. Orr . . . . . . . . . 54 Director
Lynn B. Powell, III . . . . . . . 61 Director
Walter L. Presha . . . . . . . . 52 Director
R. Jay Taylor . . . . . . . . . . 42 Director
Brian M. Watterson . . . . . . . 40 Senior Vice President, Chief Financial Officer, Secretary, and Chief
Operations Officer (1)
Edward D. Wyke . . . . . . . . . 77 Director
</TABLE>
- -------------
(1) Each of these individuals serve both the Company and the Bank in the same
capacities as indicated above.
All directors of the Company hold office until the earlier of the next
annual meeting of the shareholders and until their successors have been duly
elected and qualified, or their death, resignation, or removal. Officers of
the Company and the Bank are elected annually by the respective Boards of
Directors of the Company and the Bank to hold office until the earlier of their
death, resignation, or removal.
Set forth below is a description of the business experience during the
past five years or more and other biographical information for the directors
and executive officers identified above.
J. GARY RUSS has been Chairman of the Board of Directors of the
Company and the Bank since 1995, and has been a director of the Bank since
1989. Mr. Russ is the principal owner of Russ Citrus Groves, Ltd. and a 50%
partner of Edwards-Russ Groves.
GERALD L. ANTHONY has been President, Chief Executive Officer, and a
director of the Company since its inception in 1995, and has also served in
these three capacities for the Bank since 1989.
SAMUEL S. AIDLIN has served as a director of the Company since 1995,
and as a director of the Bank since 1989. Mr. Aidlin was the Chairman of the
Board and Chief Executive Officer of Aidlin Automation Corporation and
Automated Recycling, Inc. from 1945 until its sale in 1997.
58
<PAGE> 62
PHILIP W. COON has been the Senior Vice President, Mortgage Banking
Division of the Bank since the start-up of the Bank's mortgage banking
operations in 1994. Mr. Coon has engaged in mortgage banking activities for
the past 17 years. He was employed as Director of Residential Lending with Key
Florida Bank, Bradenton from 1991 to 1994, as Regional Manager with Southeast
Mortgage Company, Tampa from 1985 to 1991, as a Branch Manager with Collateral
Mortgage Company from 1984 to 1985, and as a Loan Officer with Cameron-Brown
Company in Charlotte, North Carolina and Tampa, Florida from 1979 to 1984.
ANDREA M. FRANCO has been the Vice President, Credit Cards and
Marketing of the Bank since 1994. Previously, Ms. Franco was the District
Manager of Financial Alliance, an independent sales organization for credit
card sales, from 1992 to 1994; Vice President of Credit Card operations for
First Florida Banks from 1982 to 1992; credit card sales for Telecredit, a
credit card processing company, from 1978 to 1982; and credit card processing
for First National Bank of Ft. Myers, Florida from 1972 to 1978.
STUART M. GREGORY has been the Senior Vice President, Residential Real
Estate since January 1997. Previously, Mr. Gregory was the founder and
President of DesChamps & Gregory Mortgage Company, Inc. ("DesChamps"), a
Bradenton based mortgage brokerage company originating residential mortgage
loans, from 1991 until its acquisition by the Bank in 1997. Prior to forming
DesChamps, Mr. Gregory served for eleven years as a Senior Account Executive
for Republic Mortgage Insurance Company and General Electric Capital
Corporation in the State of Florida. Both companies specialize in high loan to
value risk insurance for residential mortgage loans. Mr. Gregory is a graduate
of Florida Southern College with a bachelor of science degree in Sports
Administration.
RONALD L. LARSON has been a director of the Company since 1995, and a
director of the Bank since 1989. He currently serves as the President and
owner of Ron Larson & Associates, Inc., a consulting engineer company which was
organized in early 1997. From 1994 to 1997, Mr. Larson was the Senior Project
Manager at Larson Engineering, a division of Kimley Horn & Associates, Inc.
Prior to 1994, Mr. Larson was the President and owner of Larson Engineering.
MICHAEL R. LEWIS has been the Senior Vice President, Consumer Lending
of the Bank since 1993. Previously, Mr. Lewis has worked as Vice President,
Consumer Lending, at Barnett Bank, Tallahassee (1969-75), as Vice President,
Consumer Lending at Southeast Bank, Bradenton (1975-80), as Business Manager
for Sands Toyota, Bradenton (1980-83), as a Consumer Lending Officer at Island
Bank, Bradenton (1983-84), and a Director of Indirect Consumer Lending at
Barnett Bank, Bradenton (1985-93). Mr. Lewis attended Florida State University
and is a graduate of the University of Oklahoma Banking School.
DAVID R. MADY has been the Vice President, Secondary Market Manager of
the Bank since the start-up of the Bank's mortgage banking operations in 1994.
Previously, Mr. Mady served as the Secondary Market Manager for Key Florida
Bank, F.S.B., from 1991 to 1994. From 1990 to 1991, he was employed by First
Union Bank of Florida in charge of its residential lending operations for
Hillsborough County, Florida, and from 1984 to 1989, Mr. Mady served as a loan
officer for Southeast Mortgage. Mr. Mady is a graduate of the University of
Connecticut with a bachelor of science degree in finance.
TIMOTHY I. MILLER has been a director of the Company since 1995, and a
director of the Bank since 1989. Mr. Miller is the President of Miller
Insulation & Acoustics, Inc.
DAN E. MOLTER has been a director of the Company since 1995, and a
director of the Bank since 1992. Mr. Molter has been the President and Chief
Executive Officer of Molter Termite & Pest Control since 1976 and since 1994 he
also has served as President and Chief Executive Officer of Extend-O Drain
Inc., a product manufacturer.
59
<PAGE> 63
KIRK D. MOUDY has been a director of the Company since 1995, and a
director of the Bank since 1994. Mr. Moudy has been the President and Chief
Executive Officer of General Mortgage Corporation of America, a mortgage
broker, since 1985.
JOHN S. NASH has been the Senior Vice President, Senior Commercial
Lending Officer of the Bank since 1989. Prior to joining the Bank, from 1982
to 1989, Mr. Nash worked with Barnett Bank in Bradenton as a consumer lending
officer, corporate lending officer and finally as Branch Manager/Commercial
Officer in the downtown office of Barnett Bank in Bradenton. He holds a
bachelor of science degree in business administration, conferred by the
University of Florida in 1981.
LINDELL W. ORR has been a director of the Company and the Bank since
1995. Mr. Orr has been the President and Chief Executive Officer of Columbia
Blake Medical Center since 1995. From 1993 to 1995 he was the Chief Executive
Officer of the Columbia Ed White Hospital and from 1988 to 1993 Mr. Orr was the
District Vice President for Hospital Corporation of America responsible for the
management of 14 hospitals located in Florida, Georgia, and South Carolina.
LYNN B. POWELL, III has been a director of the Company since 1995, and
a director of the Bank since 1989. Mr. Powell has been the owner of Powell
Motor Company since 1992. Prior to 1992, Mr. Powell was the owner of Cortez
Motors.
WALTER L. PRESHA has been a director of the Company since 1995, and a
director of the Bank since 1989. Mr. Presha is the Executive Director for
Manatee County Rural Health Services.
R. JAY TAYLOR has been a director of the Company and the Bank since
1995. Mr. Taylor is the President of Taylor & Fulton Packing Company.
BRIAN M. WATTERSON has been the Chief Operations Officer of the
Company and the Bank since January 15, 1996, and in February 1997 Mr. Watterson
took over the responsibilities of the Chief Financial Officer of the Company
and the Bank, and was named Senior Vice President of both. Previously, Mr.
Watterson served as a Senior Vice President and Chief Financial Officer at
SouthTrust Bank, Sarasota, Florida from August 1995 to December 1995. Senior
Vice President and Chief Financial Officer at Key Florida Bank, F.S.B.,
Bradenton, Florida from September 1992 to July 1995; insurance agent for
Nationwide Insurance and Metropolitan Insurance Company, Bradenton from
September 1990 to February 1992; Vice President, Chief Financial Officer, and
Cashier at Southtrust Bank, Sarasota, Florida from February 1992 to August
1992; and as Assistant Controller at Barnett Bank of Manatee County, N.A. from
July 1979 to May 1990. Mr. Watterson graduated in 1981 from the University of
South Florida with a degree in Business Administration. He also graduated form
the Florida School of Banking at the University of Florida, Gainesville,
Florida in 1985 and from the B.A.I. School for Banking Administration at the
University of Wisconsin, Madison, Wisconsin in 1989.
EDWARD D. WYKE has been a director of the Company since 1995 and a
director of the Bank since 1989. Mr. Wyke is a retired architect.
There is no family relationship between any of the Company's directors
or executive officers.
COMPENSATION OF DIRECTORS
Directors of the Company also are directors of the Bank, and receive
$600 per month for their services to the Company and the Bank regardless of the
number of regular or special Board meetings they
60
<PAGE> 64
attend and an additional $100 for each committee meeting that they attend. The
Chairman of the Board of the Company also is the Chairman of the Board for the
Bank, and receives $1500 per month for services rendered to the Company and the
Bank. The Company also has approved and adopted the "American Bancshares, Inc.
Directors' Non-qualified Stock Option Plan of 1997" (the "1997 Plan"). No
options have been granted under the 1997 Plan.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the cash and
non-cash compensation paid to or accrued for the past three fiscal years for
the Company's Chief Executive Officer, and all other executive officers whose
total compensation exceeded $100,000 for fiscal year 1997 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------
NAME AND FISCAL ---------------------- STOCK OPTION ALL OTHER
PRINCIPAL OCCUPATION YEAR SALARY BONUS AWARDS COMPENSATION(1)
-------------------- ------ -------- ------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Gerald L. Anthony, 1997 $136,267 $10,000 6,000 $ 880
President and Chief 1996 135,000 0 0 992
Executive Officer 1995 98,333 8,000 0 917
Phillip W. Coon 1997 $ 84,133 $53,156 (2) 0 $ 880
Senior Vice President 1996 85,228 40,226 (2) 0 851
Mortgage Banking 1995 72,950 17,378 (2) 0 67,424
Division
Stuart M. Gregory 1997 (3) $ 67,968 $53,467 (4) 0 $ 301
Senior Vice President
Retail Residential Lending
David R. Mady 1997 $ 66,506 $53,156 (2) 0 $ 834
Vice President, Secondary 1996 66,770 40,226 (2) 0 588
Market Manager 1995 54,662 17,378 (2) 0 67,105
John S. Nash 1997 $ 86,204 $10,000 5,000 $ 577
Senior Vice President 1996 78,140 0 0 537
Senior Commercial 1995 68,916 0 0 589
Lending Officer
</TABLE>
- -----------
(1) Represents Company contributions to its 401(k) Plan on behalf of each
employee for the periods indicated, except that the amounts for
Messrs. Coon and Mady in 1995 also includes $66,500 paid to each of
them for the release of their employment contracts entered into in May
1994.
(2) Commission paid based on aggregate principal balance of wholesale
residential mortgage loans originated by Mortgage Banking Division and
sold in the secondary mortgage market.
(3) Mr. Gregory was not an employee of the Company in 1995 or 1996.
(4) Includes commission of $12,536 and a bonuses of $40,931.
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<PAGE> 65
SHARE OPTIONS GRANTED
As of December 31, 1997, the Company did not have any long term
incentive plans nor had it awarded any restricted shares. The table set forth
below contains information with respect to the award of stock options during
the fiscal year ended December 31, 1997 to the Named Executive Officers covered
by the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR OPTION TERMS (2)
UNDERLYING EMPLOYEES PRICE OR EXPIRATION ---------------------------
NAME OPTIONS GRANTED IN 1997(1) BASE PRICE DATE 5% 10%
---- --------------- ----------- ---------- ---- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Anthony 6,000 (3) 20.0% $8.375 4/15/07 $31,602 $80,086
John S. Nash 5,000 (3) 16.7% $8.375 4/15/07 $26,335 $66,738
</TABLE>
- ---------
(1) Employees of the Company were granted an aggregate of 30,000 options during
1997 under the Company's 1996 Incentive Stock Option Plan. Options were not
granted under any other plans.
(2) Amounts reflect hypothetical gains that could be achieved for the options
if they are exercised at the end of the option term. Those gains are based
on assumed rates of stock appreciation of 5% and 10% compounded annually
from the date the option was granted through the expiration date.
(3) These options were granted on April 15, 1997 under the Company's 1996
Incentive Stock Option Plan. These options vest and become exercisable in
three equal installments beginning on April 15, 1998.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
No stock options or SARs were exercised in 1997 by the Named Executive
Officers covered by the Summary Compensation Table. The following table sets
forth, for each of the Named Executive Officers in the Summary Compensation
Table above who holds stock options, the number of the stock options held at
December 31, 1997, and the realizable gain of the stock options that are
"in-the-money". The in-the-money stock options and SARs are those with
exercise prices that are below the year-end stock price because the stock value
grew since the date of the grant.
FISCAL YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED ------------------------- ---------------------------
ON VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME EXERCISED(#) REALIZED (#) (#) ($) ($)
- -------- ----------- -------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Anthony 0 0 0 6,000 $ 0 $26,250
John S. Nash 0 0 0 5,000 $ 0 $21,875
</TABLE>
- -----------
(1) Based upon the closing price of the Common Shares as quoted by the
Nasdaq Stock Market, Inc. on December 30, 1997 of $12.75 per share.
62
<PAGE> 66
EMPLOYMENT AGREEMENTS
The Company, believing that the continued services and contributions
of certain key executives is critical to the Company's prospects and in the
best interest of its shareholders, has caused the Bank to enter into employment
agreements with such executives under the terms and conditions set forth below.
The Bank has entered into an employment agreement with Gerald L.
Anthony, President and Chief Executive Officer of the Company and the Bank,
which commenced on December 1, 1995. The agreement is for a period of three
years, at the end of which, the agreement is automatically renewed on an annual
basis. The agreement provides, among other things, for an initial annual base
salary of $135,000, which salary is subject to annual increases and the payment
of performance bonuses if the Bank achieves certain target goals with respect
to projected yearly returns on assets. Under the agreement, Mr. Anthony is
provided an automobile, and also is eligible to receive any other benefits
provided to the Bank's executive employees. The agreement further provides
that if Mr. Anthony's employment is terminated within 120 days after a "change
of control" (as that term is defined therein) for other than "just cause" (as
that term is defined therein), Mr. Anthony shall be entitled to an amount equal
to twice his then existing annual compensation, as well as his salary through
the last day of the month of termination. In the event that Mr. Anthony is not
terminated within 120 days after the "change of control", but Mr. Anthony or the
Board of Directors opposes the "change of control" within 120 days after its
occurrence, and Mr. Anthony ends his employment within that time period, Mr.
Anthony is entitled to receive an amount equal to twice his then existing annual
salary.
The Bank also has entered into employment agreements with John S. Nash
and Brian M. Watterson, which commenced in January 1996 and in February 1998,
respectively. Each agreement is for a three year term, with automatic annual
renewals thereafter. The initial annual base salaries for Messrs. Nash and
Watterson, as provided under their respective agreements, are $78,000 and
$90,000, respectively. These base salaries are subject to merit-based
increases, which are determined by the President and Chief Executive Officer,
as well as increases based on the amount of any annual increase in the Consumer
Price Index. These officers may also earn a performance bonus based upon
achievement of quantified goals related to the Bank's profitability. Messrs.
Nash and Watterson also are eligible to receive any other benefits provided to
the Bank's executive employees. Each of the agreements with Messrs. Nash and
Watterson provide that the employee will be entitled to twelve months salary as
severance pay should the employee be involuntarily terminated within 90 days
prior to or after a "change of control" (as that term is defined therein).
In connection with its acquisition of DesChamps, the Bank entered into
an employment agreement with Mr. Stuart M. Gregory which commenced on January
22, 1997. Mr. Gregory's employment agreement has a three year term, with
automatic renewals thereafter. The base salary under the agreement is $75,000
per year and provided for an initial bonus of $25,000. In addition to base
salary, Mr. Gregory's employment agreement provides for the payment of a
quarterly bonus based on the aggregate principal balance of all residential
loans for which Mr. Gregory and the loan officers under his supervision
generate and close during the quarter. The employment agreement also provides
for the payment of a commission as incentive compensation based on the
achievement of quantifiable goals related to residential loan productivity.
The Board of Directors of the Bank entered into employment agreements
with Mr. Philip W. Coon and Mr. David Mady, of the Mortgage Banking Division,
effective June 30, 1995. Each contract is for a four year term, with automatic
annual renewal thereafter. These agreements provide for a base salary which is
subject to annual increases based upon annual increases, if any, in the
Consumer Price Index. The initial base salaries were $79,233 and $59,850 for
Messrs. Coon and Mady, respectively. In addition to the base salary, the
contracts provide for a commission based on the aggregate principal balance of
wholesale residential mortgage loans originated by the Mortgage Banking
Division and sold in the secondary market. The
63
<PAGE> 67
agreements further entitle the officers to earn incentive compensation based
upon achievement of quantified goals related to the Bank's profitability.
In connection with the recent settlement of a lawsuit against the
Company by James J. Bazata, a former employee who had alleged various
employment discrimination claims under the Americans with Disabilities Act, the
Company has agreed to enter into a consulting agreement with Mr. Bazata's
corporation until December 31, 2000, and has further agreed to pay his
attorneys' fees and costs in connection with the lawsuit; the total payments
due through the end of 2000 under the consulting agreement, and fees and costs,
aggregate $525,000.
401(k) PLAN
The Board of Directors of the Bank approved a tax-deferred investment
plan (the "401(k) Plan") effective January 1, 1994. All employees who work at
least 250 hours per quarter and are at least 21 years of age may elect to
participate in the 401(k) Plan once he or she has completed one year of
service. Under the 401(k) Plan, a participating employee is given an
opportunity to make an elective contribution under a salary deferral savings
arrangement of up to a maximum of 15% of the participant's pre-tax compensation
up to a maximum of $9,500 per year. Each such contribution is fully vested in
the participant. In addition, the Bank may make a separate matching
contribution in an amount based upon its annual profitability, which will be
allocated proportionally among the participants and vested on a five year
schedule. In 1997, Messrs. Anthony, Coon, Gregory, Mady, and Nash participated
in the 401(k) Plan at 6.9%, 6.9%, 2.7%, 7.5%, and 6.0% of their salaries
respectively.
STOCK OPTION PLANS
Employee Incentive Share Option Plan. American Bancshares, Inc. and
American Bank of Bradenton Incentive Stock Option Plan of 1996 ("ISO Plan")
approved by the Company's shareholders in 1996 provides options ("ISO options")
which may be granted by the Company's Board of Directors to key employees to
purchase up to an aggregate of 150,000 Common Shares. Key employees eligible
to participate in the ISO Plan include any person in the regular full-time
employment of the Company or any subsidiary as an executive or non-executive
officer thereof, who in the opinion of the Board of Directors, is or is
expected to be primarily responsible for the management, growth, or protection
of some part or all of the business of the Company.
The ISO Plan is designed to qualify as an "incentive stock option
plan" under Section 422 of the Code and it is administered by the Company's
Board of Directors. The Board of Directors has the power and authority to
administer, construe, and interpret the ISO Plan and to make rules for carrying
it out and to make changes in such rules. Except for options granted to 10%
shareholders, the exercise price of the options must not be less than the fair
market value of the Company's Common Shares on the date of grant, as determined
by the Board of Directors in conformity with Treasury regulations. In order for
options granted to shareholders possessing more than 10% of the combined voting
power of all classes of the Company's stock (or persons to whom such ownership
is attributed on the date of the grant) to constitute incentive stock options,
the exercise price of such options must not be less than 110% of such fair
market value and must be exercised within five years from the date of grant.
Options must be granted within ten years from the date of adoption of the ISO
Plan. Except for ISO options granted to 10% shareholders, each option granted
under the ISO Plan must be exercised, if at all, within ten years from the date
of grant, unless by their terms the options expire sooner. Options are
cancelled three months following termination of employment, unless termination
is due to death or permanent disability. The Board of Directors may impose
additional or more restricted terms and conditions on any ISO option.
64
<PAGE> 68
Thirty thousand (30,000) options were granted under the ISO Plan
during 1997 at an option price of $8.375 per share. Of this amount, 11,000
options were granted to the Named Executive Officers covered by the Summary
Compensation Table and 18,500 options were issued to all the executive officers
as a group (including the Named Executive Officers' options). In connection
with the acquisition of Murdock, options to purchase 14,000 shares of Murdock
common stock were converted into options to purchase 33,600 shares of the
Company's common stock. Such options were issued under the ISO Plan. None of
these options has been exercised.
Non-Employee Director Share Option Plan. The 1997 Plan approved by the
Company's shareholders in 1997 provides options which may be granted to
directors of the Company or any subsidiary who are otherwise not employees of
the Company or any subsidiary to purchase up to an aggregate of 75,000 Common
Shares. The 1997 Plan is administered by the Board of Directors and, as such,
the Board of Directors has the power and authority to construe, interpret, and
make rules for carrying out its administration of the 1997 Plan, and to make
changes to such rules. The exercise price of the options granted under the 1997
Plan shall not be less then the fair market value of the Common Shares on the
date of the grant. Fair market value for purposes of the 1997 Plan is the
closing sales price of the Common Shares as reported on Nasdaq National Market
on the date of grant. Each option granted under the 1997 Plan must be
exercised, if at all, within the earlier of ten years from the date of grant or
immediately after termination of the director for cause, unless by their terms
the options expire sooner. The exercise price may be paid in cash, by delivery
of Common Shares, or a combination thereof as the Board of Directors may
determine. Options granted under the 1997 Plan are not transferrable except by
laws of descent and distribution. Unless sooner terminated, the 1997 Plan will
expire on its tenth anniversary. The termination of the 1997 Plan, however,
will not affect the validity of options granted prior to the date of its
termination. To date, no options have been granted under the 1997 Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has had, and expects to have in the future, various loans and
other banking transactions in the ordinary course of business with the
directors, executive officers, and principal shareholders of the Bank and the
Company (or associate of such person). All such transactions: (i) have been
and will be made in the ordinary course of business; (ii) have been and will be
made on substantially the same terms, including interest rates and collateral
on loans, as those prevailing at the time for comparable transactions with
unrelated persons; and (iii) in the opinion of management do not and will not
involve more than the normal risk of collectability or present other
unfavorable features. At December 31, 1997 and 1996, the total dollar amount
of extensions of credit to directors and executive officers identified above
and principal shareholders of the Company identified below, and their
associates (excluding extensions of credit which were less than $60,000 to any
one such person and their associates) were $6,164,157 and $5,963,312,
respectively, which represented approximately 28.5% and 32.0%, respectively, of
total shareholders' equity.
Outside of normal customer relationships, none of the directors or
officers of the Company, and no shareholder holding over 5% of the Company's
Common Stock and no corporations or firms with which such persons or entities
are associated, currently maintains or has maintained since the beginning of
the last fiscal year, any significant business or personal relationship with
the Company or the Bank, other than such as arises by virtue of such position
or ownership interest in the Company or the Bank.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's outstanding common shares as of March 31,
1998, by: (i) each director and each executive officer
65
<PAGE> 69
of the Company named in the Summary Compensation Table and (ii) all directors
and executive officers of the Company as a group. No person is known to the
Company to be the beneficial owner of more than 5% of the outstanding common
shares. Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all of the common shares owned by
them.
<TABLE>
<CAPTION>
CURRENT BENEFICIAL OWNERSHIP
---------------------------------
NUMBER PERCENT
NAME OF BENEFICIAL OWNER OF SHARES (1) OF CLASS(2)
- ------------------------- ------------- -----------
<S> <C> <C>
DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
J. Gary Russ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192,708 (3) 3.86%
Samuel S. Aidlin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,408 (4) 1.35%
Gerald L. Anthony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,479 (5) *
Philip W. Coon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- *
Ronald L. Larson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,624 (6) *
David R. Mady . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 *
Timothy I. Miller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,229 (7) *
Dan E. Molter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,335 *
Kirk D. Moudy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,600 (8) *
John S. Nash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,036 (9) *
Lindell W. Orr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 *
Lynn B. Powell, III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 *
Walter L. Presha . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,947 *
R. Jay Taylor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- *
Edward D. Wyke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,632 *
All directors and executive officers as a group (19 persons) . . . . . . . . . 487,650 (10) 9.75%
</TABLE>
- --------------
*Less than 1%
(1) In accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange Act of 1934, a person is deemed to be the beneficial owner of
a security for purposes of the rule if he or she has or shares voting
power or dispositive power with respect to such security or has the
right to acquire such ownership within sixty days. As used herein,
"voting power" is the power to vote or direct the voting of shares,
and "dispositive power" is the power to dispose or direct the
disposition of shares, irrespective of any economic interest therein.
(2) In calculating the percentage ownership for a given individual or
group, the number of common shares outstanding includes unissued
shares subject to options, warrants, rights or conversion privileges
exercisable within sixty days held by such individual or group, but
are not deemed outstanding by any other person or group.
(3) Includes 57,479 common shares owned by Russ Citrus Groves, Ltd., a
Florida limited partnership in which Mr. Russ is the general partner;
and, by reason of his position, Mr. Russ may be deemed the beneficial
owner of these shares.
(4) Includes 441 common shares held by Mr. Aidlin's spouse.
(5) Includes 2,000 common shares which may be acquired pursuant to
currently exercisable warrants, 4,500 shares held by Mr. Anthony's
spouse, and 920 shares held by his stepson.
(6) Includes 26,624 common shares held by Mr. Larson's spouse as to which
Mr. Larson disclaims beneficial ownership.
(7) Includes 2,205 common shares held by Mr. Miller's spouse as to which
Mr. Miller disclaims beneficial ownership.
(8) Includes 23,600 common shares held by General Mortgage Corporation,
of which Mr. Moudy is President and majority owner; and, by reason of
his position and ownership, Mr. Moudy may be deemed the beneficial
owner of these shares.
(9) Includes 1,667 common shares which may be acquired pursuant to
currently exercisable options and 150 shares held in trust for Mr.
Nash's daughter.
(10) Includes 6,667 common shares which may be acquired pursuant to
currently exercisable options.
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DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trust will issue the Preferred Securities and the Common Securities. The
Preferred Securities will represent preferred undivided beneficial interests in
the assets of the Issuer Trust and the holders thereof will be entitled to a
preference in certain circumstances with respect to Distributions and amounts
payable on redemption or liquidation over the Common Securities, as well as
other benefits as described in the Trust Agreement. This summary of certain
provisions of the Preferred Securities and the Trust Agreement does not purport
to be complete and is subject to, and qualified in its entirety by reference
to, all the provisions of the Trust Agreement, including the definitions
therein of certain terms. Wherever particular defined terms of the Trust
Agreement are referred to herein, such defined terms are incorporated herein by
reference. A copy of the form of the Trust Agreement is available upon request
from the Issuer Trustees.
GENERAL
The Preferred Securities will be limited to $15,000,000 aggregate
Liquidation Amount outstanding (which amount may be increased by up to
$2,250,000 aggregate Liquidation Amount of Preferred Securities for exercise of
the Underwriter's over-allotment option). See "Underwriting." The Preferred
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." The Junior Subordinated Debentures will be registered in the name
of the Issuer Trust and held by the Property Trustee in trust for the benefit
of the holders of the Preferred Securities and Common Securities. The Guarantee
will be a guarantee on a subordinated basis with respect to the Preferred
Securities but will not guarantee payment of Distributions or amounts payable
on redemption or liquidation of such Preferred Securities when the Issuer Trust
does not have funds on hand available to make such payments. See "Description
of Guarantee."
DISTRIBUTIONS
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and Distributions on each
Preferred Security will be payable at the annual rate of ____% of the stated
Liquidation Amount of $10, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each a "Distribution Date"), to the
holders of the Preferred Securities at the close of business on 15th day of
March, June, September and December (whether or not a Business Day (as defined
below)) next preceding the relevant Distribution Date. Distributions on the
Preferred Securities will be cumulative. Distributions will accumulate from
_________, 1998. The first Distribution Date for the Preferred Securities will
be _________, 1998. The amount of Distributions payable for any period less
than a full Distribution period will be computed on the basis of a 360-day year
of twelve 30-day months and the actual days elapsed in a partial month in such
period. Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four. If any date on which
Distributions are payable on the Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (without any additional Distributions or
other payment in respect of any such delay), with the same force and effect as
if made on the date such payment was originally payable, except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day.
So long as no Debenture Event of Default has occurred and is
continuing, the Company has the right under the Junior Subordinated 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 20 consecutive quarterly
periods with
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respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. Distributions to which holders of the Preferred Securities are entitled
will accumulate additional Distributions thereon at the rate of ____%
per annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company 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 Company's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of an exchange or
conversion of any class or series of the Company's capital stock (or any
capital stock of a subsidiary of the Company) for any class or series of the
Company's capital stock or of any class or series of the Company's indebtedness
for any class or series of the Company's capital stock, (c) 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, (d) any declaration of a dividend in connection with
any stockholder's rights plan, or the issuance of rights, stock or other
property under any stockholder's rights plan, or the redemption or repurchase
of rights pursuant thereto, or (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock). Prior to the termination of any such Extension Period, the Company may
further defer the payment of interest, provided that no Extension Period may
exceed 20 consecutive quarterly periods or 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, the Company may elect to begin
a new Extension Period. No interest shall be due and payable during an
Extension Period, except at the end thereof. The Company must give the Issuer
Trustees notice of its election of such Extension Period at least one Business
Day prior to the earlier of (i) the date the Distributions on the Preferred
Securities would have been payable but for the election to begin such Extension
Period and (ii) the date the Property Trustee is required to give notice to
holders of the Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Property Trustee will give notice of the
Company's election to begin a new Extension Period to the holders of the
Preferred Securities. Subject to the foregoing, there is no limitation on the
number of times that the Company may elect to begin an Extension Period. See
"Description of Junior Subordinated Debentures - Option To Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences - Interest Income
and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders
of the Preferred Securities will be limited to payments under the Junior
Subordinated Debentures in which the Issuer Trust will invest the proceeds from
the issuance and sale of the Preferred Securities. See "Description of Junior
Subordinated
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Debentures." If the Company does not make payments on the Junior
Subordinated Debentures, the Issuer Trust may not have funds available to pay
Distributions or other amounts payable on the Preferred Securities. The payment
of Distributions and other amounts payable on the Preferred Securities (if and
to the extent the Issuer Trust has funds legally available for and cash
sufficient to make such payments) is guaranteed by the Company on a limited
basis as set forth herein under "Description of Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Preferred Securities, upon not less than 30 nor more
than 60 days' notice, at a redemption price (the "Redemption Price") equal to
the aggregate Liquidation Amount of such Preferred Securities plus accumulated
but unpaid Distributions thereon to the date of redemption (the "Redemption
Date") and the related amount of the premium, if any, paid by the Company upon
the concurrent redemption of such Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures - Redemption." If less than all
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 Preferred Securities and the Common Securities.
The amount of premium, if any, paid by the Company upon the redemption of all
or any part of the Junior Subordinated Debentures to be repaid or redeemed on a
Redemption Date shall be allocated to the redemption pro rata of the Preferred
Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures
(i) on or after ________, 2003, in whole at any time or in part from time to
time, or (ii) in whole, but not in part, at any time within 90 days following
the occurrence and during the continuation of a Tax Event, Investment Company
Event, or Capital Treatment Event (each as defined below), in each case subject
to possible regulatory approval. See " - Liquidation Distribution Upon
Dissolution." A redemption of the Junior Subordinated Debentures would cause a
mandatory redemption of a Like Amount of the Preferred Securities and Common
Securities at the Redemption Price.
"25% Capital Limitation" means the limitation imposed by the FRB that
the proceeds of certain qualifying securities like the Trust Securities will
qualify as Tier 1 capital of the Company up to an amount not to exceed, when
taken together with all cumulative preferred stock of the Company, if any, 25%
of the Company's Tier 1 capital, or any subsequent limitation adopted by the
FRB.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the State of Florida or the City of New
York are authorized or required by law or executive order to remain closed, or
(iii) a day on which the Property Trustee's Corporate Trust Office or the
Corporate Trust Office of the Debenture Trustee is closed for business.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount (as defined below)
equal to that portion of the principal amount of Junior Subordinated Debentures
to be contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Common Securities and to the Preferred Securities
based upon the relative Liquidation Amounts of such classes and (ii) with
respect to a distribution of Junior Subordinated Debentures to holders of Trust
Securities in connection with a dissolution or liquidation of the Issuer 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.
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"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company 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 or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery 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 Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion, will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes or (iii) the
Issuer Trust is, or will be within 90 days of the delivery of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. See "Certain Federal Income Tax Consequences-Pending Tax
Litigation Affecting the Preferred Securities" for a discussion of pending
United States Tax Court litigation that, if decided adversely to the taxpayer,
could give rise to a Tax Event, which may permit the Company to redeem the
Junior Subordinated Debentures prior to ____, 20___.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation, for purposes
of the risk-based capital adequacy guidelines of the FRB, as then in effect and
applicable to the Company.
If a Tax Event described in clause (i) or (iii) of the definition of
Tax Event above has occurred and is continuing and the Issuer Trust is the
holder of all the Junior Subordinated Debentures, the Company will pay
Additional Sums (as defined below), if any, on the Junior Subordinated
Debentures.
"Additional Sums" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Issuer Trust
on the outstanding Preferred Securities and Common Securities of the Issuer
Trust will not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result
of a Tax Event.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Junior Subordinated Debentures.
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Redemptions of the Preferred Securities shall be made and the Redemption Price
shall be payable on each Redemption Date only to the extent that the Issuer
Trust has funds on hand available for the payment of such Redemption Price. See
also " - Subordination of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the
Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, to the extent funds are available, in the case of Preferred
Securities held in book-entry 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 Redemption
Price to the beneficial owners of the Preferred Securities. With respect to
Preferred Securities not held in book-entry form, the Property Trustee, to the
extent funds are available, will irrevocably deposit with the paying agent for
the Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority
to pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing the Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
the Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit all rights of the
holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Preferred Securities will cease to be outstanding. If any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (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 Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Issuer Trust or by the Company pursuant to the Guarantee as
described under "Description of Guarantee," Distributions on such Preferred
Securities will continue to accumulate at the then applicable rate, from the
Redemption Date originally established by the Issuer Trust for such Preferred
Securities to the date such Redemption Price is actually paid, in which case
the actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to applicable law (including, without limitation, United
States federal securities laws), the Company or its affiliates may at any time
and from time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to
be redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated
pro rata to the Preferred Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis not more than
60 days prior to the Redemption Date by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, or if
the Preferred Securities are then held in the form of a Global Preferred
Security (as defined below), in accordance with DTC's customary procedures. The
Property Trustee shall promptly notify the securities registrar for the Trust
Securities in writing of the Preferred Securities selected for redemption and,
in the case of any Preferred Securities selected for partial redemption, the
Liquidation Amount thereof to be redeemed. For all purposes of the Trust
Agreement, unless the context otherwise requires, all provisions relating to
the redemption of Preferred Securities shall relate, in the case of any
Preferred Securities redeemed or to be redeemed only in part, to the portion of
the aggregate Liquidation Amount of Preferred Securities which has been or is
to be redeemed.
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Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Preferred Securities is withheld or refused and not paid either
by the Issuer Trust or the Company pursuant to the Guarantee, Distributions
will cease to accumulate on the Preferred Securities or portions thereof)
called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution in respect
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions on all the outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all the
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Preferred Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from
a Debenture Event of Default, the holders of the Common Securities will be
deemed to have waived any right to act with respect to any such Event of
Default under the Trust Agreement until the effects of all such Events of
Default with respect to such Preferred Securities have been cured, waived or
otherwise eliminated. See " - Events of Default; Notice" and "Description of
Junior Subordinated Debentures - Debenture Events of Default." Until all such
Events of Default under the Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee will act solely on behalf of the holders of the Preferred Securities
and not on behalf of the holders of the Common Securities, and only the holders
of the Preferred Securities will have the right to direct the Property Trustee
to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $10 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at
any time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
The FRB's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption
should consult with the FRB
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before redeeming any equity or capital instrument prior to maturity if such
redemption could have a material effect on the level or composition of the
organization's capital base (unless the equity or capital instrument were
redeemed with the proceeds of, or replaced by, a like amount of a similar or
higher quality capital instrument and the FRB considers the organization's
capital position to be fully adequate after the redemption).
In the event the Company, while a holder of Common Securities,
dissolves the Issuer Trust prior to the Stated Maturity of the Preferred
Securities and the dissolution of the Issuer Trust is deemed to constitute the
redemption of capital instruments by the FRB under its risk-based capital
guidelines or policies, the dissolution of the Issuer Trust by the Company may
be subject to the prior approval of the FRB. Moreover, any changes in
applicable law or changes in the FRB's risk-based capital guidelines or policies
could impose a requirement on the Company that it obtain the prior approval of
the FRB to dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company or the holder of the Common Securities, (ii) the distribution of a Like
Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if the holders of Common Securities have given written direction to
the Property Trustee to dissolve the Issuer Trust (which direction, subject to
the foregoing restrictions, is optional and wholly within the discretion of the
holders of Common Securities), (iii) the repayment of all the Preferred
Securities in connection with the redemption of all the Trust Securities as
described under " - Redemption" and (iv) the entry of an order for the
dissolution of the Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i),
(ii), or (iv) above, the Issuer Trust will be liquidated by the Property Trustee
as expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Issuer Trust
as provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Junior Subordinated Debentures, unless such distribution is not
practical, in which event such holders will be entitled to receive out of the
assets of the Issuer Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, 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 Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Issuer Trust on its Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the Preferred Securities,
except that if a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities shall have a priority
over the Common Securities. See "- Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior
Subordinated Debentures (i) the Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by DTC or its nominee and
(iii) any certificates representing the Preferred Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the
Preferred Securities and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on the Preferred Securities until
such certificates are presented to the security registrar for the Trust
Securities for transfer or reissuance.
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If the Company does not redeem the Junior Subordinated Debentures
prior to maturity and the Issuer Trust is not liquidated and the Junior
Subordinated Debentures are not distributed to holders of the Preferred
Securities, the Preferred Securities will remain outstanding until the
repayment of the Junior Subordinated Debentures and the distribution of the
Liquidation Distribution to the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the
Issuer Trust were to occur. Accordingly, the Preferred Securities that an
investor may purchase, or the Junior Subordinated Debentures that the investor
may receive on dissolution and liquidation of the Issuer Trust, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default"
under the Trust Agreement (an "Event of Default") with respect to the Preferred
Securities (whatever the reason for such Event of Default and whether it is
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see
"Description of Junior Subordinated Debentures - Debenture Events of
Default"); or
(ii) default by the Issuer Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Issuer Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in the
Trust Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in clause
(ii) or (iii) above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered or
certified mail, to the Issuer Trustees and the Company by the holders
of at least 25% in aggregate Liquidation Amount of the outstanding
Preferred 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" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or
insolvency with respect to the Property Trustee if a successor
Property Trustee has not been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor, and the Administrators are required to file annually
with the Property Trustee a certificate as to whether or not they are in
compliance with all the conditions and covenants applicable to them under the
Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Company to pay any amounts in respect of the
Junior Subordinated Debentures when due, the Preferred
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Securities will have a preference over the Common Securities with respect to
payments of any amounts in respect of the Preferred Securities as described
above. See " - Subordination of Common Securities," " - Liquidation
Distribution Upon Dissolution" and "Description of Junior Subordinated
Debentures - Debenture Events of Default."
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of at least a majority in aggregate Liquidation Amount of
the outstanding Preferred Securities may remove an Issuer Trustee for cause or,
if a Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at least
25% in aggregate Liquidation Amount of Preferred Securities. If an Issuer
Trustee resigns, such Issuer Trustee will appoint its successor. If an Issuer
Trustee fails to appoint a successor, the holders of at least 25% in aggregate
Liquidation Amount of the outstanding Preferred Securities may appoint a
successor. If a successor has not been appointed by the holders, any holder of
Preferred Securities or Common Securities or the other Issuer Trustee may
petition a court in the State of Delaware to appoint a successor. Any Delaware
Trustee must meet the applicable requirements of Delaware law. Any Property
Trustee must be a national or state-chartered bank, and at the time of
appointment have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization and have capital and
surplus of at least $50,000,000. No resignation or removal of an Issuer Trustee
and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS, OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer 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 entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the
request of the holders of the Common Securities and with the consent of the
holders of at least a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities, merge with or into, consolidate, amalgamate,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of any
State, so long as (i) such successor entity either (a) expressly assumes all
the obligations of the Issuer Trust with respect to the Preferred Securities or
(b) substitutes for the Preferred Securities other securities having
substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities have the same priority as the
Preferred Securities with respect to distributions and payments upon
liquidation, redemption, and otherwise, (ii) a trustee of such successor
entity, possessing the same powers and duties as the Property Trustee, is
appointed to hold the Junior Subordinated Debentures, (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, if then rated, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect, (v) such
successor
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entity has a purpose substantially identical to that of the Issuer
Trust, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Issuer Trust has received an opinion from
independent counsel experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Preferred Securities (including any Successor Securities) in any
material respect and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Issuer Trust nor such
successor entity will be required to register as an investment company under
the Investment Company Act, and (vii) the Company or any permitted successor or
assignee owns all 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 Issuer Trust may not, except with the consent of holders of 100% in
aggregate Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to, any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States federal income tax
purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided above and under " - Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee - Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of
a majority of the Common Securities and the Property Trustee, without the
consent of the holders of the Preferred Securities, (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, provided
that any such amendment does not adversely affect in any material respect the
interests of any holder of Trust Securities, or (ii) to modify, eliminate or
add to any provisions of the Trust Agreement to such extent as may be necessary
to ensure that the Issuer Trust will not be taxable as a corporation for United
States federal income tax purposes at any time that any Trust Securities are
outstanding or to ensure that the Issuer Trust will not be required to register
as an "investment company" under the Investment Company Act, and any such
amendments of the Trust Agreement will become effective when notice of such
amendment is given to the holders of Trust Securities. The Trust Agreement may
be amended by the holders of a majority of the Common Securities and the
Property Trustee with (i) the consent of holders representing not less than a
majority in aggregate Liquidation Amount of the outstanding Preferred
Securities and (ii) receipt by the Issuer Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not affect the Issuer
Trust's not being taxable as a corporation for United States federal income tax
purposes or the Issuer Trust's exemption from status as an "investment company"
under the Investment Company Act, except that, without the consent of each
holder of Trust Securities affected thereby, the Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date
or (ii) restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer
Trust, the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to
the Junior
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Subordinated Debentures, (ii) waive any past default that is waivable under
Section 5.13 of the Junior Subordinated Indenture, (iii) exercise any right
to rescind or annul a declaration that the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or
termination of the Junior Subordinated Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities, except that, if a
consent under the Junior Subordinated Indenture would require the consent of
each holder of Junior Subordinated Debentures affected thereby, no such consent
will be given by the Property Trustee without the prior consent of each holder
of the Preferred Securities. The Property Trustee may not revoke any action
previously authorized or approved by a vote of the holders of the Preferred
Securities except by subsequent vote of the holders of the Preferred
Securities. The Property Trustee will notify each holder of Preferred
Securities of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Preferred Securities, before taking any of the foregoing actions, the
Property Trustee will obtain an opinion of counsel experienced in such matters
to the effect that the Issuer Trust will not be taxable as a corporation for
United States federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given
at a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be given to each registered holder of Preferred Securities in the manner set
forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Issuer Trustees or any
affiliate of the Company or any Issuer Trustees, will, for purposes of such
vote or consent, be treated as if they were not outstanding.
EXPENSES AND TAXES
In the Junior Subordinated Indenture, the Company, as borrower, has
agreed to pay all debts and other obligations (other than with respect to the
Preferred Securities) and all costs and expenses of the Issuer Trust (including
costs and expenses relating to the organization of the Issuer Trust, the fees
and expenses of the Issuer Trustees and the costs and expenses relating to the
operation of the Issuer Trust) and to pay any and all taxes and all costs and
expenses with respect thereto (other than United States withholding taxes) to
which the Issuer Trust might become subject. The foregoing obligations of the
Company under the Junior Subordinated Indenture are for the benefit of, and
shall be enforceable by, any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether or not such Creditor has
received notice thereof. Any such Creditor may enforce such obligations of the
Company directly against the Company, and the Company has irrevocably waived
any right or remedy to require that any such Creditor take any action against
the Issuer Trust or any other person before proceeding against the Company. The
Company has also agreed in the Junior Subordinated Indenture to execute such
additional agreements as may be necessary or desirable to give full effect to
the foregoing.
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BOOK ENTRY, DELIVERY, AND FORM
The Preferred Securities will be issued in the form of one or more
fully registered global securities which will be deposited with, or on behalf
of, DTC and registered in the name of DTC's nominee. Unless and until it is
exchangeable in whole or in part for the Preferred Securities in definitive
form, a global security may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by
DTC or any such nominee to a successor of such Depository or a nominee of such
successor.
Ownership of beneficial interests in a global security will be limited
to persons that have accounts with DTC or its nominee ("Participants") or
persons that may hold interests through Participants. The Company expects that,
upon the issuance of a global security, DTC will credit, on its book-entry
registration and transfer system, the Participants' accounts with their
respective principal amounts of the Preferred Securities represented by such
global security. Ownership of beneficial interests in such global security will
be shown on, and the transfer of such ownership interests will be effected only
through, records maintained by DTC (with respect to interests of Participants)
and on the records of Participants (with respect to interests of Persons held
through Participants). Beneficial owners will not receive written confirmation
from DTC of their purchase, but are expected to receive written confirmations
from the Participants through which the beneficial owner entered into the
transaction. Transfers of ownership interests will be accomplished by entries
on the books of Participants acting on behalf of the beneficial owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global security
for all purposes under the Trust Agreement. Except as provided below, owners of
beneficial interests in a global security will not be entitled to receive
physical delivery of the Preferred Securities in definitive form and will not
be considered the owners or holders thereof under the Trust Agreement.
Accordingly, each person owning a beneficial interest in such a global security
must rely on the procedures of DTC and, if such person is not a Participant, on
the procedures of the Participant through which such person owns its interest,
to exercise any rights of a holder of Preferred Securities under the Trust
Agreement. The Company understands that, under DTC's existing practices, in the
event that the Company requests any action of holders, or an owner of a
beneficial interest in such a global security desires to take any action which
a holder is entitled to take under the Trust Agreement, DTC would authorize the
Participants holding the relevant beneficial interests to take such action, and
such Participants would authorize beneficial owners owning through such
Participants to take such action or would otherwise act upon the instructions
of beneficial owners owning through them. Redemption notices will also be sent
to DTC. If less than all of the Preferred Securities are being redeemed, the
Company understands that it is DTC's existing practice to determine by lot the
amount of the interest of each Participant to be redeemed.
Distributions on the Preferred Securities registered in the name of
DTC or its nominee will be made to DTC or its nominee, as the case may be, as
the registered owner of the global security representing such Preferred
Securities. None of the Company, the Issuer Trustees, the Administrators, any
Paying Agent or any other agent of the Company or the Issuer Trustees will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security for such Preferred Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Disbursements of Distributions to Participants shall be the responsibility of
DTC. DTC's practice is to credit Participants' accounts on a payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date.
Payments by Participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or
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registered in "street name," and will be the responsibility of such Participant
and not of DTC, the Company, the Issuer Trustees, the Paying Agent or any other
agent of the Company, subject to any statutory or regulatory requirements as may
be in effect from time to time.
DTC may discontinue providing its services as securities depository
with respect to the Preferred Securities at any time by giving reasonable notice
to the Company or the Issuer Trustees. If DTC notifies the Company that it is
unwilling to continue as such, or if it is unable to continue or ceases to be a
clearing agency registered under the Exchange Act and a successor depository is
not appointed by the Company within ninety days after receiving such notice or
becoming aware that DTC is no longer so registered, the Company will issue the
Preferred Securities in definitive form upon registration of transfer of, or in
exchange for, such global security. In addition, the Company may at any time and
in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust 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 Participants and to facilitate the clearance and
settlement of securities transactions 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 (such as the Underwriter), banks, trust companies and clearing
corporations and may include certain other organizations. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Preferred Securities will be made by the
Underwriter in immediately available funds.
Secondary trading in preferred securities of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to DTC,
which will credit the relevant accounts at DTC on the applicable Distribution
Dates or, if the Preferred Securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto as such
address appears on the securities register for the Trust Securities. The paying
agent (the "Paying Agent") will initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrators. The Paying Agent will be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the Administrators. If
the Property Trustee is no longer the Paying Agent, the Property Trustee will
appoint a successor (which must be a bank or trust company reasonably acceptable
to the Administrators) to act as Paying Agent.
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REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Issuer Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The Issuer Trust will not be required to register or
cause to be registered the transfer of the Preferred Securities after the
Preferred Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Trust Agreement and, after such Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
For information concerning the relationships between Bankers Trust
Company, the Property Trustee, and the Company, see "Description of Junior
Subordinated Debentures - Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrators and the Property Trustee are authorized and
directed to conduct the affairs of and to operate the Issuer Trust in such a
way that the Issuer Trust will not be deemed to be an "investment company"
required to be registered under the Investment Company Act or 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 Company
for United States federal income tax purposes. In this connection, the Property
Trustee and the holders of Common Securities are authorized to take any action,
not inconsistent with applicable law, the certificate of trust of the Issuer
Trust or the Trust Agreement, that the Property Trustee and the holders of
Common Securities 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 Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money, issue debt or mortgage or pledge
any of its assets.
GOVERNING LAW
The Trust Agreement will be governed by and construed in accordance
with the laws of the State of Delaware.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Bankers Trust Company is acting as
Debenture Trustee. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Junior Subordinated Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Junior Subordinated Indenture, including the
definitions therein of certain terms. Whenever particular defined terms of the
Junior Subordinated Indenture (as amended or supplemented from time to time)
are referred to herein, such defined terms are incorporated herein by
reference. A copy of the form of Junior Subordinated Indenture is available
from the Debenture Trustee upon request.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Issuer
Trust will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from __________, 1998, at the annual rate of _____% of the principal
amount thereof, payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each, an "Interest Payment Date"), commencing
________, 1998, to the person in whose name each Junior Subordinated Debenture
is registered at the close of business on the 15th day of March, June,
September or December (whether or not a Business Day) next preceding such
Interest Payment Date. It is anticipated that, until the liquidation, if any,
of the Issuer Trust, each Junior Subordinated Debenture will be registered in
the name of the Issuer Trust and held by the Property Trustee in trust for the
benefit of the holders of the Trust Securities. The amount of interest payable
for any period less than a full interest period will be computed on the basis
of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. The amount of interest payable for any full
interest period will be computed by dividing the rate per annum by four. If any
date on which interest is payable on the Junior Subordinated Debentures is not
a Business Day, then payment of the interest payable on such date will be made
on the next succeeding day that is a Business Day (without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on the date such payment was originally payable, except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. 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 ____%,
compounded quarterly and computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in such period.
The amount of additional interest payable for any full interest period will be
computed by dividing the rate per annum by four. The term "interest" as used
herein includes quarterly interest payments, interest on quarterly interest
payments not paid on the applicable Interest Payment Date and Additional Sums
(as defined below), as applicable.
The Junior Subordinated Debentures will mature on _______, 2028,
subject to the Maturity Adjustment (such date, as it may be shortened by the
Maturity Adjustment is referred to herein as the Stated Maturity). The Maturity
Adjustment represents the right of the Company to shorten the maturity date
once at any time to any date not earlier than _______, 2003, subject to the
Company having received prior approval of the FRB if then required under
applicable capital guidelines or policies of the FRB. In the event the Company
elects to shorten the Stated Maturity of the Junior Subordinated Debentures, it
will give notice to the registered holders of the Junior Subordinated
Debentures, the Debenture Trustee and the Issuer Trust of such shortening no
less than 90 days prior to the effectiveness thereof. The Property Trustee must
give notice to the holders of the Trust Securities of the shortening of the
Stated Maturity at least 30 but not more than 60 days before such date.
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The Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Indebtedness of the
Company. The Junior Subordinated Debentures will not be subject to a sinking
fund. The Junior Subordinated Indenture does not limit the incurrence or
issuance of other secured or unsecured debt by the Company, including Senior
Indebtedness, whether under the Junior Subordinated Indenture or any existing
or other indenture that the Company may enter into in the future or otherwise.
See " - Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is
continuing, the Company has the right at any time during the term of the Junior
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. During any
such Extension Period the Company shall have the right to make partial payments
of interest on any interest payment date. At the end of such Extension Period,
the Company must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of ____%, compounded quarterly and computed
on the basis of a 360-day year of twelve 30-day months and the actual days
elapsed in a partial month in such period, to the extent permitted by
applicable law). The amount of additional interest payable for any full
interest period will be computed by dividing the rate per annum by four. During
an Extension Period, interest will continue to accrue and holders of Junior
Subordinated Debentures (or holders of Preferred Securities while outstanding)
will be required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences - Interest Income and
Original Issue Discount."
During any such Extension Period, the Company 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 Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or
series of the Company's indebtedness for any class or series of the Company's
capital stock, (c) 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, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholders rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarterly periods
or 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, the Company may elect to begin a new Extension Period subject
to the above conditions. No interest shall be due and payable during an
Extension Period, except at the end thereof. The Company must give the Issuer
Trustees
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notice of its election of such Extension Period at least one Business Day prior
to the earlier of (i) the date the Distributions on the Preferred Securities
would have been payable but for the election to begin such Extension Period and
(ii) the date the Property Trustee is required to give notice to holders of the
Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than one Business Day prior to such record
date. The Property Trustee will give notice of the Company's election to begin
a new Extension Period to the holders of the Preferred Securities. There is no
limitation on the number of times that the Company may elect to begin an
Extension Period.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after _________, 2003, in whole at any time
or in part from time to time, or (ii) in whole, but not in part, at any time
within 90 days following the occurrence and during the continuation of a Tax
Event, Investment Company Event, or Capital Treatment Event (each as defined
under "Description of Preferred Securities - Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Preferred Securities.
The FRB's risk-based capital guidelines, which are subject to change,
currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a redemption should consult with the FRB before redeeming any
equity or capital instrument prior to maturity if such redemption could have a
material effect on the level or composition of the organization's capital base
(unless the equity or capital instrument were redeemed with the proceeds of, or
replaced by, a like amount of a similar or higher quality capital instrument
and the FRB considers the organization's capital position to be fully adequate
after the redemption).
The redemption of the Junior Subordinated Debentures by the Company
prior to their Stated Maturity would constitute the redemption of capital
instruments under the FRB's current risk-based capital guidelines and may be
subject to the prior approval of the FRB. The redemption of the Junior
Subordinated Debentures also could be subject to the additional prior approval
of the FRB under its current risk-based capital guidelines.
The redemption price for Junior Subordinated Debentures is the
outstanding principal amount of the Junior Subordinated Debentures plus accrued
interest (including any Additional Interest or any Additional Sums) thereon to
but excluding the date fixed for redemption.
ADDITIONAL SUMS
The Company has covenanted in the Junior Subordinated Indenture that,
if and for so long as (i) the Issuer Trust is the holder of all Junior
Subordinated Debentures and (ii) the Issuer Trust is required to pay any
additional taxes, duties or other governmental charges as a result of a Tax
Event, the Company will pay as additional sums on the Junior Subordinated
Debentures such amounts as may be required so that the Distributions payable by
the Issuer Trust will not be reduced as a result of any such additional taxes,
duties or other governmental charges. See "Description of Preferred Securities
- - Redemption."
REGISTRATION, DENOMINATION, AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the
name of the Issuer Trust. If the Junior Subordinated Debentures are distributed
to holders of Preferred Securities, it is anticipated that the
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depositary arrangements for the Junior Subordinated Debentures will be
substantially identical to those in effect for the Preferred Securities. See
"Description of Preferred Securities - Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days of receipt of notice from DTC to such effect, the
Company will cause the Junior Subordinated Debentures to be issued in
definitive form.
Payments on Junior Subordinated Debentures represented by a global
security will be made to Cede & Co., the nominee for DTC, as the registered
holder of the Junior Subordinated Debentures, as described under "Description
of Preferred Securities - Book Entry, Delivery and Form." If Junior
Subordinated Debentures are issued in certificated form, principal and interest
will be payable, the transfer of the Junior Subordinated Debentures will be
registrable, and Junior Subordinated Debentures will be exchangeable for Junior
Subordinated Debentures of other authorized denominations of a like aggregate
principal amount, at the corporate trust office of the Debenture Trustee in New
York, New York or at the offices of any Paying Agent or transfer agent
appointed by the Company, provided that payment of interest may be made at the
option of the Company by check mailed to the address of the persons entitled
thereto. However, a holder of $1 million or more in aggregate principal amount
of Junior Subordinated Debentures may receive payments of interest (other than
interest payable at the Stated Maturity) by wire transfer of immediately
available funds upon written request to the Debenture Trustee not later than 15
calendar days prior to the date on which the interest is payable.
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations, and of
a like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as
provided above, and may be presented for registration of transfer (with the
form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed), at the office of the securities registrar appointed
under the Junior Subordinated Debenture or at the office of any transfer agent
designated by the Company for such purpose without service charge and upon
payment of any taxes and other governmental charges as described in the Junior
Subordinated Indenture. The Company will appoint the Debenture Trustee as
securities registrar under the Junior Subordinated Indenture. The Company may
at any time designate additional transfer agents with respect to the Junior
Subordinated Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any monies deposited with the Debenture Trustee or any paying agent,
or then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
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RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted 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 or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of any one or
more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period or other
event referred to below, (b) as a result of an exchange or conversion of any
class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) 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,
(d) any declaration of a dividend in connection with any stockholder's rights
plan, or the issuance of rights, stock or other property under any
stockholder's rights plan, or the redemption or repurchase of rights pursuant
thereto, or (e) any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock), if at
such time (i) there has occurred any event (a) of which the Company has actual
knowledge that with the giving of notice or the lapse of time, or both, would
constitute a Debenture Event of Default and (b) that the Company has not taken
reasonable steps to cure, (ii) if the Junior Subordinated Debentures are held
by the Issuer Trust, the Company is in default with respect to its payment of
any obligations under the Guarantee or (iii) the Company has given notice of
its election of an Extension Period as provided in the Junior Subordinated
Indenture and has not rescinded such notice, or such Extension Period, or any
extension thereof, is continuing.
The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms
and provisions of the Trust Agreement, to cause the Issuer Trust to continue
not to be taxable as a corporation for United States federal income tax
purposes.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time, the Company and the Debenture Trustee may, without
the consent of any of the holders of the outstanding Junior Subordinated
Debentures, amend, waive or supplement the provisions of the Junior
Subordinated Indenture to: (1) evidence succession of another corporation or
association to the Company and the assumption by such person of the obligations
of the Company under the Junior Subordinated Debentures, (2) add further
covenants, restrictions or conditions for the protection of holders of the
Junior Subordinated Debentures, (3) cure ambiguities or correct the Junior
Subordinated Debentures in the case of defects or inconsistencies in the
provisions thereof, so long as any such cure or correction does not adversely
affect the interest of the holders of the Junior Subordinated Debentures in any
material respect, (4) change
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the terms of the Junior Subordinated Debentures to facilitate the issuance of
the Junior Subordinated Debentures in certificated or other definitive form,
(5) evidence or provide for the appointment of a successor Debenture Trustee,
or (6) qualify, or maintain the qualification of, the Junior Subordinated
Indentures under the Trust Indenture Act. The Junior Subordinated Indenture
contains provisions permitting the Company and the Debenture Trustee, with the
consent of the holders of not less than a majority in principal amount of the
Junior Subordinated Debentures, to modify the Junior Subordinated Indenture in
a manner affecting the rights of the holders of the Junior Subordinated
Debentures, except that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture so affected, (i)
change the Stated Maturity of the Junior Subordinated Debentures, or reduce the
principal amount thereof, the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or the
currency in which, any such amount is payable or impair the right to institute
suit for the enforcement of any Junior Subordinated Debenture or (ii) reduce
the percentage of principal amount of Junior Subordinated Debentures, the
holders of which are required to consent to any such modification of the Junior
Subordinated Indenture. Furthermore, so long as any of the Preferred Securities
remain outstanding, no such modification may be made that adversely affects the
holders of such Preferred Securities in any material respect, and no
termination of the Junior Subordinated Indenture may occur, and no waiver of
any Debenture Event of Default or compliance with any covenant under the Junior
Subordinated Indenture may be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount of the
outstanding Preferred Securities unless and until the principal of (and
premium, if any, on) the Junior Subordinated Debentures and all accrued and
unpaid interest thereon have been paid in full and certain other conditions are
satisfied.
DEBENTURE EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior Subordinated
Debentures when due and continuance of such default for a period of 30
days (subject to the deferral of any due date in the case of an
Extension Period); or
(ii) failure to pay any principal of or premium, if any, on
the Junior Subordinated Debentures when due whether at the Stated
Maturity; or
(iii) failure to observe or perform in any material respect
certain other covenants contained in the Junior Subordinated Indenture
for 90 days after written notice to the Company from the Debenture
Trustee or the holders of at least 25% in aggregate outstanding
principal amount of the outstanding Junior Subordinated Debentures; or
(iv) the Company consents to the appointment of a receiver or
other similar official in any liquidation, insolvency or similar
proceeding with respect to the Company or all or substantially all its
property.
For purposes of the Trust Agreement and this Prospectus, each such
Event of Default under the Junior Subordinated Debenture is referred to as a
"Debenture Event of Default." As described in "Description of Preferred
Securities - Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
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The holders of at least a majority in aggregate principal amount of
outstanding 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 principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred Securities
shall have such right. The holders of a majority in aggregate principal amount
of outstanding Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of Junior Subordinated Debentures which has become due solely by such
acceleration) have 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. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of
the outstanding Junior Subordinated Debentures affected thereby may, on behalf
of the holders of all the Junior Subordinated Debentures, waive any past
default, except a default in the payment of principal (or premium, if any) or
interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and 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 Junior Subordinated
Indenture cannot be modified or amended without the consent of the holder of
each outstanding Junior Subordinated Debenture affected thereby. See " -
Modification of Junior Subordinated Indenture." The Company is required to file
annually with the Debenture Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants applicable to it
under the Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the Junior
Subordinated Indenture, to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay any amounts
payable in respect of the Junior Subordinated Debentures on the date such
amounts are otherwise payable, a registered holder of Preferred Securities may
institute a Direct Action against the Company for enforcement of payment to
such holder of an amount equal to the amount payable in respect of Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities held by such holder. The Company
may not amend the Junior Subordinated Indenture to remove the foregoing right
to bring a Direct Action without the prior written consent of the holders of
all the Preferred Securities. The Company will have the right under the Junior
Subordinated Indenture to set-off any payment made to such holder of Preferred
Securities by the Company in connection with a Direct Action.
The holders of the Preferred Securities are not able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures except under the circumstances described in the preceding paragraph.
See "Description of Preferred Securities - Events of Default; Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS, AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, and no
Person may consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless (i) if the Company 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 Company's obligations in respect of the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time
or both, would constitute a Debenture Event of Default, has occurred and is
continuing; and (iii) certain other conditions as prescribed in the Junior
Subordinated Indenture are satisfied.
The provisions of the Junior Subordinated Indenture do not afford
holders of the Junior Subordinated Debentures protection in the event of a
highly leveraged or other transaction involving the Company that may adversely
affect holders of the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other
things, all Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become due and payable, (ii) will
become due and payable at the Stated Maturity within one year, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if any)
and interest to the date of the deposit or to the Stated Maturity, as the case
may be, then the Junior Subordinated Indenture will cease to be of further
effect (except as to the Company's obligations to pay all other sums due
pursuant to the Junior Subordinated Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will
be deemed to have satisfied and discharged the Junior Subordinated Indenture.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate and junior in
right of payment, to the extent set forth in the Junior Subordinated Indenture,
to all Senior Indebtedness (as defined below) of the Company. If the Company
defaults in the payment of any principal, premium, if any, or interest, if any,
or any other amount payable on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for redemption or by
declaration of acceleration or otherwise, then, unless and until such default
has been cured or waived or has ceased to exist or all Senior Indebtedness has
been paid, no direct or indirect payment (in cash, property, securities, by
set-off or otherwise) may be made or agreed to be made on the Junior
Subordinated Debentures, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Junior Subordinated
Debentures.
As used herein, "Senior Indebtedness" means, whether recourse is to
all or a portion of the assets of the Company and whether or not contingent,
(i) every obligation of the Company for money borrowed; (ii) every obligation
of the Company evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses; (iii) every reimbursement obligation of the
Company with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of the Company; (iv) every obligation of the
Company issued or assumed as
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the deferred purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) every
obligation of the Company for claims (as defined in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended) in respect of derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise,
including without limitation the Barnett Credit Line; provided that Senior
Indebtedness shall not include (i) any obligations which, by their terms, are
expressly stated to rank pari passu in right of payment with, or to not be
superior in right of payment to, the Junior Subordinated Debentures, (ii) any
Senior Indebtedness of the Company which when incurred and without respect to
any election under Section 1111(b) of the United States Bankruptcy Code of 1978,
as amended, was without recourse to the Company, (iii) any indebtedness of the
Company to any of its subsidiaries, (iv) indebtedness to any executive officer
or director of the Company, or (v) any indebtedness in respect of debt
securities issued to any trust, or a trustee of such trust, partnership or other
entity affiliated with the Company that is a financing entity of the Company in
connection with the issuance of such financing entity of securities that are
similar to the Preferred Securities.
In the event of (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors
or (iv) any other marshaling of the assets of the Company, all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made on
account of the Junior Subordinated Debentures. In such event, any payment or
distribution on account of the Junior Subordinated Debentures, whether in cash,
securities or other property, that would otherwise (but for the subordination
provisions) be payable or deliverable in respect of the Junior Subordinated
Debentures will be paid or delivered directly to the holders of Senior
Indebtedness in accordance with the priorities then existing among such holders
until all Senior Indebtedness (including any interest thereon accruing after
the commencement of any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company ranking
on a parity with the Junior Subordinated Debentures, will be entitled to be
paid from the remaining assets of the Company the amounts at the time due and
owing on the Junior Subordinated Debentures and such other obligations before
any payment or other distribution, whether in cash, property or otherwise, will
be made on account of any capital stock or obligations of the Company ranking
junior to the Junior Subordinated Debentures and such other obligations. If any
payment or distribution on account of the Junior Subordinated Debentures of any
character or any security, whether in cash, securities or other property is
received by any holder of any Junior Subordinated Debentures in contravention
of any of the terms hereof and before all the Senior Indebtedness has been paid
in full, such payment or distribution or security will be received in trust for
the benefit of, and must be paid over or delivered and transferred to, the
holders of the Senior Indebtedness at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay all
such Senior Indebtedness in full. By reason of such subordination, in the event
of the insolvency of the Company, holders of Senior Indebtedness may receive
more, ratably, and holders of the Junior Subordinated Debentures may receive
less, ratably, than the other creditors of the Company. Such subordination
will not prevent the occurrence of any Event of Default in respect of the
Junior Subordinated Debentures.
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The Junior Subordinated Indenture places no limitation on the amount
of additional Senior Indebtedness that may be incurred by the Company. The
Company expects from time to time to incur additional indebtedness constituting
Senior Indebtedness.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee, other than during the occurrence and
continuance of a default by the Company in performance of its obligations under
the Junior Subordinated Debenture, is under no obligation to exercise any of
the powers vested in it by the Junior Subordinated Indenture at the request of
any holder of Junior Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities that 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.
Bankers Trust Company, the Debenture Trustee, may serve from time to
time as trustee under other indentures or trust agreements with the Company or
its subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships with
Bankers Trust Company and its affiliates.
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated
Debentures will be governed by and construed in accordance with the laws of the
State of New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company
concurrently with the issuance of Preferred Securities by the Issuer Trust for
the benefit of the holders from time to time of the Preferred Securities.
Bankers Trust Company will act as Guarantee Trustee under the Guarantee. This
summary of certain provisions of the Guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, all the
provisions of the Guarantee, including the definitions therein of certain
terms. A copy of the form of Guarantee is available upon request from the
Guarantee Trustee. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth in the Guarantee and described herein, the
Guarantee Payments (as defined below) to the holders of the Preferred
Securities, as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer Trust may have or assert other than the defense of
payment. The following payments with respect to the Preferred Securities, to
the extent not paid by or on behalf of the Issuer Trust (the "Guarantee
Payments"), will be subject to the Guarantee: (i) any accrued and unpaid
Distributions required to be paid on such Preferred Securities, to the extent
that the Issuer Trust has funds on hand available therefor at such time, (ii)
the Redemption Price with respect to any Preferred Securities called for
redemption, to the extent that the Issuer Trust has
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funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, termination, winding up or liquidation of the Issuer
Trust (unless the Junior Subordinated Debentures are distributed to holders of
the Preferred 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 Issuer Trust has funds on hand available therefor at such
time, and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Preferred Securities on liquidation of the
Issuer Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of the Preferred Securities or by causing the Issuer Trust to pay such
amounts to such holders.
The Guarantee will be an irrevocable guarantee of payment on a
subordinated basis of the Issuer Trust's obligations under the Preferred
Securities, but will apply only to the extent that the Issuer Trust has funds
sufficient to make such payments, and is not a guarantee of collection.
If the Company does not make payments on the Junior Subordinated
Debentures held by the Issuer Trust, the Issuer Trust will not be able to pay
any amounts payable in respect of the Preferred Securities and will not have
funds legally available therefor. The Guarantee will rank subordinate and
junior in right of payment to all Senior Indebtedness of the Company. See " -
Status of the Guarantee." The Guarantee does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, including Senior
Indebtedness, whether under the Junior Subordinated Indenture, any other
indenture that the Company may enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Junior Subordinated Indenture, taken
together, fully, irrevocably and unconditionally guaranteed all the Issuer
Trust's obligations under the Preferred Securities on a subordinated basis. No
single document standing alone or operating in conjunction with fewer than all
the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer Trust's obligations in
respect of the Preferred Securities. See "Relationship Among the Preferred
Securities, the Junior Subordinated Debentures, and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company in the same manner as the Junior Subordinated
Debentures.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Guarantor to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity). The Guarantee will be held by the Guarantee Trustee for the benefit of
the holders of the Preferred Securities. The Guarantee will not be discharged
except by payment of the Guarantee Payments in full to the extent not paid by
the Issuer Trust or distribution to the holders of the Preferred Securities of
the Junior Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely
affect the rights of holders of the Preferred Securities (in which case no
consent will be required), the Guarantee may not be amended without the prior
approval of the holders of not less than a majority of the aggregate
Liquidation Amount of the outstanding Preferred Securities. The manner of
obtaining any such approval will be as set forth under "Description of
Preferred Securities - Voting Rights; Amendment of Trust Agreement." All
guarantees and agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall inure
to the benefit of the holders of the Preferred Securities then outstanding.
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EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder, or
to perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct
the exercise of any trust or power conferred upon the Guarantee Trustee under
the Guarantee.
Any registered holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer
Trust, the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and
continuance of a default by the Company in performance of the Guarantee,
undertakes to perform only such duties as are specifically set forth in the
Guarantee and, after the occurrence of an event of 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 is under no obligation to exercise any of the
powers vested in it by the Guarantee at the request of any holder of the
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust
Company, as Guarantee Trustee, and the Company, see "Description of Junior
Subordinated Debentures - Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the Preferred Securities, upon
full payment of the amounts payable with respect to the Preferred Securities
upon liquidation of the Issuer Trust or upon distribution of Junior
Subordinated Debentures to the holders of the Preferred Securities in exchange
for all of the Preferred Securities. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the Preferred Securities must restore payment of any sums paid under the
Preferred Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES, AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Issuer Trust has funds available for such
payment) are irrevocably guaranteed, on a subordinated basis, by the Company as
and to the extent set forth under "Description of Guarantee." Taken together,
the Company's obligations under the Junior Subordinated Debentures, the Junior
Subordinated Indenture, the Trust Agreement and the Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. If and to the extent that the Company does not make
payments on the Junior Subordinated Debentures, the Issuer Trust will not have
sufficient funds to pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of amounts payable with
respect to the Preferred Securities when the Issuer Trust does not have
sufficient funds to pay such amounts. In such event, the remedy of a holder of
the Preferred Securities is to institute a legal proceeding directly against
the Company for enforcement of payment of the Company's obligations under
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities held by such holder.
The obligations of the Company under the Junior Subordinated
Debentures and the Guarantee are subordinate and junior in right of payment to
all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the sum of the aggregate stated Liquidation Amount of the Preferred
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Junior Subordinated Debentures will match the Distribution
rate, Distribution Dates and other payment dates for the Preferred Securities;
(iii) the Company will pay for any and all costs, expenses and liabilities of
the Issuer Trust except the Issuer Trust's obligations to holders of the Trust
Securities; and (iv) the Trust Agreement further provides that the Issuer Trust
will not engage in any activity that is not consistent with the limited
purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the
Company would not constitute a default or Event of Default in respect of the
Preferred Securities. However, in the event of payment defaults
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under, or acceleration of, Senior Indebtedness of the Company, the
subordination provisions of the Junior Subordinated Indenture provide that no
payments may be made in respect of the Junior Subordinated Debentures until
such Senior Indebtedness has been paid in full or any payment default
thereunder has been cured or waived. See "Description of Junior Subordinated
Debentures - Subordination."
LIMITED PURPOSE OF ISSUER TRUST
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and the Issuer Trust exists for
the sole purpose of issuing its Preferred Securities and Common Securities and
investing the proceeds thereof in Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security and a holder
of a Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture is entitled to receive from the Company payments on Junior
Subordinated Debentures held, while a holder of Preferred Securities is
entitled to receive Distributions or other amounts distributable with respect
to the Preferred Securities from the Issuer Trust (or from the Company under
the Guarantee) only if and to the extent the Issuer Trust has funds available
for the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Issuer Trust,
other than any such dissolution involving the distribution of the Junior
Subordinated Debentures, after satisfaction of liabilities to creditors of the
Issuer Trust as required by applicable law, the holders of the Preferred
Securities will be entitled to receive, out of assets held by the Issuer Trust,
the Liquidation Distribution in cash. See "Description of Preferred Securities
- - Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Issuer Trust, as
registered holder of the Junior Subordinated Debentures, would be a
subordinated creditor of the Company, subordinated and junior in right of
payment to all Senior Indebtedness as set forth in the Junior Subordinated
Indenture, but entitled to receive payment in full of all amounts payable with
respect to the Junior Subordinated Debentures before any stockholders of the
Company receive payments or distributions. Since the Company is the guarantor
under the Guarantee and has agreed under the Junior Subordinated Indenture to
pay for all costs, expenses and liabilities of the Issuer Trust (other than the
Issuer Trust's obligations to the holders of the Trust Securities), the
positions of a holder of the Preferred Securities and a holder of such Junior
Subordinated Debentures relative to other creditors and to stockholders of the
Company in the event of liquidation or bankruptcy of the Company are expected
to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler,
P.A., Tampa, Florida, in its capacity as counsel to the Company ("Tax
Counsel"), the following discussion summarizes the material United States
federal income tax consequences of the purchase, ownership and disposition of
the Preferred Securities.
This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject
to change, possibly on a retroactive basis. The authorities on which this
summary is based are subject to various interpretations, and the opinions of
Tax Counsel are not binding on the Internal Revenue Service (the "IRS") or the
courts, either of which could take a contrary position. Moreover, no
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rulings have been or will be sought from the IRS with respect to the
transactions described herein. Accordingly, there can be no assurance that the
IRS will not challenge the opinions expressed herein or that a court would not
sustain such a challenge.
Except as otherwise stated, this summary deals only with the Preferred
Securities held as a capital asset by a holder who or which (i) purchased the
Preferred Securities upon original issuance at their original offering price and
(ii) is a US Holder (as defined below). This summary does not address all the
tax consequences that may be relevant to a US Holder, nor does it address the
tax consequences, except as stated below, to holders that are not US Holders
("Non-US Holders") or to holders that may be subject to special tax treatment
(such as banks, thrift institutions, real estate investment trusts, regulated
investment companies, insurance companies, brokers and dealers in securities or
currencies, certain securities traders, other financial institutions, tax-exempt
organizations, persons holding the Preferred Securities as a position in a
"straddle," or as part of a "synthetic security," "hedging," as part of a
"conversion" or other integrated investment, persons having a functional
currency other than the U.S. Dollar and certain United States expatriates).
Further, this summary does not address (a) the income tax consequences to
shareholders in, or partners or beneficiaries of, a holder of the Preferred
Securities, (b) the United States federal alternative minimum tax consequences
of the purchase, ownership or disposition of the Preferred Securities, or (c)
any state, local or foreign tax consequences of the purchase, ownership and
disposition of Preferred Securities.
A "US Holder" generally is a holder of the Preferred 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 income tax purposes, (ii) a
corporation or partnership created or organized (or treated as created or
organized for 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 United States federal income tax purposes
without regard to its source, or (iv) a trust if (a) a court within the United
States is able to exercise primary supervision over the administration of the
trust and (b) one or more United States persons have the authority to control
all substantial decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
US HOLDERS
CHARACTERIZATION OF THE ISSUER TRUST. In connection with the issuance
of the Preferred Securities, Tax Counsel will render its opinion generally to
effect that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Trust Agreement (and other relevant documents), and based on
certain assumptions and qualifications referenced in the opinion, the Issuer
Trust will be characterized for United States federal income tax purposes as a
grantor trust and will not be characterized as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of the Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures owned by the Issuer
Trust, and each US Holder will be required to include all income or gain
recognized for United States federal income tax purposes with respect to its
allocable share of the Junior Subordinated Debentures on its own income tax
return.
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CHARACTERIZATION OF THE JUNIOR SUBORDINATED DEBENTURES. The Company and
the Issuer Trust will treat the Junior Subordinated Debentures as indebtedness
for all United States federal income tax purposes. In connection with the
issuance of the Junior Subordinated Debentures, Tax Counsel will render its
opinion generally to the effect that, under then current law and based on the
representations, facts and assumptions set forth in this Prospectus, and
assuming full compliance with the terms of the Junior Subordinated Indenture
(and other relevant documents) and based on certain assumptions and
qualifications referenced in the opinion, the Junior Subordinated Debentures
will be characterized for United States federal income tax purposes as debt of
the Company.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under the terms of the
Junior Subordinated Debentures, the Company has the ability to defer payments of
interest from time to time by extending the interest payment period for a period
not exceeding 20 consecutive quarterly periods, but not beyond the maturity of
the Junior Subordinated Debentures. Treasury regulations under Section 1273 of
the Code provide that debt instruments like the Junior Subordinated Debentures
will not be considered issued with original issue discount ("OID") by reason of
the Company's ability to defer payments of interest if the likelihood of such
deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of
the date of this Prospectus, the likelihood of deferring payments of interest
under the terms of the Junior Subordinated Debentures is "remote" within the
meaning of the applicable Treasury regulations, in part because exercising that
option would prevent the Company from declaring dividends on its stock and
would prevent the Company from making any payments with respect to debt
securities that rank pari passu with or junior to the Junior Subordinated
Debentures. Therefore, the Junior Subordinated Debentures should not be treated
as issued with OID by reason of the Company's deferral option. Rather, stated
interest on the Junior Subordinated Debentures will generally be taxable to a
US Holder as ordinary income when paid or accrued in accordance with that
holder's method of accounting for income tax purposes. It should be noted,
however, that these Treasury regulations have not yet been interpreted in any
rulings or any other published authorities of the IRS. Accordingly, it is
possible that the IRS could take a position contrary to the interpretation
described herein.
In the event the Company exercises its option to defer payments of
interest, the Junior Subordinated Debentures would be treated as redeemed and
reissued for OID purposes and the sum of the remaining interest payments (and
any de minimis OID) on the Junior Subordinated Debentures would thereafter be
treated as OID, which would accrue, and be includible in a US Holder's taxable
income, on an economic accrual basis (regardless of the US Holder's method of
accounting for income tax purposes) over the remaining term of the Junior
Subordinated Debentures (including any period of interest deferral), without
regard to the timing of payments under the Junior Subordinated Debentures.
(Subsequent distributions of interest on the Junior Subordinated Debentures
generally would not be taxable.) Consequently, during any period of interest
deferral, US Holders will include OID in gross income in advance of the receipt
of cash, and a US Holder that disposes of a Preferred Security prior to the
record date for payment of distributions on the Junior Subordinated Debentures
following that period will be subject to income tax on OID accrued through the
date of disposition (and not previously included in income), but will not
receive cash from the Issuer Trust with respect to the OID.
If the possibility of the Company's exercise of its option to defer
payments of interest is not remote, the Junior Subordinated Debentures would be
treated as initially issued with OID in an amount equal to the aggregate stated
interest (plus any de minimis OID) over the term of the Junior Subordinated
Debentures. That OID would generally be includible in a US Holder's taxable
income, over the term of the Junior Subordinated Debentures, on an economic
accrual basis.
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CHARACTERIZATION OF INCOME. Because the income underlying the
Preferred Securities will not be characterized as dividends for income tax
purposes, corporate holders of the Preferred Securities will not be entitled to
a dividends-received deduction for any income recognized with respect to the
Preferred Securities.
MARKET DISCOUNT AND BOND PREMIUM. Holders of the Preferred Securities
may be considered to have acquired their undivided interests in the Junior
Subordinated Debentures with market discount or acquisition premium (as each
phrase is defined for United States federal income tax purposes).
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF
THE ISSUER TRUST. Under certain circumstances described herein (See
"Description of the Preferred Securities - Liquidation Distribution Upon
Dissolution"), the Issuer Trust may distribute the Junior Subordinated
Debentures to holders in exchange for the Preferred Securities and in
liquidation of the Issuer Trust. Except as discussed below, such a distribution
would not be a taxable event for United States federal income tax purposes, and
each US Holder would have an aggregate adjusted basis in its Junior
Subordinated Debentures for United States federal income tax purposes equal to
such holder's aggregate adjusted basis in its Preferred Securities. For United
States federal income tax purposes, a US Holder's holding period in the Junior
Subordinated Debentures received in such a liquidation of the Issuer Trust
would include the period during which the Preferred Securities were held by the
holder. If, however, the relevant event is a Tax Event which results in the
Issuer Trust being treated as an association taxable as a corporation, the
distribution would likely constitute a taxable event to US Holders of the
Preferred Securities for United States federal income tax purposes.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption
of their Preferred Securities. Such a redemption would be taxable for United
States federal income tax purposes, and a US Holder would recognize gain or
loss as if it had sold the Preferred Securities for cash. See " - Sales of
Preferred Securities" below.
SALES OF PREFERRED SECURITIES. A US Holder that sells Preferred
Securities will recognize gain or loss equal to the difference between its
adjusted basis in the Preferred Securities and the amount realized on the sale
of such Preferred Securities. A US Holder's adjusted basis in the Preferred
Securities generally will be its initial purchase price, increased by OID
previously included (or currently includible) in such holder's gross income to
the date of disposition, and decreased by payments received on the Preferred
Securities (other than any interest received with respect to the period prior
to the effective date of the Company's first exercise of its option to defer
payments of interest). Any such gain or loss generally will be capital gain or
loss, and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year prior to the date of
disposition. Tax rates on long-term capital gains received by individual US
Holders vary depending on each US Holder's income and holding period for the
Preferred Securities. US Holders that are individuals should contact their own
tax advisors for more information or for the capital gains rate applicable to a
specific Preferred Security.
A holder who disposes of his Preferred Securities between record dates
for payments of distributions thereon will be required to include accrued but
unpaid interest (or OID) on the Junior Subordinated Debentures through the date
of disposition in its taxable income for United States federal income tax
purposes (notwithstanding that the holder may receive a separate payment from
the purchaser with respect to accrued interest), and to deduct that amount from
the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the Preferred Securities (or as to OID only,
to add such amount to such holder's adjusted tax basis in its Preferred
Securities). To the extent the selling price is less than the holder's adjusted
tax basis (which will include accrued but unpaid OID, if any), a holder will
recognize a capital loss.
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Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
PENDING TAX LITIGATION AFFECTING THE PREFERRED SECURITIES
Recently, a taxpayer filed a petition in the United States Tax Court
contesting the IRS' proposed disallowance of interest deductions the taxpayer
claimed in respect of securities issued in 1993 and 1994 that are, in some
respects, similiar to the Preferred Securities of the Issuer Trust (Enron Corp.
v. Commissioner, Docket No. 6149-98, filed April 1, 1998). It is possible that
an adverse decision by the Tax Court concerning the deductibility of such
interest could give rise to a Tax Event. Such a Tax Event would give the Company
the right to redeem the Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures-Redemption" and "Description of Preferred
Securities - Liquidation Distribution Upon Dissolution."
NON-US HOLDERS
The following discussion applies to a Non-US Holder.
Payments to a holder of a Preferred Security which is a Non-US Holder
will generally not be subject to withholding of income tax, provided that (a)
the beneficial owner of the Preferred Security does not (directly or
indirectly, actually or constructively) own 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (b) the
beneficial owner of the Preferred Security is not a controlled foreign
corporation that is related to the Company through stock ownership, and (c)
either (i) the beneficial owner of the Preferred Securities certifies to the
Issuer Trust or its agent, under penalties of perjury, that it is a Non-US
Holder and provides its name and address, or (ii) 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 Preferred Security in such capacity, certifies to
the Issuer Trust or its agent, under penalties of perjury, that such a
statement has been received from the beneficial owner by it or by another
Financial Institution between it and the beneficial owner in the chain of
ownership, and furnishes the Issuer Trust or its agent with a copy thereof.
A Non-US Holder of a Preferred Security will generally not be subject
to withholding of income tax on any gain realized upon the sale or other
disposition of a Preferred Security.
A Non-US Holder which holds the Preferred Securities in connection
with the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Junior Subordinated Debentures.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments
made on, and proceeds from the sale of, the Preferred Securities held by a
noncorporate US Holder within the United States. In addition, payments made on,
and payments of the proceeds from the sale of, the Preferred Securities to or
through the United States office of a broker or through certain U.S.- related
financial intermediaries, are subject to information reporting unless the holder
thereof certifies as to its Non-United States status or otherwise establishes an
exemption from information reporting and backup withholding. See " - Backup
Withholding." Taxable income on the Preferred Securities for a calendar year
should be reported to US Holders on the appropriate forms by the following
January 31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the
holder complies with certain identification or exemption requirements. Any
amounts so withheld will be allowed as a credit against the holder's income tax
liability, or refunded, provided the required information is provided to the
IRS.
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS ALL
THE CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE PREFERRED SECURITIES. POTENTIAL HOLDERS OF THE PREFERRED
SECURITIES ARE URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR
PARTICULAR TAX CONSEQUENCES.
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CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each 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. The purchase of the
Preferred Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section
4975(e)(1) of the Code and with respect to which the Company, or any affiliate
of the Company 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 the Preferred Securities are acquired
pursuant to and in accordance with an applicable exemption. Any pension or
other employee benefit plan proposing to acquire any Preferred Securities
should consult with its counsel.
SUPERVISION AND REGULATION
The banking industry is extensively regulated under both federal and
state law, and is undergoing significant change. These laws and regulations
are intended primarily to protect depositors and the federal deposit insurance
funds, and not for the protection of shareholders. The following discussion
summarizes certain aspects of the banking laws and regulations that affect the
Company or the Bank. Proposals to change the laws and regulations governing
the banking industry are frequently raised in Congress, in state legislatures,
and before the various banking agencies. The likelihood and timing of any
changes, and the impact that such changes might have on the Company, are
impossible to predict with any certainty. A change in the applicable laws or
regulations, or a change in the way such laws or regulations are interpreted by
regulatory agencies or the courts, may have a material impact on the business
or prospects of the Company and the Bank.
To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to the
particular statutory and regulatory provisions.
BANK HOLDING COMPANY REGULATION
GENERAL. As a bank holding company registered under the BHCA, the
Company is subject to the regulation and supervision of, and inspection by, the
FRB. The Company is required to file with the FRB annual reports and other
information regarding its business operations and those of its subsidiaries.
Under the BHCA, the Company's activities and those of its subsidiaries are
limited to banking, managing or controlling banks, furnishing services to or
performing services for its subsidiaries or engaging in any other activity
which the FRB determines to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In this regard, the BHCA
prohibits a bank holding company, with certain limited exceptions, from (i)
acquiring or retaining direct or indirect ownership or control of more than 5%
of the outstanding voting stock of any company which is not a bank or bank
holding company, or (ii) engaging directly or indirectly in activities other
than those of banking, managing or controlling banks, or performing services
for its subsidiaries; unless such nonbanking business is determined by the FRB
to be so closely related to banking or managing or controlling banks as to be
properly incident thereto. In making such determinations, the FRB is required
to weigh the expected benefit to the public, such as greater convenience,
increased competition, or gains in efficiency, against the possible adverse
effects such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices. Generally,
bank holding companies, such as the Company, are required to obtain prior
approval of the FRB to engage in any new activity not previously approved by
the FRB.
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The enactment of the Economic Growth and Regulatory Paperwork Reduction
Act of 1996 ("EGRPRA") streamlines the nonbanking activities application process
for well-capitalized and well managed bank holding companies. Under EGRPRA,
qualified bank holding companies may commence a regulatory approved nonbanking
activity without prior notice to the FRB; written notice is merely required
within ten business days after commencing the activity. Also under EGRPRA, the
prior notice period is reduced to twelve business days in the event of any
nonbanking acquisition or share purchase, assuming the size of the acquisition
does not exceed 10% of risk-weighted assets of the acquiring bank holding
company and the consideration does not exceed 15% of Tier 1 capital. This prior
notice requirement also applies to commencing a nonbanking activity de novo
which has been previously approved by order of the FRB, but not yet implemented
by regulations.
The BHCA also requires, among other things, the prior approval of the
FRB in any case where a bank holding company proposes to (i) acquire all or
substantially all of the assets of any bank, (ii) acquire direct or indirect
ownership or control of more than 5% of the outstanding voting stock of any bank
(unless it owns a majority of such bank's voting shares) or (iii) merge or
consolidate with any other bank holding company. The FRB will not approve any
acquisition, merger, or consolidation that would result in a monopoly, or which
would be in the furtherance of any attempt to monopolize the business of banking
in any part of the United States, or which would have a substantially
anti-competitive effect, unless the anti-competitive impact of the proposed
transaction is clearly outweighed by a greater public interest in meeting the
convenience and needs of the community to be served. The FRB also considers
capital adequacy and other financial and managerial factors when reviewing
acquisitions or mergers. As described in greater detail below, pursuant to the
Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994 (the
"Interstate Banking and Branching Act"), a bank holding company is permitted to
acquire banks in states other than its home state. See "Supervision and
Regulation - Bank Holding Company Regulation -- Interstate Banking" below for
additional information.
There are a number of obligations and restrictions imposed on bank
holding companies and their depository institution subsidiaries by law and
regulatory policies that are designed to minimize potential loss to the
depositors of such depository institutions and the FDIC insurance funds in the
event the depository institution becomes in danger of default or is in default.
For example, under the Federal Deposit Insurance Company Improvement Act of 1991
("FDICIA"), in order to avoid receivership of an insured depository institution
subsidiary, a bank holding company is required to guarantee the compliance of
any insured depository institution subsidiary that may become "undercapitalized"
with the terms of any capital restoration plan filed by such subsidiary with its
appropriate federal banking agency up to the lesser of (i) an amount equal to 5%
of the institution's total assets at the time the institution became
undercapitalized or (ii) the amount that is necessary (or would have been
necessary) to bring the institution into compliance with all applicable capital
standards as of the time the institution fails to comply with such capital
restoration plan. See "Supervision and Regulation - Capital Adequacy
Guidelines."
Under a policy of the FRB with respect to bank holding company
operations, a bank holding company is required to serve as a source of financial
strength to its subsidiary depository institutions and to commit all available
resources to support such institutions in circumstances where it might not do so
absent such policy. Although this "source of strength" policy has been
challenged in litigation, the FRB continues to take the position that it has
authority to enforce it. The FRB under the BHCA also has cease and desist
authority pursuant to which it may require a bank holding company to terminate
any activity or to relinquish control of a nonbank subsidiary (other than a
nonbank subsidiary of a bank) upon the FRB's determination that such activity or
control constitutes a serious risk to the financial soundness and stability of
any bank subsidiary of the bank holding company.
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The FRB and the FDIC collectively have extensive enforcement authority
over commercial banks, which authority was enhanced substantially by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA")
and the FDICIA. This enforcement authority includes, among other things, the
ability to assess civil money penalties, to issue cease and desist or removal
orders, to initiate injunctive actions, and, in extreme cases, to terminate
deposit insurance. In general, these enforcement actions may be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with the federal banking agencies. FIRREA
significantly increased the amount of and the grounds for civil money penalties
and generally requires public disclosure of final enforcement actions.
COMMUNITY REINVESTMENT ACT. Bank holding companies and their
subsidiary banks are subject to the provisions of the Community Reinvestment
Act of 1977 ("CRA") and the regulations promulgated thereunder by the
appropriate bank regulatory agency. Under the terms of the CRA, a state bank
has a continuing and affirmative obligation consistent with its safe and sound
operation to help meet the credit needs of its entire community, including low
and moderate income neighborhoods. The CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the CRA.
The CRA requires the FDIC, in connection with its examination of a state bank,
to assess the association's record of meeting the credit needs of its community
and to take such record into account in its evaluation of certain applications
by such association. The CRA also requires all institutions to make public
disclosure of their CRA ratings. Further, such assessment also is required of
any state bank that, among other things, has applied to merge or consolidate
with, or acquire the assets or assume the liabilities of, a federally regulated
financial institution, or to open or relocate a branch office. In the case of
a bank holding company applying for approval to acquire a bank or a bank
holding company, the FRB will assess the record of each subsidiary bank of the
applicant bank holding company in considering the application.
Pursuant to current CRA regulations, an institution's CRA rating is
based on its actual performance in meeting community needs. In particular, the
rating system focuses on three tests: (i) a lending test, which evaluates the
institution's record of making loans in its service areas; (ii) an investment
test, which evaluates the institution's record of investing in community
development projects, affordable housing, and programs benefitting low or
moderate income individuals and business; and (iii) a service test, which
evaluates the institution's delivery of services through its branches, ATMs,
and other offices. The current CRA regulations also clarify how an
institution's CRA performance will be considered in the application process.
INTERSTATE BANKING. Under the Interstate Banking and Branching Act,
regardless of any previously applicable state law, bank holding companies which
meet specified capital and management adequacy standards are eligible to
acquire banks in states other than their home states, but will need to retain a
separate bank charter in each state where subsidiaries conduct banking
business. Various restrictions on interstate acquisitions will continue to
apply, including: (1) federal and state antitrust laws, as currently in
effect; (2) prohibitions on a single holding company system accounting for more
than 10% of all deposits nationwide or, subject to various opt-in and opt-out
provisions for various states on a nondiscriminatory basis, accounting for more
than 30% or more of deposits in any state; (3) state-imposed prohibitions on
acquiring banks within up to five years after they commence operations; and (4)
compliance by the acquirer with the CRA and fair lending laws.
Furthermore, beginning June 1, 1997, the Interstate Banking and
Branching Act authorized adequately capitalized and managed banks to cross
state lines to merge with other banks, thereby creating interstate branches,
subject to individual state's adoption of various nondiscriminatory opt-in and
opt-out provisions. Under such legislation, each state had the opportunity to
"opt-in" at an earlier time thereby allowing interstate
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banking in that state prior to 1997, or to "opt-out". Furthermore a state may
opt-in with respect to de novo branching thereby permitting a bank to open new
branches in a state in which the bank does not already have a branch. Without
de novo branching, an out-of-state bank can enter the state only by acquiring
an existing bank. Antitrust and anti-concentration restrictions will apply as
described above. It will not be necessary to keep multiple state charters in
effect or to have a holding company system. Generally, all banks that are
parties to a proposed post-1997 merger must satisfy applicable CRA, management
quality, and capital adequacy standards.
FLORIDA INTERSTATE BANKING LAWS. In this context, the Florida
legislature enacted legislation in 1996, the Florida Interstate Banking Act
("FIBA"), which specifically authorizes out-of-state bank holding companies
located in any state or the District of Columbia that meet certain prescribed
criteria to acquire Florida bank holding companies or banks which have been in
existence and continuously operated as a bank for more than three years,
subject to the prior approval of the Florida Department of Banking and Finance
(the "Department"). Entry into the State of Florida by interstate branching or
by means other than such an acquisition is expressly prohibited by the FIBA.
Furthermore, except for initial entry into the State of Florida by an
out-of-state bank or bank holding company, no acquisition of a Florida bank or
Florida bank holding company is permitted if the resulting bank holding company
and its affiliates would control 30% or more of total deposits in the state.
In addition, the Florida legislature also enacted the Florida
Interstate Branching Act ("Florida Branching Act") which permits interstate
branching in Florida by a merger transaction and grants Florida state-chartered
banks the same interstate branching opportunities as is afforded to national
banks under the newly enacted federal law.
An out-of-state bank that does not operate a branch in the State of
Florida is prohibited from establishing a de novo branch in Florida.
Accordingly an out-of-state bank or bank holding company can only enter Florida
by acquiring an existing Florida bank which has been operating continuously for
at least three years. The same deposit concentration limits referred to above
apply. Any out-of-state bank or bank holding company that has acquired a
Florida bank under either the FIBA or the Florida Branching Act, may establish
additional branches in Florida to the same extent as any Florida bank may do
so.
Proposals to change the laws and regulations governing the banking
industry are frequently introduced in Congress, in state legislatures, and
before the various bank regulatory agencies. The likelihood and timing of any
such changes and the potential impact of such changes on the Company or the
Bank cannot be determined at this time.
BANK REGULATION
GENERAL. The Bank, a Florida state-chartered banking corporation, is a
general commercial bank, the deposits of which are insured by the Bank Insurance
Fund ("BIF") of the FDIC and, as such, is subject to the primary supervision,
examination, and regulation by the Department and the FDIC. It is not a member
of the Federal Reserve System.
As a state-chartered commercial bank, the Bank is subject to the
applicable provisions of Florida law and the regulations adopted by the
Department. The Bank must file various reports with, and is subject to
periodic examinations by the Department and the FDIC. Florida law and the
Department regulate (in conjunction with applicable federal laws and
regulations), among other things, the Bank's capital, permissible activities,
reserves, investments, lending authority, branching, the issuance of
securities, payment of dividends, transactions with affiliated parties, and
borrowing.
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The FDIC insures the deposits of the Bank to the current maximum
allowed by law. Applicable statutes and regulations administered by the FDIC
also relate to required reserves against deposits, investments, loans, mergers
and consolidations, issuance of securities, payment of dividends, establishment
of branches, and other aspects of the Bank's operations. Various consumer laws
and regulations also affect the operations of the Bank, including state usury
laws, laws relating to fiduciaries, consumer credit and equal credit, and fair
credit reporting.
TRANSACTIONS WITH AFFILIATES. There are various legal restrictions on
the extent to which the Company and any future nonbank subsidiaries can borrow
or otherwise obtain credit from the Bank. There also are legal restrictions on
the Bank's purchase of or investments in the securities of and purchases of
assets from the Company and any of its future nonbank subsidiaries, a bank's
loans or extensions of credit to third parties collateralized by the securities
or obligations of the Company and any of its future nonbank subsidiaries, the
issuance of guaranties, acceptances and letters of credit on behalf of the
Company and any of its future nonbank subsidiaries, or with respect to which
the Company and nonbank subsidiaries, act as agent, participate or have a
financial interest. Subject to certain limited exceptions, the Bank may not
extend credit to the Company or to any other affiliate in an amount which
exceeds 10% of the Bank's capital stock and surplus and may not extend credit
in the aggregate to such affiliates in an amount which exceeds 20% of its
capital stock and surplus. Further, there are legal requirement as to the
type, amount and quality of collateral which must secure such extensions of
credit transactions between the Bank and the Company or such affiliates, and
such transactions must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the Bank
as those prevailing at the time for comparable transactions with non-affiliated
companies. These regulations and restrictions may limit the Company's ability
to obtain funds from the Bank for its cash needs, including funds for
acquisitions, and the payment of dividends, interest and operating expenses.
Further, the Bank and the Company are prohibited from engaging in
certain tie-in arrangements in connection with any extension of credit, lease
or sale of property, or furnishing of services. For example, the Bank may not
generally require a customer to obtain other services from the Bank or the
Company, and may not require the customer to promise not to obtain other
services from a competitor, as a condition to an extension of credit.
The Bank also is subject to certain restrictions imposed by the
Federal Reserve Act on extensions of credit to executive officers, directors,
principal shareholders or any related interest of such persons. Extensions of
credit (i) must be made on substantially the same terms, including interest
rates and collateral as, and following credit underwriting procedures that are
not less stringent than those prevailing at the time for comparable
transactions with persons not covered above and who are not employees and (ii)
must not involve more than the normal risk of repayment or present other
unfavorable features. The Bank also is subject to certain lending limits and
restrictions on overdrafts to such persons. A violation of these restrictions
may result in the assessment of substantial civil monetary penalties on the
Bank or any officer, director, employee, agent or other person participating in
the conduct of the affairs of the Bank or the imposition of a cease and desist
order.
DIVIDEND RESTRICTIONS AND TRANSFERS OF FUNDS. Under various banking
laws, the declaration and payment of dividends by a state banking institution
is subject to certain restrictions, including those relating to the amount and
frequency of such dividends. Under the FDICIA, an insured depository
institution is prohibited from making any capital distribution to its owner,
including any dividend, if, after making such distribution, the depository
institution fails to meet the required minimum level for any relevant capital
measure, including the risk-based capital adequacy and leverage standards
described below.
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If, in the opinion of the applicable federal bank regulatory
authority, a depository institution or holding company is engaged in or is
about to engage in an unsafe or unsound practice (which, depending on the
financial condition of the depository institution or holding company, could
include the payment of dividends), such authority may require, after notice and
hearing (except in the case of an emergency proceeding where there is no notice
or hearing), that such institution or holding company cease and desist from
such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's or holding company's capital
base to an inadequate level would be such an unsafe and unsound banking
practice. Moreover, the FRB and the FDIC have issued policy statements which
provide that bank holding companies and insured depository institutions
generally should only pay dividends out of current operating earnings.
In addition, Florida law places certain restrictions on the
declaration of dividends form state chartered banks to their holding companies.
Pursuant to the Florida Banking Code, the Board of Directors of state-chartered
banks, after charging off bad debts, depreciation, and other worthless assets,
if any, and making provisions for reasonably anticipated future losses on loans
and other assets, may quarterly, semiannually or annually declare a dividend of
up to the aggregate net profits of that period combined with bank's retained
net profits for the preceding two years and, with the approval of the
Department, declare a dividend from retained net profits which accrued prior to
the preceding two years. Before declaring such dividends, 20% of the net
profits for the preceding period as is covered by the dividend must be
transferred to the surplus fund of the bank until the fund becomes equal to the
amount of the bank's common stock then issued and outstanding. A
state-chartered bank may not declare any dividend if (i) its net income from
the current year combined with the retained net income from the preceding two
years is a loss, or (ii) the payment of such dividend would cause the capital
account of the bank to fall below the minimum amount required by law,
regulation, order, or any written agreement with the Department or a federal
regulatory agency.
CAPITAL ADEQUACY GUIDELINES
MINIMUM CAPITAL REQUIREMENTS. The federal banking agencies, including
the FRB and the FDIC, have adopted substantially similar risk-based capital
guidelines for bank holding companies and banks under their supervision. The
risk-based capital guidelines are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance sheet exposure, and to minimize
disincentives for holding liquid assets. Under these guidelines, assets and
off-balance sheet items are assigned to broad risk categories each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk- weighted assets and off-balance sheet items. In
addition, these regulatory agencies may from time to time require that a
banking organization maintain capital above the minimum limits, whether because
of its financial condition or actual or anticipated growth.
These risk-based capital guidelines define a two-tier capital
framework. Under these regulations, the minimum ratio of total capital to
risk-weighted assets (including certain off-balance sheet activities, such as
stand-by letters of credit) is 8%. At least half of the total capital must be
"Tier 1 Capital," consisting of common shareholders' equity, noncumulative
perpetual preferred stock, and a limited amount of cumulative perpetual
preferred stock, less certain goodwill items and other intangible assets (i.e.,
at least 4% of the risk weighted assets). The remainder ("Tier 2 Capital") may
consist of (a) the allowance for loan losses of up to 1.25% of risk-weighted
risk assets, (b) excess of qualifying perpetual preferred stock, (c) hybrid
capital instruments, (d) perpetual debt, (e) mandatory convertible securities,
and (f) subordinated debt and intermediate term-preferred stock up to 50% of
Tier 1 capital. As noted above, the proceeds to the Company of the issuance of
the Trust Securities will qualify as Tier 1 capital up to the 25% Capital
Limitation and as Tier 2 capital in excess thereof. See "Use of Proceeds."
Total capital is the sum of Tier 1 and Tier 2 capital less reciprocal holdings
of other banking organizations' capital instruments and investments in
unconsolidated
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subsidiaries and any other deductions as determined on a case by case basis or
as a matter of policy after formal rule making.
In computing total risk-weighted assets, an institution's assets are
given risk-weights of 0%, 20%, 50% and 100%. In addition, certain off-balance
sheet items are given similar credit conversion factors to convert them to
asset equivalent amounts to which an appropriate risk-weight will apply. These
computations result in the total risk-weighted assets. Most loans will be
assigned to the 100% risk category, except for first mortgage loans fully
collateralized by residential property which carry a 50% risk rating. Most
investment securities (including, primarily, general obligation claims on
states or other political subdivisions of the United States) will be assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% risk-weight, and direct obligations of the U.S. treasury or obligations
backed by the full faith and credit of the U.S. Government, which have a 0%
risk-weight. In converting off-balance sheet items, direct credit substitutes
including general guarantees and standby letters of credit backing financial
obligations, are given a 100% conversion factor. Transaction related
contingencies such as bid bonds, standby letters of credit backing
non-financial obligations, and undrawn commitments (including commercial credit
lines with an initial maturity or more than one year) have a 50% conversion
factor. Short term or trade letters of credit are converted at 20% and certain
short-term unconditionally cancelable commitments have a 0% factor.
As of December 31, 1997, the total risk-based capital ratio of the
Company and the Bank were 10.9% and 10.0%, respectively. In addition to the
risk-based capital guidelines, the FRB and the FDIC also have adopted a
leverage standard to supplement the risk-based ratios. This leverage standard
focuses on the institution's ratio of Tier 1 capital to average total assets,
adjusted for goodwill and certain other items. Under these guidelines,
institutions which have received the highest regulatory rating and exhibit
certain other high standards, must maintain a minimum level of Tier 1 capital
to average consolidated assets of at least 3%. All other institutions are
expected to maintain a ratio of at least 1% or 2% above the stated minimum. As
of December 31, 1997, the leverage capital ratio of the Company and the Bank
were 6.9% and 6.7%, respectively.
Federal banking agencies also have adopted regulations which require
regulators to take into consideration concentrations of audit risk and risks
from non-traditional activities, as well as an institution's ability to manage
those risks. This evaluation will be made as part of the institution's regular
safety and soundness examination. In addition, pursuant to the requirements of
the FDICIA, federal banking agencies all have adopted regulations requiring
regulators to consider interest rate risk (when interest rate sensitivity of an
institution's assets does not match its liabilities or its off-balance sheet
position) in the evaluation of a bank's capital adequacy. Concurrently, the
federal banking agencies have prepared a new methodology for evaluating
interest rate risk.
CLASSIFICATION OF BANKING INSTITUTIONS. FDICIA substantially revised
the bank regulatory and funding provisions of the FDI Act and made revisions to
several other federal banking statutes. Among other things, the FDICIA
provided federal banking agencies broad powers to take "prompt corrective
action" in respect of depository institutions that do not meet minimum capital
requirements. The extent of those powers depend upon whether the institutions
in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized." A depository institution's capital tier will depend upon
where its capital levels are in relation to various relevant capital measures,
which include a risk-based capital measure and a leverage ratio capital
measure, and certain other factors.
Under implementing regulations adopted by the federal banking
agencies, a bank would be considered "well capitalized" if it has (i) a total
risk-based capital ratio of 10% or greater, (ii) a Tier 1 risk-based capital
ratio of 6% or greater, (iii) a leverage ratio of 5% or greater and (iv) is not
subject to any order or written
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directive to meet and maintain a specific capital level for any capital
measure. An "adequately capitalized" bank would be defined as one that has (i)
a total risk-based capital ratio of 8% or greater, (ii) a Tier 1 risk-based
capital ratio of 4% of greater, and (iii) a leverage ratio of 4% or greater (or
3% or greater in the case of a bank with a composite CAMEL rating of 1). A
bank would be considered (A) "undercapitalized" if it has (i) a total
risk-based capital ratio of less than 8%, (ii) a Tier 1 risk-based capital
ratio of less than 4%, or (iii) a leverage ratio of less than 4% (or 3% in the
case of a bank with a composite CAMEL rating of 1); (B) "significantly
undercapitalized" if the bank has (i) a total risk-based capital ratio of less
than 6%, or (ii) a Tier 1 risk-based capital ratio of less than 3%, or (iii) a
leverage ratio of less than 3%; and (C) "critically undercapitalized" if the
bank has a ratio of tangible equity to total assets equal to or less than 2%.
The FRB may reclassify a "well classified" bank as "adequately capitalized" or
subject an "adequately capitalized" or "undercapitalized" institution to
supervisory actions applicable to the next lower capital category if it
determines that the bank is in an unsafe or unsound condition or deems the bank
to be engaged in an unsafe or unsound practice and not have corrected the
deficiency. The Bank currently meets the definition of a "well capitalized"
institution.
BROKERED DEPOSITS
Only a "well capitalized" depository institution may accept brokered
deposits without prior regulatory approval. Under implementing regulations,
"well capitalized" banks may accept brokered deposits without restriction,
"adequately capitalized" banks may accept brokered deposits with a waiver from
the FDIC (subject to certain restrictions on payments of rates), while
"undercapitalized" banks may not accept brokered deposits.
FDIC INSURANCE PREMIUMS
The Bank is required to pay semiannual FDIC deposit insurance
assessments. Under the FDIC's risk-based insurance system, BIF-insured
institutions are currently assessed premiums of between zero and $0.27 per
$100 of insured deposits, depending on the institution's capital position and
other supervisory factors. Each financial institution is assigned to one of
three capital groups - well capitalized, adequately capitalized or
undercapitalized - and further assigned to one of three subgroups - within a
capital group, on the basis of supervisory evaluations by the institution's
primary federal and, if applicable, state supervisors and other information
relevant to the institution's financial condition and the risk posed to the
applicable FDIC deposit insurance fund. The actual assessment rate applicable
to a particular institution (and any applicable refund) will, therefore, depend
in part upon the risk assessment classification so assigned to the institution
by the FDIC.
Under EGRPRA, BIF-insured institutions will be assessed for certain
payments to be used to pay certain Financing Corporation ("FICO") obligations.
In addition to any BIF insurance assessments, BIF-insured banks are expected to
make payments relating to the FICO obligations equal to an estimated $0.0129
per $100 of eligible deposits each year during 1997 through 1999, and an
estimated $0.024 per $100 of eligible deposits thereafter. The Bank's
assessment rate was zero basis points before the FICO assessment noted above.
MONETARY POLICY AND ECONOMIC CONTROL
The commercial banking business in which the Bank engages is affected
not only by general economic conditions, but also by the monetary policies of
the FRB. Changes in the discount rate on member bank borrowing, availability
of borrowing at the "discount window," open market operations, the imposition
of changes in reserve requirements against members banks' deposits and assets
of foreign branches and the imposition of and changes in reserve requirements
against certain borrowings by banks and their affiliates are
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some of the instruments of monetary policy available to the FRB. These
monetary policies are used in varying combinations to influence overall growth
and distributions of bank loans, investments and deposits, and this use may
affect interest rates charged on loans or paid on deposits. The monetary
policies of the FRB have had a significant effect on the operating results of
commercial banks and are expected to do so in the future. The monetary
policies of these agencies are influenced by various factors, including
inflation, unemployment, short-term and long-term changes in the international
trade balance and in the fiscal policies of the United States Government.
Future monetary policies and the effect of such policies on the future business
and earnings of the Company cannot be predicted.
FINANCE COMPANY
The Finance Company is a wholly-owned subsidiary of the Company. As
indicated above, a bank holding company is only permitted to engage in
nonbanking activities that the have been determined by the FRB to be so closely
related to banking as to be a proper incident thereto. The FRB has promulgated
rules identifying certain permissible nonbanking activities in which a bank
holding company may engage including making, acquiring, or servicing loans or
other extensions of credit that can be made by consumer or commercial finance
companies, credit card companies, mortgage companies, or through factoring.
Prior to commencement of such activities, FRB approval is required
which approval has been received by the Company, and on or about March 30,
1998, the Company began providing such nonbanking services de novo through the
Finance Company.
The State of Florida also regulates the operation of a finance company
within the state. As a condition to providing such services in the State of
Florida, the Finance Company has applied for and been granted a mortgage
lender's license, retail installment sales license and sales finance license
from the Department's Division of Finance. Florida law requires that mortgage
lender licensees maintain a minimum net worth of $250,000 and that the foregoing
licenses be renewed biennially.
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UNDERWRITING
Under the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") among the Company, the Issuer Trust, and the
underwriter named therein (the "Underwriter"), the Underwriter has agreed to
purchase from the Issuer Trust and the Issuer Trust has agreed to sell to the
Underwriter, $15,000,000 aggregate Liquidation Amount of Preferred Securities at
the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus.
The Underwriting Agreement provides that the obligations of the
Underwriter is subject to certain conditions precedent and that the Underwriter
will purchase all of the Preferred Securities offered hereby if any of such
Preferred Securities are purchased.
The Underwriter has advised the Company and the Issuer Trust that the
Underwriter proposes to offer the Preferred Securities directly to the public
at the public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not to exceed $_____ per
Preferred Security. The Underwriter may allow, and such dealers may reallow, a
concession not in excess of $____ per Preferred Security to certain other
dealers. After the public offering of the Preferred Securities, the public
offering price, concession, and reallowance to dealers may be changed by the
representative of the Underwriter. No such change shall affect the amount of
proceeds to be received by the Issuer Trust as set forth on the cover page of
this Prospectus.
The Company and Issuer Trust have granted to the Underwriter an option
exercisable during the 30 day period beginning from the date of this Prospectus
to purchase up to an additional $2,250,000 aggregate Liquidation Amount of the
Preferred Securities, solely to cover over-allotments, if any, at the public
offering price as set forth on the cover page. To the extent that the
Underwriter exercises such option, the Issuer Trust will be obligated, pursuant
to the option, to sell such Preferred Securities to the Underwriter. If
purchased, the Underwriter will offer such additional Preferred Securities on
the same terms as those on which the $15,000,000 aggregate Liquidation Amount of
the Preferred Securities are being offered.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued
by the Company, the Underwriting Agreement provides that the Company will pay
as compensation for the Underwriter's arranging the investment therein of such
proceeds an amount of $____ per Preferred Security (or $_______ ($________ if
the over-allotment option is exercised in full) in the aggregate) and an
advisory fee equal to $25,000.
Because the National Association of Securities Dealers, Inc. ("NASD")
is expected to view the Preferred Securities as interest in a direct
participation program, the offering of the Preferred Securities is being made
in compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
Subject to certain limitations, the Company, the Issuer Trust, and the
Underwriter have agreed to indemnify each other against certain liabilities
including liabilities under the Securities Act, or to contribute to payments
that the Company, the Issuer Trust, or the Underwriter may be required to make
in respect thereof.
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The foregoing is a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to a copy of
the Underwriting Agreement which is on file as an exhibit to the Registration
Statement.
In connection with the offering of the Preferred Securities, the
Underwriter and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Securities
and Exchange Commission's Regulation M that are intended to stabilize,
maintain, or otherwise affect the market price of the Preferred Securities.
Such transactions may include over-allotment transactions in which the
Underwriter creates a short position for its own account by selling more
Preferred Securities than it is committed to purchase from the Issuer Trust.
In such a case, to cover all or part of the short position, the Underwriter may
exercise the over-allotment option described above or may purchase Preferred
Securities in the open market following completion of the initial offering of
the Preferred Securities. The Underwriter also may engage in stabilizing
transactions in which it bids for, and purchases, shares of the Preferred
Securities at a level above that which might otherwise prevail in the open
market for the purpose of preventing or retarding a decline in the market price
of the Preferred Securities. The Underwriter also may reclaim any selling
concessions allowed to a dealer if the Underwriter repurchases shares
distributed by that dealer. Any of the foregoing transactions may result in
the maintenance of a price for the Preferred Securities at a level above that
which might otherwise prevail in the open market. Neither the Company nor the
Underwriter makes any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Preferred Securities. The Underwriter is not required to engage
in any of the foregoing transactions and, if commenced, such transactions may
be discontinued at any time without notice.
The Preferred Securities are a new issue of securities with no
established trading market. The Company and the Issuer Trust have been advised
by the Underwriter that it intends to make a market in the Preferred
Securities. However, the Underwriter is not obligated to do so and such market
making may be interrupted or discontinued at any time without notice at the
sole discretion of the Underwriter. The Preferred Securities have been
approved for quotation on the Nasdaq National Market. Nasdaq National Market
maintenance standards require the existence of two market makers for continued
listing, and the presence of such market makers cannot be assured. No
assurance can be given as to the development or liquidity of any market for the
Preferred Securities.
Advest, Inc. acted as the managing underwriter in connection with the
Company's initial public offering completed in February 1996, and has continued
to serve as a financial advisor to the Company in connection with the Company's
acquisition and capital programs. In addition, Advest, Inc. has entered into
an agreement with the Bank to provide trust services to the Bank's customers
through Advest, Inc's wholly-owned banking subsidiary. Advest, Inc. may in the
future perform various services to the Company, including investment banking
services for which it may receive customary fees.
VALIDITY OF SECURITIES
The validity of the Guarantee and the Junior Subordinated Debentures
and certain tax matters will be passed upon for the Company by Carlton, Fields,
Ward, Emmanuel, Smith & Cutler, P.A., Tampa, Florida, and certain legal matters
will be passed upon for the Underwriter by Arnold & Porter, Washington, D.C.
and New York, New York. Arnold & Porter will rely as to certain matters of
Florida law on the opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler,
P.A. Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement, and the creation of the
Issuer Trust will be passed upon by Richards, Layton & Finger, P.A., special
Delaware counsel to the Company
109
<PAGE> 113
and the Issuer Trust. Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A.,
and Arnold & Porter will rely as to certain matters of Delaware law on the
opinion of Richards, Layton & Finger, P.A.
EXPERTS
The consolidated balance sheets of the Company and its subsidiaries as
of December 31, 1997 and 1996, and the consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997, which appear in the Prospectus, have been audited by
Coopers & Lybrand L.L.P., independent accountants, and have been included in
this Prospectus and in the Registration Statement in reliance on the report
given on the authority of that firm as experts in accounting and auditing and on
the report of Hacker, Johnson, Cohen & Grieb, P.A. on the financial statements
of Murdock as of December 31, 1997 and 1996 and for each of the three years in
the period December 31, 1997, included as Exhibit 99.1, and upon the authority
of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith files reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission" or the "SEC"). Such
reports, proxy statements, and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Seven World Trade
Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained at prescribed rates from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains an Internet Web site that contains reports, proxy
statements, and other information filed electronically by the Company with the
Commission which can be accessed at http://www.sec.gov. The Company's common
shares trade on the Nasdaq Stock Market and, as a result, reports, proxy
statements, and other information concerning the Company also can be inspected
at the offices of Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington,
D.C. 20006-1500.
In addition, the Company has filed with the Commission a Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules filed as part thereof,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock, reference is hereby made to the Registration
Statement, including the exhibits and schedules filed as part thereof.
Statements contained in this Prospectus as to the contents of any document
referred to herein are not necessarily complete and, in each instance, reference
is made to the copy of such document filed with the Commission as an exhibit to
the Registration Statement or otherwise, and each such statement is qualified in
all respects by such reference. The Registration Statement, including exhibits
and schedules filed as a part thereof, may be inspected without charge at Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
at prescribed rates.
110
<PAGE> 114
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996 AND
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
WITH REPORT OF INDEPENDENT ACCOUNTANTS
<PAGE> 115
INDEX TO FINANCIAL STATEMENTS OF THE COMPANY
<TABLE>
<CAPTION>
PAGES
<S> <C>
Report of Independent Accountants F-2
Consolidated Balance Sheets at December 31, 1997 and 1996 F-3
Consolidated Statements of Income for the Years Ended December 31, 1997, 1996, and
1995 F-4
Consolidated Statements of Shareholders' Equity for the Years Ended December 31,
1997, 1996, and 1995 F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996,
and 1995 F-6
Notes to Consolidated Financial Statements F-7 - F-30
Consolidated Condensed Balance Sheet at March 31, 1998 (Unaudited) F-31
Consolidated Condensed Statements of Income for the Three Months Ended March 31, 1998
and 1997 (Unaudited) F-32
Consolidated Condensed Statements of Comprehensive Income for the Three Months
Ended March 31, 1998 and 1997 (Unaudited) F-33
Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31,
1998 and 1997 (Unaudited) F-34
Notes to Consolidated Condensed Financial Statements (Unaudited) F-35 - F-36
</TABLE>
<PAGE> 116
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
American Bancshares, Inc. and Subsidiaries
Bradenton, Florida
We have audited the accompanying consolidated balance sheets of American
Bancshares, Inc. and Subsidiaries (the "Company") as of December 31, 1997 and
1996, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We did not audit the
financial statements of Murdock Florida Bank which statements reflect total
assets constituting 18% and 23%, at December 31, 1997 and 1996, respectively,
and net income constituting 15%, 13%, and 21% for the years ended December 31,
1997, 1996 and 1995, respectively. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to data included for Murdock Florida Bank, is based solely on the report
of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of American Bancshares,
Inc. and Subsidiaries as of December 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Tampa, Florida
February 13, 1998, except for Note 24,
as to which the date is March 23, 1998
F-2
<PAGE> 117
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
Cash and due from banks $ 13,275,893 $17,562,908
Federal funds sold 5,120,000 6,000,000
Loans held for sale 39,587,522 20,351,204
Investment securities available for sale (at aggregate fair value) 68,664,216 43,508,712
Loans receivable (net of allowance for loan losses and deferred loan
fees/costs of $1,704,237 in 1997 and $1,173,463 in 1996)
Loans receivable, net 213,405,033 175,264,438
Premises and equipment, net 9,160,971 7,134,589
Other assets 4,687,692 3,808,477
----------- ------------
Total assets $353,901,327 $273,630,328
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $302,745,776 $232,432,633
Securities sold under agreements to repurchase 17,528,493 10,112,986
Federal Home Loan Bank advances 5,000,000 6,300,000
Note payable 500,000 0
Other liabilities 2,047,748 1,280,802
------------ ------------
Total liabilities 327,822,017 250,126,421
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 14)
SHAREHOLDERS' EQUITY
Common stock - $1.175 par value; 10,000,000 shares authorized;
4,994,482 and 4,925,768 shares issued at December 31, 1997
and 1996, respectively 5,868,516 5,787,777
Additional paid-in capital 15,547,568 15,203,743
Unrealized gain (loss) on investment securities available for sale, net
of tax of $85,914 and $(56,145) at December 31, 1997 and 1996,
respectively 139,808 (90,951)
Retained earnings 4,523,418 2,603,338
------------ ------------
Total shareholders' equity 26,079,310 23,503,907
------------ ------------
Total liabilities and shareholders' equity $353,901,327 $273,630,328
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 118
AMERICAN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
for the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $20,101,030 $16,149,883 $13,091,496
Interest on federal funds sold 534,642 336,408 326,857
Interest on investment securities 3,996,145 2,945,060 2,407,366
----------- ----------- -----------
Total interest income 24,631,817 19,431,351 15,825,719
----------- ----------- -----------
Interest expense:
Deposits 11,905,370 9,474,587 8,087,161
Borrowings 1,012,036 490,591 364,887
----------- ----------- -----------
Total interest expense 12,917,406 9,965,178 8,452,048
----------- ----------- -----------
Net interest income 11,714,411 9,466,173 7,373,671
Provision for loan losses 921,000 514,654 701,604
----------- ----------- -----------
Net interest income after provision for loan losses 10,793,411 8,951,519 6,672,067
----------- ----------- -----------
Other income 4,155,646 2,148,059 2,085,774
----------- ----------- -----------
Other expenses 11,911,765 9,856,136 7,436,957
----------- ----------- -----------
Income before income tax provision 3,037,292 1,243,442 1,320,884
Income tax provision 1,117,212 460,953 470,975
----------- ----------- -----------
Net income $ 1,920,080 $ 782,489 $ 849,909
=========== =========== ===========
Weighted average basic shares outstanding 4,988,318 4,637,565 3,160,012
=========== =========== ===========
Weighted average diluted shares outstanding 5,019,484 4,692,093 3,206,992
=========== =========== ===========
Earnings per share:
Basic $ 0.38 $ 0.17 $ 0.27
=========== =========== ===========
Diluted $ 0.38 $ 0.17 $ 0.27
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 119
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
UNREALIZED
GAINS/
(LOSSES) ON
COMMON STOCK INVESTMENT
------------------------------------- ADDITIONAL SECURITIES
AUTHORIZED OUTSTANDING PAID-IN RETAINED AVAILABLE
SHARES SHARES PAR VALUE CAPITAL EARNINGS FOR SALE, NET TOTAL
---------- ----------- ---------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 4,000,000 3,024,944 $3,554,309 $ 7,737,523 $ 970,940 $ (778,923) $ 11,483,849
Exercise of warrants 0 212,932 250,195 610,333 0 0 860,528
Issuance of stock 0 87,218 102,481 377,293 0 0 479,774
Change in net unrealized
gain on investment
securities available
for sale 0 0 0 0 0 958,409 958,409
Net income 0 0 0 0 849,909 0 849,909
Change in net unrealized
gain on investment
securities available
for sale 6,000,000 0 0 0 0 0 0
----------- ----------- ---------- ----------- ---------- ----------- ------------
Balance, December 31,
1995 10,000,000 3,325,094 3,906,985 8,725,149 1,820,849 179,486 14,632,469
Exercise of warrants 0 163,695 192,342 789,828 982,170
Issuance of stock 0 1,436,979 1,688,450 5,688,766 0 0 7,377,216
Change in net unrealized
gain on investment
securities available
for sale 0 0 0 0 0 (270,437) (270,437)
Net income 0 0 0 0 782,489 0 782,489
----------- ----------- ---------- ----------- ---------- ----------- ------------
Balance, December 31,
1996 10,000,000 4,925,768 5,787,777 15,203,743 2,603,338 (90,951) 23,503,907
Exercise of warrants 0 61,595 72,374 297,196 0 0 369,570
Issuance of stock 0 7,119 8,365 46,629 0 0 54,994
Change in net unrealized
loss on investment
securities available
for sale 0 0 0 0 0 230,759 230,759
Net income 0 0 0 0 1,920,080 0 1,920,080
----------- ----------- ---------- ----------- ---------- ----------- ------------
Balance, December 31,
1997 10,000,000 4,994,482 $5,868,516 $15,547,568 $4,523,418 $ 139,808 $ 26,079,310
=========== =========== ========== =========== ========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 120
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,920,080 $ 782,489 $ 849,909
------------ ------------ ------------
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Deferred tax credit (199,194) (420,411) (392,300)
Depreciation 717,916 485,976 389,051
Amortization of investment securities 18,479 120,064 29,118
Provision for loan losses 921,000 514,654 701,604
Gain on sale of investment securities available for sale (139,820) (106,826) (42,310)
Gain on sale of loans (296,991) (190,624) (321,499)
Gain on sale of mortgage servicing rights (381,151) (323,378) (210,327)
Gain on sale of assets 0 0 (42,976)
(Gain) loss on sale of other real estate owned (12,990) 336,000 (64,000)
Origination of loans held for sale (58,451,859) (38,628,254) (42,845,175)
Proceeds from sales of loans held for sale 44,112,636 38,158,995 42,480,846
Increase in deferred loan costs 23,359 150,103 25,079
Increase in other liabilities 766,946 71,011 725,635
(Increase) decrease in other assets (961,732) 681,988 435,263
------------ ------------ ------------
Total adjustments (13,883,401) 849,298 868,009
------------ ------------ ------------
Net cash (used in) provided by operating activities (11,963,321) 1,631,787 1,717,918
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net loans to customers (43,152,942) (36,815,218) (29,070,401)
Purchases of bank premises and equipment (2,744,298) (3,332,104) (1,400,094)
Proceeds on sales of assets 0 0 96,000
Proceeds from sales of available for sale investment
securities 17,997,969 33,501,321 10,873,642
Proceeds from maturities of available for sale investment
securities 14,178,000 12,337,437 3,325,000
Purchases of available for sale investment securities (56,936,173) (49,448,883) (12,398,348)
Purchases of held-to-maturity investment securities 0 0 (4,000,000)
Recoveries on loans charged off 100,536 49,486 23,255
------------ ------------ ------------
Net cash used in investing activities (70,556,908) (43,707,961) (32,550,946)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, NOW, money market
and savings accounts 36,468,555 28,231,180 276,090
Net increase in time deposits 33,844,588 17,474,549 20,842,788
Net increase in securities sold under agreements to
repurchase 7,415,507 546,318 4,189,176
Proceeds from advances from borrowings 4,800,000 3,900,000 9,500,000
Repayments of advances from borrowings (5,600,000) (4,100,000) (3,600,000)
Repayments of obligations under capital leases 0 0 (11,000)
Proceeds from stock sale 424,564 8,359,386 1,340,302
------------ ------------ ------------
Net cash provided by financing activities 77,353,214 54,411,433 32,537,356
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (5,167,015) 12,335,259 1,704,328
Cash and cash equivalents at beginning of year 23,562,908 11,227,649 9,523,321
------------ ------------ ------------
Cash and cash equivalents at end of year $ 18,395,893 $ 23,562,908 $ 11,227,649
============ ============ ============
DISCLOSURES
Interest paid $ 12,710,683 $ 9,787,428 $ 8,269,000
============ ============ ============
Income taxes paid $ 1,415,233 $ 910,500 $ 549,000
============ ============ ============
Reclassification of loans to foreclosed real estate $ 160,000 $ 518,000 $ 781,000
============ ============ ============
Loans originated for sale of foreclosed real estate $ 95,000 $ 570,000 $ 613,000
============ ============ ============
Unrealized appreciation on investment securities $ 230,759 $ (270,437) $ 958,409
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 121
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION:
American Bancshares, Inc. (Holding Company) is a one-bank holding company,
operated under the laws of the State of Florida. It has two wholly owned
subsidiaries, which include a banking subsidiary, American Bank of Bradenton
(Bank), a state-chartered bank; and Freedom Finance Company (Finance), a
Florida Corporation. The Bank is a general commercial bank with all the
rights, powers, and privileges granted and conferred by the Florida Banking
Code. Finance was incorporated on March 26, 1997 and had no activity during
1997 other than a $100 capital contribution.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accounting and reporting policies of the Holding Company and
Subsidiaries conform to generally accepted accounting principles and general
practice within the banking industry. Following is a description of the more
significant of those policies:
BASIS OF PRESENTATION - The consolidated financial statements give
retroactive effect to the merger with Murdock Florida Bank, American Bank of
Bradenton, and the Holding Company. The merger was consummated on March 23,
1998 and resulted in the Holding Company issuing a total of 924,024 shares
of common stock in exchange for all of the outstanding stock of Murdock
Florida Bank. The transaction has been accounted for on a
pooling-of-interests basis, and the financial statements are presented as if
the merger had been consummated for the periods presented.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of the Holding Company and its wholly owned subsidiaries,
American Bank of Bradenton and Freedom Finance Company, collectively
referred to herein as the Company. All significant intercompany accounts and
transactions have been eliminated.
INVESTMENT SECURITIES AVAILABLE FOR SALE - Securities to be held for
indefinite periods of time and not intended to be held to maturity are
classified as available for sale. Assets included in this category are those
assets that management intends to use as part of its asset/liability
management strategy and that may be sold in response to changes in interest
rates, resultant prepayment risk and other factors related to interest rate
and resultant prepayment risk changes. Securities available for sale are
recorded at fair value. Both unrealized gains and losses on securities
available for sale, net of taxes, are included as a separate component of
shareholders' equity in the consolidated balance sheets until these gains or
losses are realized. If a security has a decline in fair value that is other
than temporary, then the security will be written down to its fair value by
recording a loss in the consolidated statements of operations.
F-7
<PAGE> 122
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Gains or losses on the disposition of investment securities are recognized
using the specific identification method.
LOANS - Loans are carried at the principal amount outstanding, net of
deferred loan fees and/or origination costs. Interest is accrued on a
simple-interest basis. Loans are charged to the allowance for loan losses at
such time as management considers them uncollectible in the normal course of
business. Accrual of interest is discontinued on a loan, including impaired
loans, when management believes, after considering economic and business
conditions and collection efforts, the borrower's financial condition is
such that collection of interest is doubtful. Classification of a loan as
nonaccrual is not necessarily indicative of a potential loss of principal.
ALLOWANCE FOR LOAN LOSSES - The Company adheres to an internal asset review
system and allowance for loan losses methodology designated to provide for
the detection of problem assets and to provide an adequate general valuation
allowance to cover loan losses. A provision for loan losses is charged to
operations based on management's evaluation of potential losses in the loan
portfolio. The provision is based on an analysis of the loan portfolio,
economic conditions, historical loan loss experience, changes in the nature
and volume of the loan portfolios and management's assessment of the
inherent risk in the portfolio in relation to the level of the allowance for
loan losses. While management uses the best information available to make
these evaluations, future adjustments to the allowance may be necessary if
economic conditions differ from the assumptions used in preparing the
evaluation. The Company also establishes provisions on a specific loan basis
when an identified problem becomes known. Ultimate losses may vary from the
current estimates and any adjustments, as they become necessary, are
reported in earnings in the periods in which they become known.
When a loan or portion of a loan, including an impaired loan, is determined
to be uncollectible, the portion deemed uncollectible is charged against the
allowance, and subsequent recoveries, if any, are credited to the allowance.
INCOME RECOGNITION ON IMPAIRED AND NONACCRUAL LOANS - Loans, including
impaired loans, are generally classified as nonaccrual if they are past due
as to maturity or payment of principal or interest for a period of more than
90 days, unless such loans are well-collateralized and in the process of
collection. If a loan or a portion of a loan is classified as doubtful or is
partially charged off, the loan is classified as nonaccrual. Loans that are
on a current payment status or past due less than 90 days may also be
classified as nonaccrual if repayment in full of principal and/or interest
is in doubt.
Loans may be returned to accrual status when all principal and interest
amounts contractually due (including arrearages) are reasonably assured of
repayment within an acceptable period of time, and there is a sustained
period of repayment performance (generally a minimum of six months) by the
borrower, in accordance with the contractual terms of interest and
principal.
F-8
<PAGE> 123
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
While a loan is classified as nonaccrual and the future collectibility of
the recorded loan balance is doubtful, collections of interest and principal
are generally applied as a reduction to principal outstanding. When the
future collectibility of the recorded loan balance is expected, interest
income may be recognized on a cash basis. In the case where a nonaccrual
loan had been partially charged off, recognition of interest on a cash basis
is limited to that which would have been recognized on the recorded loan
balance at the contractual interest rate. Cash interest receipts in excess
of that amount are recorded as recoveries to the allowance for loan losses
until prior charge-offs have been fully recovered.
LOANS HELD FOR SALE - Mortgage loans originated or purchased and intended
for sale in the secondary market are carried at the lower of cost or market
as determined by outstanding commitments from investors or current investor
yield requirements, calculated on the aggregate loan basis. Net unrealized
losses, if any, are recognized in a valuation allowance by charges to
earnings. Gains and losses resulting from the sales of these loans are
recognized in the period the sale occurs. Mortgage loan servicing fees are
earned concurrently with the receipt of the related mortgage payments.
MORTGAGE SERVICING RIGHTS - The Company recognizes an asset for rights to
service mortgage loans for others by management periodically. The value of
mortgage servicing rights related to loans sold was $145,000 and $226,000 at
December 31, 1997 and 1996, respectively. The Company had no valuation
allowance for capitalized mortgage servicing rights at December 31, 1997 and
1996.
LOAN FEES - Loan origination fees and certain direct loan origination costs
are deferred and amortized as a yield adjustment, using a method which
approximates the interest method, over the contractual lives of the loans.
The net of deferred origination fees and deferred origination costs is
presented as an adjustment of loans receivable in the accompanying balance
sheets.
The Company purchases consumer loans from local auto dealers which are
collateralized by automobiles. In conjunction with this program, the Company
pays a premium represented by the present value differential of the yield
required by the Company and the underlying loan interest rate. The premium
paid is amortized as a yield adjustment, using the interest method, over the
contractual lives of the loans. If the loan prepays, the Company has
recourse against the auto dealer for any unamortized premiums. At December
31, 1997 and 1996, the unamortized premiums totaled $448,934 and $459,541,
respectively.
F-9
<PAGE> 124
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. Summary of Significant Accounting Policies, continued:
OTHER REAL ESTATE OWNED - Other real estate owned includes properties
acquired through foreclosure or acceptance of deeds in lieu of foreclosure.
These properties are recorded on the date acquired at the lower of fair
value minus estimated costs to sell or the recorded investment in the
related loan. If the fair value minus estimated costs to sell the property
acquired is less than the recorded investment in the related loan, the
resulting loss is charged to the allowance for loan losses. The resulting
carrying value established at the date of foreclosure becomes the new cost
basis for subsequent accounting. After foreclosure, if the fair value minus
estimated costs to sell the property becomes less than its cost, the
deficiency is charged to the valuation allowance on other real estate owned
or charged directly to the asset. Costs relating to the development and
improvement of the property are capitalized, whereas those relating to
holding the property for sale are charged to expense. Gains and losses on
the disposition of other real estate owned are reflected in operations as
incurred. The Company had other real estate owned of $363,501 and $90,000 at
December 31, 1997 and 1996, respectively.
PREMISES AND EQUIPMENT - Premises and equipment are carried at cost less
accumulated depreciation and amortization. Depreciation and amortization are
computed on the straight-line method over the estimated useful lives of the
related assets. Maintenance, repairs and minor improvements are charged to
operating expenses as incurred. Major improvements and betterments are
capitalized. Upon retirement or other disposition of the assets, the
applicable cost and accumulated depreciation are removed from the accounts
and any gains or losses are included in operations.
INCOME TAXES - The Company files consolidated income tax returns. Deferred
tax assets or liabilities are computed based on the difference between the
financial statement and income tax bases of assets and liabilities using the
enacted marginal tax rate. Deferred income tax expenses or credits are based
on the changes in the asset or liability from period to period. The effect
on deferred income taxes of a change in tax rates is recognized in income in
the period that includes the enactment date.
STATEMENT OF CASH FLOWS - For purposes of reporting cash flows, cash and
cash equivalents include cash and due from banks and federal funds sold.
EARNINGS PER SHARE - In 1997, the Financial Accounting Standards Board
issued Statement No. 128 (FAS No. 128), "Earnings Per Share." FAS No. 128
replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. All earnings per share amounts
have been restated to conform to the FAS No. 128 requirements.
Basic earnings per common share is calculated by dividing net income by the
sum of the weighted average number of shares of common stock outstanding.
F-10
<PAGE> 125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. Summary of Significant Accounting Policies, continued:
Diluted earnings per common share is calculated by dividing net income by
the weighted average number of shares of common stock outstanding, assuming
the exercise of stock options and warrants using the treasury stock method.
Such adjustments to the weighted average number of shares of common stock
outstanding are made only when such adjustments dilute earnings per common
share. The diluted earnings per share is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average common shares outstanding 4,988,318 4,637,565 3,160,012
Weighted average common shares equivalents 31,166 54,528 46,980
---------- ---------- ----------
Shares used in diluted earnings per share
calculation 5,019,484 4,692,093 3,206,992
========== ========== ==========
</TABLE>
RECLASSIFICATIONS - Certain amounts in the 1996 financial statements have
been reclassified to conform with the current year presentation. Such
reclassification had no impact on total assets, equity, net income or total
cash flow balances previously reported.
3. INVESTMENT SECURITIES AVAILABLE FOR SALE:
The amortized costs and approximate fair value of investment securities
available for sale at December 31, 1997 are summarized as follows:
<TABLE>
<CAPTION>
1997
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED APPROXIMATE
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
U.S. Treasury Securities $ 4,057,278 $ 358 $ (19,046) $ 4,038,590
U.S. Government agencies 55,764,939 125,844 (43,127) 55,847,656
State and municipals 1,117,877 45,693 0 1,163,570
----------- ---------- ---------- -----------
Total debt securities 60,940,094 171,895 (62,173) 61,049,816
----------- ---------- ---------- -----------
FHLB stock 1,709,400 0 0 1,709,400
Mortgage-backed securities 5,789,000 129,000 (13,000) 5,905,000
----------- ---------- ---------- -----------
Total available for sale $68,438,494 $ 300,895 $ (75,173) $68,664,216
=========== ========== ========== ===========
</TABLE>
F-11
<PAGE> 126
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. INVESTMENT SECURITIES AVAILABLE FOR SALE, CONTINUED:
<TABLE>
<CAPTION>
1996
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED APPROXIMATE
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
U.S. Treasury Securities $ 7,562,521 $ 24,193 $ (162,264) $ 7,424,450
U.S. Government agencies 22,202,152 0 (122,400) 22,079,752
State and municipals 1,020,639 15,000 (1,258) 1,034,381
----------- ---------- ---------- -----------
Total debt securities 30,785,312 39,193 (285,922) 30,538,583
----------- ---------- ---------- -----------
FHLB stock 1,075,100 0 0 1,075,100
Mortgage-backed securities 11,803,396 144,951 (53,318) 11,895,029
----------- ---------- ---------- -----------
Total available for sale $43,663,808 $ 184,144 $ (339,240) $43,508,712
=========== ========== ========== ===========
</TABLE>
The FHLB stock is a restricted investment that is required by the FHLB to be
maintained by the Company.
The amortized cost and approximate fair value of investments at December 31,
1997, by scheduled maturity, are shown below. Scheduled maturities may
differ from actual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED APPROXIMATE
COST FAIR VALUE
------------ ------------
<S> <C> <C>
Due in one year or less $ 2,604,528 $ 2,599,170
Due after one year through five years 20,632,650 20,618,685
Due after five years through ten years 35,598,916 35,723,107
Due after ten years 2,104,000 2,108,854
------------ ------------
Total debt securities 60,940,094 61,049,816
FHLB stock 1,709,400 1,709,400
------------ ------------
Mortgage-backed securities 5,789,000 5,905,000
------------ ------------
$ 68,438,494 $ 68,664,216
============ ============
</TABLE>
Proceeds from the sale of investment securities available for sale during
the years ended December 31, 1997, 1996 and 1995 were $17,997,969,
$33,501,321, and $10,873,642, respectively. Gross gains of $148,259,
$159,526, and $42,310 were realized on these sales for the years ended
December 31, 1997, 1996, and 1995, respectively. Gross losses of $8,439 and
$52,700 were realized on these sales for the years ended December 31, 1997
and 1996, respectively.
At December 31, 1997, the Company had pledged securities with a carrying
value of approximately $3,788,000 and market value of approximately
$3,827,000 to the State of Florida for public fund deposits. The current
value of pledged securities is adequate to meet the pledging requirements.
F-12
<PAGE> 127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. LOANS RECEIVABLE, NET:
The Company's loan portfolio consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Residential mortgage loans, substantially all single-family $ 54,243,596 $ 49,575,342
Commercial and commercial real estate loans 112,038,918 82,171,560
Consumer loans 48,826,756 44,690,999
------------ ------------
215,109,270 176,437,901
Less allowance for loan losses (2,311,415) (1,761,000
Net deferred costs 607,178 587,537
------------ ------------
Loans, net $213,405,033 $175,264,438
============ ============
</TABLE>
The Company grants and purchases real estate, commercial and consumer loans
throughout Florida, with a majority in the Sarasota and Manatee County
area. Although the Company has a diversified loan portfolio, a significant
portion of its debtors' ability to honor their contracts is dependent
primarily upon the economy of Sarasota and Manatee Counties, Florida and
general economic conditions.
A summary of activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of year $ 1,761,000 $ 1,609,000 $ 1,374,000
Provision charged to income 921,000 514,654 701,604
Recoveries on loans previously charged off 100,535 49,486 67,255
Loans charged off (471,120) (412,140) (533,859)
------------ ------------ ------------
Balance at end of year $ 2,311,415 $ 1,761,000 $ 1,609,000
============ ============ ============
</TABLE>
In management's opinion, the allowance is adequate to reflect the risk in
the loan portfolio.
At December 31, 1997, 1996, and 1995, the recorded investment in loans for
which impairment has been recognized totaled approximately $662,000,
$1,478,000, and $799,000, respectively. The total allowance for loan losses
related to these loans was approximately $246,000, $331,000, and $233,000
at December 31, 1997, 1996 and 1995, respectively. Interest income on
impaired loans of approximately $48,500 and $87,000 was recognized for cash
payments received in 1997 and 1996, respectively. For the years ended
December 31, 1997 and 1996, the average recorded investment in impaired
loans was $312,000 and $1,139,000.
F-13
<PAGE> 128
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. LOANS RECEIVABLE, NET, CONTINUED:
At December 31, 1997 and 1996, the Company had approximately $986,000 and
$1,134,000 in nonaccrual loans, respectively. For the years ended December
31, 1997 and 1996, the amount of interest income not recorded related to
nonaccrual loans was approximately $42,000 and $60,000, respectively.
Interest income that would have been earned on the nonaccrual loans for the
year ended December 31, 1995 was immaterial. At December 31, 1997 and 1996,
there were no accruing loans that were 90 days or more past due.
LOANS TO OFFICERS AND DIRECTORS - In the course of its business, the
Company has granted loans to executive officers, directors and principal
shareholders of the Company and to entities to which they are related.
Following is a summary of the amount of loans in which the aggregate of the
loans exceeded $60,000 during the year:
<TABLE>
<CAPTION>
1997
------------
<S> <C>
Balance at beginning of year $ 6,892,406
New loans 2,164,334
Repayments on loans (2,597,223)
------------
Balance at end of year $ 6,459,517
============
</TABLE>
5. PREMISES AND EQUIPMENT:
A summary of premises and equipment at December 31, 1997 and 1996 is as
follows:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Land $ 2,802,264 $ 2,792,263
Building and improvements 5,405,441 3,290,277
Furniture, fixtures, and equipment 4,034,019 3,618,909
------------ ------------
12,241,724 9,701,449
Less accumulated depreciation (3,080,753) (2,566,860)
------------ ------------
$ 9,160,971 $ 7,134,589
============ ============
</TABLE>
Depreciation expense totaled $717,916, $485,976, and $389,051 for the years
ended December 31, 1997, 1996, and 1995, respectively.
F-14
<PAGE> 129
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. LOAN SERVICING:
Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. The unpaid principal balances of mortgage
loans serviced for others was approximately $10,998,000 and $19,782,000 at
December 31, 1997 and 1996, respectively.
Custodial escrow balances maintained in connection with the foregoing loan
servicing, and included in demand deposits, were $40,653 and $34,675 at
December 31, 1997 and 1996, respectively.
Mortgage servicing rights of $187,889 and $254,783 were capitalized in 1997
and 1996, respectively. There were no mortgage servicing rights in 1995.
Amortization of mortgage servicing rights was $25,927 and $28,901 during
1997 and 1996, respectively. The value of mortgage servicing rights sold
was $243,100 and $0 for 1997 and 1996, respectively. At December 31, 1997
and 1996, the capitalized mortgage servicing rights totaled $144,744 and
$225,882, respectively, which approximated fair value.
7. DEPOSITS:
Deposits consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Demand $ 44,119,577 29,763,696
NOW 24,390,090 20,546,210
Money market 61,997,868 45,463,356
Savings 13,258,135 11,523,853
------------ ------------
143,765,670 107,297,115
------------ ------------
Certificate accounts:
Under $100,000 111,339,006 90,512,837
Over $100,000 34,838,121 23,361,471
IRAs 12,802,979 11,261,210
------------ ------------
158,980,106 125,135,518
------------ ------------
$302,745,776 232,432,633
============ ============
</TABLE>
The aggregate amount of certificates of deposit of $100,000 or more at
December 31, 1997 and 1996 was approximately $36,170,000 and $24,682,000,
respectively.
F-15
<PAGE> 130
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. DEPOSITS, CONTINUED:
A summary of certificate accounts at December 31, 1997 by year of scheduled
maturity follows:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Due within one year $ 86,347,105 $ 54,378,388
Due after one year through two years 34,662,004 18,454,878
Due after two years through three years 13,486,909 20,754,335
Due after three years through four years 19,389,187 12,087,533
Due after four years 5,094,901 19,460,384
------------ ------------
$158,980,106 $125,135,518
============ ============
</TABLE>
Interest expense on deposit accounts is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Interest on NOW accounts and money market
deposit accounts $ 3,206,096 $ 2,087,059 $ 1,794,281
Interest on savings accounts 304,375 312,249 330,995
Interest on certificate accounts 8,394,899 7,075,279 5,961,885
------------ ------------ ------------
$ 11,905,370 $ 9,474,587 $ 8,087,161
============ ============ ============
</TABLE>
8. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE:
The Company enters into sales of securities under agreements to repurchase.
Repurchase agreements are treated as financings, and the obligations to
repurchase securities sold are reflected as a liability in the consolidated
balance sheets. The dollar amount of securities underlying the agreements
remains in the asset accounts. The securities sold under repurchase
agreements remain in the custody of a third-party trustee. The Company may
have sold, loaned, or otherwise disposed of such securities in the normal
course of its operations and has agreed to maintain substantially identical
securities during the agreements. The agreements mature within 30 days.
Information related to the Company's securities sold under repurchase
agreements (including accrued interest) at December 31, 1997 and 1996 is
presented below, segregated by the type of securities sold and by due date
of the agreement:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Average balance during the year $ 14,375,332 $ 9,660,214
Average interest rate during the year 4.54% 4.08%
Maximum month-end balance during the year $ 21,589,255 $ 10,557,098
U.S. Treasury securities underlying the agreements at year-end:
Carrying value $ 19,284,514 $ 11,242,138
Fair value 19,332,128 11,153,493
</TABLE>
F-16
<PAGE> 131
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. FEDERAL HOME LOAN BANK ADVANCES:
Each Federal Home Loan Bank (FHLB) is authorized to make advances to
its member associations, subject to such regulations and limitations
as the FHLB may prescribe. The Bank's borrowings from the FHLB of
Atlanta at December 31, 1997 and 1996 were $5,000,000 and $6,300,000
at 6.31% and 6.95%, respectively, with the December 31,1997 balance
maturing in October 1998.
The FHLB requires that the Bank maintain qualifying mortgages as
collateral and all of its FHLB stock as collateral for its advances.
As of December 31, 1997, the Bank has a credit availability of
$20,000,000.
Uncollateralized Federal Fund lines amounting to $3.4 million at
December 31, 1997 were maintained with various banks with rates which
are at or below prime rate. The lines and their terms are periodically
reviewed and are generally subject to withdrawal at the discretion of
the banks. No borrowings on these agreements were outstanding at
December 31, 1997 and 1996, respectively.
10. NOTE PAYABLE:
In 1997, the Company entered into a Loan Agreement with a national
banking association for a $5 million revolving line of credit
facility. The agreement requires the proceeds of the new credit
facility to be used for the acquisition of real estate to be used for
the development of the Company's corporate headquarters, an operations
center, and bank branches. The credit facility is collateralized by
the shares of the Bank. The agreement requires the Company to meet
certain covenants and restricts the payment of dividends, which have
been met. Interest on the revolving credit facility is calculated
quarterly on either one- or three-month LIBOR plus 175 basis points
(7.74% at December 31, 1997). After two years, the loan converts into
a ten-year term note with a five-year balloon payment. The total
amount of unused revolving credit available to the Company at December
31, 1997 was $4.5 million.
11. INCOME TAXES:
The Company's provision for income taxes consisted of the following
for the years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Current:
Federal $ 1,239,812 $ 534,953 $ 786,835
State 76,600 29,200 76,440
----------- ----------- -----------
1,316,412 564,153 863,275
----------- ----------- -----------
Deferred:
Federal (184,000) (90,500) (363,900)
State (15,200) (12,700) (28,400)
----------- ----------- -----------
(199,200) (103,200) (392,300)
----------- ----------- -----------
$ 1,117,212 $ 460,953 $ 470,975
=========== =========== ===========
</TABLE>
F-17
<PAGE> 132
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
11. INCOME TAXES. CONTINUED:
Deferred income taxes consisted of the following for the years ended
December 31:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Provision for loan losses $(163,000) $ 134,300 $(163,000)
Cash to accrual adjustment (58,000) 57,900 (72,200)
Merger expense (128,000) 0 0
Net operating loss carryforward 219,000 (219,000) 0
Other (69,200) (76,400) (157,100)
--------- --------- ---------
$(199,200) $(103,200) $(392,300)
========= ========= =========
</TABLE>
Deferred income taxes reflect the impact of temporary differences
between the amounts of assets and liabilities recorded for financial
reporting purposes and such amounts as measured in accordance with tax
laws. In general, these temporary differences are more inclusive than
timing differences recognized under previously applicable accounting
principles. The items which comprise a significant portion of deferred
tax assets and liabilities at December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Deferred tax assets:
Book over tax bad debts $ 657,400 $ 494,400
Market value of loans held for sale 105,800 101,000
Merger expense 128,000 0
Net operating loss carryforward 0 219,000
Other 31,400 15,200
--------- ---------
Deferred tax assets 922,600 829,600
--------- ---------
Deferred tax liabilities:
Loan origination fees (71,200) (49,700)
Cash to accrual adjustment (57,900) (116,800)
Other 0 (63,900)
--------- ---------
Deferred tax liabilities (129,100) (230,400)
--------- ---------
Net deferred tax asset $ 793,500 $ 599,200
========= =========
</TABLE>
The Company's effective income tax rates of 37%, 37%, and 36% for the
years ended December 31, 1997, 1996, and 1995, respectively, vary from
the statutory federal income tax rate of 34% due primarily to state
income taxes of 5.5% net of federal tax benefits.
F-18
<PAGE> 133
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
12. OTHER INCOME:
Other income consisted of the following for the years ended December
31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ----------- ----------
<S> <C> <C> <C>
Service charges on deposit accounts $1,812,104 $ 1,192,258 $1,037,697
Broker loan fees 327,512 32,807 38,350
Net gains on sales of investment securities 139,820 106,826 42,310
Net gains on sales of loans held for sale 296,991 190,624 321,499
Net gain (loss) on sale of other real estate owned 12,990 (336,000) 64,000
Merchant fees on credit cards 479,048 262,061 97,114
Late fees 171,301 127,486 55,503
Net gain on sales of servicing rights 573,289 323,377 210,327
Gain on sale of assets 0 0 63,515
Other 342,591 248,620 155,459
---------- ----------- ----------
$4,155,646 $ 2,148,059 $2,085,774
========== =========== ==========
</TABLE>
13. OTHER EXPENSES:
Other expenses consisted of the following for the years ended December
31:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Compensation and related benefits $ 5,181,275 $4,361,130 $3,165,104
Occupancy and equipment 1,627,498 1,183,960 1,043,853
SAIF assessment 0 348,000 0
FDIC insurance 81,831 148,181 299,478
Data processing 916,891 925,140 583,708
Advertising and promotion 307,154 350,507 159,284
Printing supplies and postage 433,705 322,445 224,191
Directors fees and expenses 156,680 123,952 97,063
Professional fees 533,606 243,934 187,367
ATM and credit card fees 631,077 205,681 86,375
Foreclosed real estate expense 29,000 223,000 632,000
Intangible taxes 156,767 126,235 75,873
Other 1,856,281 1,293,971 882,661
----------- ---------- ----------
$11,911,765 $9,856,136 $7,436,957
=========== ========== ==========
</TABLE>
Loan origination costs of approximately $686,000, $380,000, and
$342,000 in 1997, 1996, and 1995, respectively, have been offset
against compensation and related benefits.
F-19
<PAGE> 134
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
14. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
The Company is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to
extend credit, standby letters of credit, and credit cards. They
involve, to varying degrees, elements of credit and interest rate risk
in excess of the amount recognized on the balance sheet. The contract
or notional amounts of those instruments reflect the extent of
involvement the Company has in particular classes of financial
instruments. The Company has no financial instruments with
off-balance-sheet risk that are held for trading purposes.
The Company's exposure to credit loss in the event of nonperformance
by the other party to the financial instrument for commitments to
extend credit and standby letters of credit is represented by the
contractual or notional amount of the instruments. The Company uses
the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments. As of
December 31, 1997 and 1996 financial instruments with
off-balance-sheet risk were as follows:
<TABLE>
<CAPTION>
CONTRACTUAL OR NOTIONAL AMOUNTS 1997 1996
------------------------------- ----------- ------------
<S> <C> <C>
Commitments to extend credit $56,598,000 $29,395,000
Standby letters of credit $ 537,000 $ 498,000
Credit cards $ 4,742,000 $ 4,258,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of
the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash
requirements. The Company evaluates each customer's credit worthiness
on a case-by-case basis. The amount of collateral obtained if deemed
necessary by the Company upon extension of credit is based on
management's credit evaluation of the counter-party. Collateral held
varies but may include accounts receivable, inventory, property,
plant, and equipment, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party.
Those guarantees are primarily issued to support public and private
borrowing arrangements, including commercial paper, bond financing,
and similar transactions. The guarantees are short-term, expiring in
1997.
F-20
<PAGE> 135
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
15. EMPLOYEE BENEFIT AND STOCK OPTION PLANS:
The Company has a qualified plans under Section 401(k) of the Internal
Revenue Code (Plans) for all employees meeting certain eligibility
requirements. The Plans allow participants to make annual
contributions equal to 15% or less of the participant's compensation
up to a maximum allowed by Internal Revenue Service regulation. The
Company may match a percentage of the participant's contributions.
Plan contributions by the Company for the year ended December 31, 1997
and 1996 was approximately $28,100 and $18,300, respectively.
The Company has a qualified Incentive Stock Option plan (Incentive
Plan) and a Non-qualified Share Option Plan for non-employee directors
(Non-qualified Plan) under which the Company may grant options for up
to 150,000 and 75,000 shares of common stock, respectively. Under the
Plans, the exercise price of each option equals the market price of
the Company's stock on the date of grant. Options are granted upon
approval of the Board of Directors and vest 33% per year for three
years and are exercisable over 10 years from the date of the grant.
The Company applies APB Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB 25) and related Interpretations in accounting for
its Plans. Accordingly, no compensation cost has been recognized for
options granted under the Plan. Had compensation cost for the
Company's Plan been determined based on the fair value at the grant
dates for awards under the Plan consistent with the method of SFAS
123, the Company's net income and net income per share would have been
reduced to the pro forma amounts of $1,890,680, $774,489, and $839,909
net income and earnings per share of .38, .17, and .27 for the years
ended December 31, 1997, 1996 and 1995, respectively.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1997; dividend yield
of 0% in each period, as there has been no regular dividend payment
history, expected stock price volatility of 0%, risk-free interest
rates of 6.35%; and expected lives of four years.
A summary of the status of the Company's Plan as of December 31, 1997
and 1996, respectively, and changes during the years ending on those
dates is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ---------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- ------------- -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 28,800 $5.24 24,000 $5.25 19,200 $5.25
Granted 34,800 7.93 4,800 5.17 4,800 5.24
Exercised
Forfeited
------ ------ ------
Outstanding at end of year 63,600 6.71 28,800 5.24 24,000 5.25
====== ====== ======
Options exercisable at year-end 33,600 28,800 24,000
====== ====== ======
</TABLE>
F-21
<PAGE> 136
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
15. EMPLOYEE BENEFIT AND STOCK OPTION PLANS, CONTINUED:
The following table summarizes information about the Plan's stock
options at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------ -------------------------------
NUMBER WEIGHTED-AVERAGE WEIGHTED NUMBER WEIGHTED
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT 12/31/97 CONTRACTUAL LIFE EXERCISE AT 12/31/97 EXERCISE PRICE
PRICE
--------------- ----------- ---------------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$5.50 - $8.50 63,600 years $ 6.71 $ 5.23
====== ======== =======
</TABLE>
16. SHAREHOLDERS' EQUITY:
The Company's current policy is to retain all earnings to fund
operations. Future dividend payments will be at the discretion of the
Board of Directors of the Company and will be dependent upon several
factors, including State and Federal banking regulations that impose
limitations on such payments.
In February 1996, the Company completed a public offering of 1,250,000
shares of common stock at $6.00 per share (the Offering). Subsequent
to the Offering, an additional 187,500 shares of common stock were
issued as part of the over-allotment amount. The net proceeds of the
Offering, after deducting applicable issuance costs and expenses, were
approximately $7,377,000.
In January 1997, the Company acquired the net assets of Deschamps &
Gregory Mortgage Company, Inc., a mortgage brokerage company, for
approximately $55,000. The Company issued 7,119 shares of common stock
in connection with the acquisition. The Company accounted for the
acquisition using the purchase method of accounting.
The following table summarizes the activity of the Company's issued
and outstanding warrants and their corresponding exercise prices:
<TABLE>
<CAPTION>
1992 WARRANTS 1994 WARRANTS
--------------------- ---------------------
WARRANTS EXERCISE WARRANTS EXERCISE
OUTSTANDING PRICE OUTSTANDING PRICE
--------------------- ---------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995 227,126 $4.00 144,606 $6.00
Warrants exercised (208,532) 4.00 (4,400) 6.00
Warrants issued 0 4.00 87,018 6.00
-------- --------
Balance, December 31, 1995 18,594 $4.00 227,224 $6.00
Warrants exercised 0 0.00 (163,695) 6.00
-------- --------
Balance, December 31, 1996 18,594 4 63,529 6
Options issued -- 0.00 -- --
Warrants expired (18,594) 0.00 (1,934) 6.00
Warrants exercised -- 0.00 (61,595) 6.00
-------------------- -------------------
Balance, December 31, 1997 0 $4.00 0 $6.00
======== =======
</TABLE>
F-22
<PAGE> 137
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
17. DIVIDEND RESTRICTIONS:
State banking regulations limit the amount of dividends that may be
paid by the Bank to its Parent without prior approval of regulatory
agencies. The amount of dividends that may be paid is based on the net
profits of the current year combined with retained net profits of the
preceding two years as defined by state banking regulations. At
December 31, 1997, approximately $3,720,000 are available for payment
of dividends without prior regulatory approval.
18. FAIR VALUES OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments," requires that the Company
disclose estimated fair values for its financial instruments. Fair
value is defined as the price at which a financial instrument could be
liquidated in an orderly manner over a reasonable time period under
present market conditions. Fair values estimates, methods and
assumptions are set forth below for the Company's financial
instruments.
CASH AND DUE FROM BANK - For cash and due from banks, the carrying
amount is a reasonable estimate of fair value.
INVESTMENTS AND MORTGAGE-BACKED SECURITIES - The fair value of
investments and mortgage-backed securities is estimated based on bid
prices published in financial newspapers or bid quotations received
from securities dealers.
LOANS RECEIVABLE - The estimated fair value of the Company's fixed
rate loans was calculated by discounting contractual cash flows
adjusted for current prepayment estimates. The discount rates were
based on the interest rate charged to current customers for comparable
loans. The Company's adjustable rate loans reprice frequently at
current market rates. Therefore, the fair value of these loans has
been estimated to be approximately equal to their carrying amount.
The impact of delinquent loans on the estimation of the fair values
described above is not considered to have a material effect and,
accordingly, delinquent loans have been disregarded in the valuation
methodologies used.
DEPOSIT LIABILITIES - The fair value of deposits with no stated
maturity, such as demand, NOW, money market and savings is equal to
the amount payable on demand as of December 31, 1996. The fair value
of time deposits is estimated using the rates currently offered for
deposits of similar remaining maturities.
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS - The repurchase
agreements outstanding at December 31, 1997 mature within 30 days. The
estimated fair value of these agreements approximates the carrying
value.
FHLB ADVANCES AND NOTE PAYABLE - Cash flow from fixed-rate borrowings
are discounted at a spread to the zero Treasury curve which equates to
the LIBOR yield. The note payable's interest rate reprices quarterly.
The estimated fair value approximates the carrying value.
F-23
<PAGE> 138
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
18. FAIR VALUES OF FINANCIAL INSTRUMENTS, CONTINUED:
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT - The fair
value of commitments to extend credit is estimated using the fees
currently charged to enter into similar agreements, taking into
account the remaining terms of the agreements and the present
creditworthiness of the counterparties. For fixed rate loan
commitments, fair value also considers the difference between current
levels of interest rates and the committed rates. The fair value of
standby letters of credit is based on fees currently charged for
similar agreements or on the estimated cost to terminate them or
otherwise settle the obligations with the counterparties.
The estimated fair values of the Company's financial instruments are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------------------
1997 1996
--------------------- ---------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from bank $ 13,276 $ 13,276 $ 17,563 $ 17,563
Federal funds sold 5,120 5,120 6,000 6,000
Loans held for sale 39,588 39,747 20,351 20,414
Investment securities available for sale 68,664 68,664 43,509 43,509
Loans receivable, net 213,405 218,927 175,264 175,441
Financial liabilities:
Deposits 302,746 303,586 232,433 234,291
Securities sold under agreements to
repurchase 17,528 17,528 10,113 10,113
FHLB advances 5,000 5,000 6,300 6,300
Note payable 500 500 0 0
<CAPTION>
CONTRACT CONTRACT
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Unrecognized financial instruments:
Loan commitments $ 56,598 $ 80 $ 29,395 $ 41
Standby letters of credit 537 0 498 0
Credit cards 4,742 0 4,258 0
</TABLE>
LIMITATIONS - The fair value estimates are made at a discrete point in
time based on relevant market information and information about the
financial instrument. Quoted market prices, when available, are used
as the measure of fair value. When quoted market prices are not
available, fair value estimates have been based on judgments regarding
future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors.
These estimates are inherently subjective, involving uncertainties and
matters of significant judgment, and, therefore, may not be indicative
of the value that could be realized in a current market exchange.
Changes in assumptions could significantly affect the estimates.
F-24
<PAGE> 139
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
18. FAIR VALUES OF FINANCIAL INSTRUMENTS, CONTINUED:
The value estimates are based on existing on- and off-balance-sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities
that are not considered financial instruments. Other significant
assets and liabilities that are not considered financial assets or
liabilities include deferred tax assets and property, plant and
equipment. In addition, the tax ramifications related to the
realization of the unrealized gains and losses for investments and
mortgage-backed securities can have a significant effect on fair value
estimates and have not been considered in many of the estimates.
19. RISKS AND UNCERTAINTIES:
The earnings of the Company depend on the earnings of the Bank. The
Bank is dependent primarily upon the level of net interest income,
which is the difference between interest earned on its interest
earning assets, such as loans and investments and the interest paid on
its interest-bearing liabilities, such as deposits and borrowings.
Accordingly, the operations of the Bank are subject to risks and
uncertainties surrounding its exposure to changes in the interest rate
environment.
Most of the Bank's lending activity is with customers located within
Sarasota and Manatee counties. Generally, the loans are collateralized
by real estate consisting of single family residential properties and
commercial properties. While this represents a concentration of credit
risk, the credit losses arising from this type of lending compares
favorably with the Bank's credit loss experience on its portfolio as a
whole. The ultimate repayment of these loans is dependent to a certain
degree on the local economy and real estate market.
The financial statements of the Company are prepared in conformity
with generally accepted accounting principles that require management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported period. Actual
results could differ from these estimates.
Significant estimates are made by management in determining the
allowance for possible loan losses. Consideration is given to a
variety of factors in establishing these estimates including current
economic conditions, diversification of the loan portfolio,
delinquency statistics, results of internal loan reviews, borrowers'
perceived financial and managerial strengths, the adequacy of
underlying collateral, if collateral dependent, or present value of
future cash flows and other relevant factors. Since the allowance for
possible loan losses is dependent, to a great extent, on general and
other conditions that may be beyond the Bank's control, it is at least
reasonably possible that the estimates of the allowance for possible
loan losses and the carrying values of the real estate assets could
differ materially in the near term.
F-25
<PAGE> 140
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
20. REGULATORY CAPITAL:
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial
statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's
assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier I
capital (as defined) to average assets (as defined). Management
believes, as of December 31, 1997, that the Bank meets all capital
adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table.
There are no conditions or events since that notification that
management believes have changed the Bank's category.
The Bank's actual capital amounts and ratios are also presented in the
table. There were no deductions for interest-rate risk in 1997 or
1996.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
------------------------ ------------------------ --------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------ ---------- -------------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital (to Risk
Weighted Assets) $25,708,738 10.90 % >$ 18,856,898 >8.0 % >$ 23,571,123 >10.0 %
- - - -
Tier I Capital (to Risk
Weighted Assets) $23,820,322 10.11 % >$ 9,428,449 >4.0 % >$ 14,142,674 > 6.0 %
- - - -
Tier I Capital (to
Averaged Assets) $23,820,322 6.87 % >$ 10,398,157 >3.0 % >$ 17,330,261 > 5.0 %
- - - -
As of December 31, 1996:
Total Capital (to Risk
Weighted Assets) $20,894,512 11.60 % >$ 14,413,417 >8.0 % >$ 18,016,772 >10.0 %
- - - -
Tier I Capital (to Risk
Weighted Assets) $19,491,512 10.82 % >$ 7,206,709 >4.0 % >$ 10,810,063 > 6.0 %
- - - -
Tier I Capital (to
Averaged Assets) $19,491,512 7.31 % >$ 8,001,300 >3.0 % >$ 13,335,500 > 5.0 %
- - - -
</TABLE>
F-26
<PAGE> 141
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
21. FUTURE ACCOUNTING PRONOUNCEMENTS:
FAS No. 130, "Reporting Comprehensive Income," establishes new
standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements.
Comprehensive income is defined as the change in equity during a
period from transactions and other events and circumstances from
non-shareholder sources, such as changes in net unrealized securities
gains. It includes all changes in equity during a period except those
resulting from investments by shareholders and distributions to
shareholders. This statement is effective for the Company's fiscal
year ending December 31, 1998. Application of this statement will not
impact amounts previously reported for net income or affect the
comparability of previously issued financial statements.
FAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for the reporting of financial
information from operating segments in annual and interim financial
statements. It requires that financial information be reported on the
same basis that it is reported internally for evaluating segment
performance and deciding how to allocate resources to segments.
Because this statement addresses how financial information is
disclosed in annual and interim reports, the adoption will have no
material impact on the financial statements. This statement is
effective for the Company's fiscal year ending December 31, 1998.
22. CONDENSED PARENT COMPANY FINANCIAL STATEMENTS:
The condensed financial statements of American Bancshares, Inc., as
the parent organization, are presented as follows:
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Assets:
Cash $ 373,665 $ 3,392,968
Premises and equipment 2,159,542 682,118
Prepaid expense 156,874 5,781
Investment in banking subsidiary 24,039,907 19,423,040
Investment in finance subsidiary 100 0
Other assets 3,000 0
------------ ------------
Total assets $ 26,733,088 $ 23,503,907
============ ============
Liabilities:
Total liabilities $ 653,778 $ 0
------------ ------------
Shareholders' equity:
Common stock 5,868,530 5,787,791
Additional paid-in capital 15,547,554 15,203,729
Unrealized gain (loss) on investment securities available for
sale, net 139,808 (90,951)
Retained earnings 4,523,418 2,603,338
------------ ------------
Total shareholders' equity 26,079,310 23,503,907
------------ ------------
Total liabilities and shareholders' equity $ 26,733,088 $ 23,503,907
============ ============
</TABLE>
F-27
<PAGE> 142
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
22. CONDENSED PARENT COMPANY FINANCIAL STATEMENTS, CONTINUED:
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Equity in undistributed earnings of banking
subsidiary $ 2,021,108 $ 852,567 $849,909
Operating expense (101,028) (70,078) 0
----------- --------- --------
Net income $ 1,920,080 $ 782,489 $849,909
=========== ========= ========
</TABLE>
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows used in operating activities $ 398,657 $ (75,859) $ 0
------------ ------------ ------------
Cash flows used in investing activities:
Acquisition of premises and equipment (3,842,524) (4,890,559) 0
------------ ------------ ------------
Cash flows provided by financing activities:
Proceeds from sale of common stock (net of
stock offering costs) 424,564 8,359,386 0
------------ ------------ ------------
Net increase in cash (3,019,303) 3,392,968 0
Cash at beginning of year 3,392,968 0 0
------------ ------------ ------------
Cash at end of year $ 373,665 $ 3,392,968 $ 0
============ ============ ============
</TABLE>
23. SAIF ASSESSMENT
On September 30, 1996, a one-time SAIF recapitalization assessment was
enacted. The rate was 65.7 cents per $100 on domestic deposits held as
of March 31, 1995. The effect on the Bank was a pretax charge of
$348,000 on deposits of $52.9 million at March 31, 1995. This amount
was paid in November, 1996.
F-28
<PAGE> 143
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
24. SUBSEQUENT EVENT:
MERGER - On March 23, 1998, the Company completed its merger with
Murdock Florida Bank, headquartered in Charlotte County, Florida.
Under the terms of the merger agreement, each outstanding share of
Murdock Florida Bank's common stock was converted into 2.4 shares of
the Company's common stock. A total of 924,024 shares of the Company's
common stock was issued. At December 31, 1997, Murdock Florida Bank
had total assets, deposits, and net interest income of $64 million,
$58.2 million, and $2.4 million, respectively, and the consolidated
financial statements included herein have been restated to give
retroactive effect to the merger.
F-29
<PAGE> 144
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, 1998
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and due from banks $ 20,660
Mortgage loans held for sale 49,718
Investment securities available for sale 62,266
Loans (net of allowance for credit losses and deferred loan fees of $1,581) 230,535
Premises and equipment, net 9,990
Other assets 6,010
--------
Total assets $379,179
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits $316,595
Securities sold under agreements to repurchase 26,265
FHLB borrowings 5,000
Note payable 1,450
Other liabilities 3,491
--------
Total liabilities 352,801
--------
Shareholders' equity:
Common stock, $1.175 par value, 20,000,000 shares authorized, 4,994,484 shares
issued and outstanding 5,869
Additional paid-in capital 15,937
Unrealized gain on securities available for sale, net 34
Retained earnings 4,538
--------
Total shareholders' equity 26,378
--------
Total liabilities and shareholders' equity $379,179
========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
F-30
<PAGE> 145
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 5,810 $ 4,452
Interest on investment securities 1,148 950
Other interest income 143 150
---------- ----------
Total interest income 7,101 5,552
---------- ----------
Interest expense:
Deposits 3,240 2,680
Borrowings 343 198
---------- ----------
Total interest expense 3,583 2,878
---------- ----------
Net interest income 3,518 2,674
Provision for loan losses 124 171
---------- ----------
Net interest income after provision for loan losses 3,394 2,503
---------- ----------
Other income:
Service charges and fees 421 322
Gain on sale of mortgage loans 62 4
Gain on sale of securities 122 2
Gain on sale of servicing 22 52
Broker loan fees 54 48
Merchant fees 187 124
Other income 235 120
---------- ----------
Total other income 1,103 672
---------- ----------
Other expenses:
Salaries and employee benefits 1,510 1,210
Net occupancy expense 195 154
Furniture and equipment expenses 239 214
Data processing fees 351 158
Other expenses 1,581 894
---------- ----------
Total other expenses 3,876 2,630
---------- ----------
Income before income taxes 621 545
Provision for income taxes 217 212
---------- ----------
Net income $ 404 $ 333
========== ==========
Earnings per share (actual $'s)
Basic $ 0.08 $ 0.07
Diluted 0.08 0.07
Average number of shares outstanding:
Basic 4,994,484 4,970,030
Diluted 5,023,454 4,992,639
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
F-31
<PAGE> 146
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1998 1997
----- -----
<S> <C> <C>
Net income $ 404 $ 333
Other comprehensive income, net of taxes: $
Unrealized gains (losses) on securities available for sale arising
during the quarter, net of taxes (106) (457)
------ ------
Comprehensive income (loss) $ 298 $ (124)
====== ======
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
F-32
<PAGE> 147
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by (used in) operating activities $ 657 $ (734)
-------- --------
Cash flows from investing activities:
Loan originations, net of repayments (36,881) (19,118)
Proceeds from sales of loans held for sale 9,559 4,221
Purchases of bank premises and equipment (1,034) (378)
Proceeds from sales and maturities of available for sale investment securities 19,534 1,543
Purchases of available for sale investment securities, net of repayments (13,107) (15,745)
-------- --------
Net cash used in investing activities (21,929) (29,477)
-------- --------
Cash flows from financing activities:
Net increase in demand deposits, NOW and savings accounts 18,656 21,057
Net increase in time deposits (4,807) 966
Net increase in securities sold under agreements to repurchase 8,737 3,377
Proceeds from advances from the FHLB and Federal Funds purchased 950 (1,300)
Proceeds from sale of stock 0 425
-------- --------
Net cash provided by financing activities 23,536 24,525
-------- --------
Net increase (decrease) in cash and cash equivalents 2,264 (5,686)
Cash and cash equivalents at beginning of period 18,396 23,570
-------- --------
Cash and cash equivalents at end of period $ 20,660 $ 17,884
======== ========
Supplemental disclosures:
Interest paid $ 3,486 $ 2,862
======== ========
Income taxes paid $ 120 $ 0
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
F-33
<PAGE> 148
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. HOLDING COMPANY AND SUBSIDIARIES BACKGROUND INFORMATION:
American Bancshares, Inc. (Company) is a one-bank holding company,
operated under the laws of the State of Florida. Its two wholly owned
banking subsidiary is American Bank (Bank), a state-chartered bank.
The Bank is a general commercial bank with all the rights, powers, and
privileges granted and conferred by the Florida Banking Code.
The Company has organized a wholly owned Florida subsidiary
corporation, Freedom Finance Corporation (Finance Company), pursuant
to which it engages in full service consumer financing. The Finance
Company offers consumer-driven products and services ranging from
mortgages to automobile loans, home equity loans and education
financing. The Finance Company has the ability to extend financing to
individuals and entities which may not be able to satisfy the Bank's
underwriting requirements or loan standards. During April 1998, the
Bank extended a $2.4 million line of credit to the Finance Company to
support operations. The Finance Company commenced preliminary
operations in late March 1998.
2. BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial
statements, in the opinion on management, include all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the results for the interim periods. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to SEC rules and
regulations, although the Company believes that the disclosures
included herein are adequate to make the information presented not
misleading. The results of operations for the three-month periods
ended March 31, 1998 and 1997 are not necessarily indicative of the
results expected for the full year.
The organization and business of the Company, accounting policies
followed by the Company, and other information are contained in the
Company's December 31, 1997 Form 10-KSB. This quarterly information
should be read in conjunction with such annual report.
MERGER - On March 23, 1998, the Company completed its merger with
Murdock Florida Bank (Murdock). The Company issued 924,026 shares of
its common stock in exchange for all of the outstanding Murdock
shares. The transaction was accounted for as a pooling of interests.
Accordingly, the consolidated condensed balance sheet, statement of
income, and statement of cash flows give retroactive effect to the
merger.
F-34
<PAGE> 149
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
3. EARNINGS PER SHARE:
Earnings per share are based on the weighted average number of common
shares outstanding during the periods. Diluted earnings per share
includes the weighted average number of common shares outstanding
during the periods and the further dilution from stock options using
the treasury stock method.
4. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS:
Effective January 1, 1998, the Company has adopted Statement of
Financial Accounting Standards (FAS) No. 130, "Reporting Comprehensive
Income," which requires that all items required to be recognized under
accounting standards as components of comprehensive income be reported
in the financial statements. Reclassification of financial statements
for earlier periods provided for comparative purposes is required. The
adoption of FAS No. 130 did not have a material impact on the
Company's financial condition or results of operations.
FAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits," which is effective for periods beginning
after December 15, 1997. This statement revises employers' disclosures
about pension and other postretirement benefit plans. Because this
statement addresses disclosures only, the adoption will have no
material impact on the financial statements.
F-35
<PAGE> 150
===============================================================================
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR THE ISSUER TRUST. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE
PREFERRED SECURITIES OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION TO ANY
PERSON IN ANY JURISDICTION OR UNDER ANY CIRCUMSTANCES
IN WHICH SUCH OFFERING WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . .
ABI Capital Trust . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . .
Market for Preferred Securities . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . . . . .
Accounting Treatment . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . .
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . .
Business . . . . . . . . . . . . . . . . . . . . . .
Management . . . . . . . . . . . . . . . . . . . . .
Description of Preferred Securities . . . . . . . . .
Description of Junior Subordinated
Debentures . . . . . . . . . . . . . . . . . . . .
Description of Guarantee . . . . . . . . . . . . . .
Relationship Among the Preferred Securities,
the Junior Subordinated Debentures,
and the Guarantee . . . . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences . . . . . . .
Certain ERISA Considerations . . . . . . . . . . . .
Supervision and Regulation . . . . . . . . . . . . .
Underwriting . . . . . . . . . . . . . . . . . . . .
Validity of Securities . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . .
Available Information . . . . . . . . . . . . . . . .
Index to Financial Statements
of the Company . . . . . . . . . . . . . . . . . .
</TABLE>
===============================================================================
$15,000,000
ABI CAPITAL TRUST
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10)
GUARANTEED, AS DESCRIBED HEREIN, BY
AMERICAN BANCSHARES, INC.
___________________
PROSPECTUS
___________________
ADVEST, INC.
June___, 1998
===============================================================================
<PAGE> 151
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses expected to be incurred in
connection with this offering, other than underwriting discounts and
commissions. All amounts, except the SEC registration fee, are estimated.
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,088
NASD Filing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NASDAQ Listing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Printing and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trustee Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
===========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act ("FBCA")
permits a Florida corporation to indemnify any person who may be a party to any
third party proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, against liability
incurred in connection with such proceeding (including any appeal thereof) 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 corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 607.0850(2) of the FBCA permits a Florida corporation to
indemnify any person who may be a party to a derivative action if such person
acted in any of the capacities set forth in the preceding paragraph, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
board of directors, the estimated expenses of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding (including appeals), provided that the person
acted under the standards set forth in the preceding paragraph. However, no
indemnification shall be made for any claim, issue or matter for which such
person is found to be liable unless, and only to the extent that, the court
determines that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Section 607.0850(4) of the FCBA provides that any indemnification made
under the above provisions, unless pursuant to a court determination, may be
II-1
<PAGE> 152
made only after a determination that the person to be indemnified has met the
standard of conduct described above. This determination is to be made by a
majority vote of a quorum consisting of the disinterested directors of the
board of directors, by duly selected independent legal counsel, or by a
majority vote of the disinterested shareholders. The board of directors also
may designate a special committee of disinterested directors to make this
determination.
Section 607.0850(3), however, provides that a Florida corporation must
indemnify any director, or officer, employee or agent of a corporation who has
been successful in the defense of any proceeding referred to in Section
607.0850(1) or (2), or in the defense of any claim, issue or matter therein,
against expenses actually and reasonably incurred by him in connection
therewith.
Expenses incurred by a director or officer in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it is ultimately determined that
such director or officer is not entitled to indemnification under Section
607.0850. Expenses incurred by other employees or agents in such a proceeding
may be paid in advance of final disposition thereof upon such terms or
conditions that the board of directors deems appropriate.
The FBCA further provides that the indemnification and advancement of
payment provisions contained therein are not exclusive and it specifically
empowers a corporation to make any other further indemnification or advancement
of expenses under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both for actions taken in an official capacity and for
actions taken in other capacities while holding an office. However, a
corporation cannot indemnify or advance expenses if a judgment or other final
adjudication establishes that the actions of the director or officer were
material to the adjudicated cause of action and the director or officer (a)
violated criminal law, unless the director or officer had reasonable cause to
believe his conduct was unlawful, (b) derived an improper personal benefit from
a transaction, (c) was or is a director in a circumstance where the liability
under Section 607.0834 (relating to unlawful distributions) applies, or (d)
engages in willful misconduct or conscious disregard for the best interests of
the corporation in a proceeding by or in right of the corporation to procure a
judgment in its favor or in a proceeding by or in right of a shareholder.
The Company Bylaws provide that the Company shall indemnify any
director or officer or any former director or officer against any liability
arising from any action or suit to the full extent permitted by Florida law as
referenced above. Advances against expenses may be made under the Company
Bylaws and any other indemnification agreement that may be entered into by the
Company and the indemnity coverage provided thereunder may include liabilities
under the federal securities laws as well as in other contexts.
The Company has purchased insurance with respect to, among other
things, any liabilities that may arise under the statutory provisions referred
to above.
Under the Trust Agreement of the Issuer Trust, the Company will agree
to indemnify each of the trustees of the Issuer Trust or any predecessor
trustee for the Issuer Trust, and to hold each such trustee harmless against
any loss, damage, claim, liability, or expense incurred without negligence or
bad faith on its past, arising out of or in connection with the acceptance or
administration of the Trust Agreement, including costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties under the Trust Agreement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
From the completion of its initial public offering in February 1996
through February 1997, the Company has sold approximately 225,290 common shares
pursuant to exercise of its Series B Warrants which were outstanding prior to
the Company's initial public offering. The exercise price of the Series B
Warrants were $6.00 per share, generating aggregate proceeds to the Company in
the amount of $1,351,740. No underwriter or independent selling agent was used
and no commissions or fees were paid in connection with the issuance of common
shares upon exercise of the Series B Warrants. As of February 28, 1997, no
warrants remained outstanding. In addition, in early 1997 the Company issued
7,119 common shares having a total aggregate fair market value of $55,000, in
connection with its acquisition of DesChamps. The shares were
II-2
<PAGE> 153
issued pursuant to the exemption from registration afforded under Sections 3(b)
and 4(2) of the Securities Act of 1933.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.*
3.1 -- Amended and Restated Articles of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of
the Company's Form 10-KSB for the fiscal year ended December 31, 1997 previously filed with the Commission.
3.2 -- Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-4 (Registration No. 333-45401) previously filed with the Commission.
4.1 -- Form of Indenture with respect to the Company's ___% Junior Subordinated Debentures.*
4.2 -- Form of Junior Subordinated Debentures (included in Exhibit 4.1).*
4.3 -- Form of Trust Agreement of ABI Capital Trust (including Certificate of Trust of ABI Capital Trust).*
4.4 -- Form of Amended and Restated Trust Agreement of ABI Capital Trust.*
4.5 -- Form of ___% Preferred Securities of ABI Capital Trust (included in Exhibit 4.4).*
4.6 -- Form of Guarantee Agreement.*
5.1 -- Opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Re: Validity of Securities.*
5.2 -- Opinion of Richards, Layton & Finger, P.A.*
8.1 -- Opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Re: Tax Opinion.*
10.1 -- Employment Agreement, dated December 1, 1995, by and between the Bank and Gerald L. Anthony, incorporated
herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form SB-2 (Registration No.
33-99972) previously filed with the Commission.
10.2 -- Employment Agreement, dated June 30, 1996, by and between the Bank and Philip W. Coon, incorporated by
reference to Exhibit 10.2 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
10.4 -- Employment Agreement, dated June 30, 1996, by and between the Bank and David R. Mady, incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
</TABLE>
II-3
<PAGE> 154
<TABLE>
<S> <C> <C>
10.5 -- Employment Agreement, dated January 1, 1996, by and between the Bank and John S. Nash, incorporated by
reference to Exhibit 10.5 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
10.6 -- Employment Agreement, dated January 1, 1996, by and between the Bank and Michael Lewis, incorporated by
reference to Exhibit 10.6 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
10.7 -- Employment Agreement, dated January 22, 1997, by and between the Bank and Stuart M. Gregory, incorporated
by reference to Exhibit 10.7 to the Company's Form 10-KSB for the fiscal year ended December 31, 1997
previously filed with the Commission.
10.8 -- Data Processing Agreement, dated April 1, 1995, by and between the Bank and M & I Data Services, Inc.,
incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form SB-2
(Registration No. 33-99972) previously filed with the Commission.
10.9 -- Mortgage Loan Subservice Agreement between Dovenmuehle Mortgage, Inc. and American Bank of Bradenton, dated
May 17, 1994, incorporated herein by reference to Exhibit 10.8 to the Company's Registration Statement on
Form SB-2 (Registration No. 33-99972) previously filed with the Commission.
10.10 -- American Bancshares, Inc. and American Bank of Bradenton Incentive Stock Option Plan of 1996, dated May 28,
1996, and Form of Incentive Stock Option Agreement, incorporated herein by reference to Exhibit 10.9 to the
Company's Form 10-KSB for the fiscal year ended December 31, 1996 previously filed with the Commission.
10.11 -- American Bancshares, Inc. 1997 Nonqualified Share Option Plan for Non-Employee Directors, dated March 18,
1997, and Form of Nonqualified Share Option Agreement, incorporated by reference to Exhibit 10.11 to the
Company's Form 10-KSB for the fiscal year ended December 31, 1997 previously filed with the Commission.
10.12 -- Loan Agreement, dated as of October 30, 1997, by and between American Bancshares, Inc. and Barnett Bank,
N.A., incorporated herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-4
(Registration No. 333-45401) previously filed with the Commission.
10.13 -- Assignment of Lease and Consent to Assignment, dated February 15, 1998, by and between the Finance Company,
G.J.M. Properties, Inc., and First Enterprise Acceptance Corporation, and Lease Agreement assumed thereby,
incorporated by reference to Exhibit 10.13 to the Company's Form 10-KSB for the fiscal year ended
December 31, 1997 previously filed with the Commission.
21.1 -- Subsidiaries of the Company, incorporated herein by reference to Exhibit 21.1 to the Company's Registration
Statement on Form S-4 (Registration No. 333-45401) previously filed with the Commission.
23.1 -- Consent of Coopers & Lybrand L.L.P.*
23.2 -- Consent of Hacker, Johnson, Cohen & Grieb, P.A.*
23.3 -- Consent of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. (included in Exhibit 5.1).*
</TABLE>
II-4
<PAGE> 155
<TABLE>
<S> <C> <C>
23.4 -- Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2).*
24.1 -- Power of Attorney (contained in Signature section of the Registration Statement).*
25.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of
Bankers Trust Company, as trustee under the Junior Subordinated Indenture, the Amended and
Restated Trust Agreement, and the Guarantee Agreement relating to the ABI Capital Trust.
27.1 -- Financial Data Schedule (for SEC use only)*
99.1 -- Report of Hacker, Johnson, Cohen & Grieb, P.A.*
</TABLE>
- ---------------
* Exhibit filed herewith.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the 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 the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of the registration statement in reliance on Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 156
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Bradenton, State
of Florida, on the 3rd day of June, 1998.
AMERICAN BANCSHARES, INC.
By: /s/ Gerald L. Anthony
-------------------------------
Gerald L. Anthony
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints J. Gary Russ and Gerald L.
Anthony and each or any one of them, his or her true and lawful
attorney-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place, and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or would do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or any of them, or his or
her their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the date(s) indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ J. Gary Russ Chairman of the Board June 3, 1998
- -------------------------------------------
J. Gary Russ
/s/ Gerald L. Anthony President, Chief Executive Officer and June 3, 1998
- ------------------------------------------- Director (Principal Executive Officer)
Gerald L. Anthony
/s/ Samuel S. Aidlin Director June 3, 1998
- -------------------------------------------
Samuel S. Aidlin
/s/ Ronald L. Larson Director June 3, 1998
- -------------------------------------------
Ronald L. Larson
</TABLE>
<PAGE> 157
<TABLE>
<S> <C> <C>
/s/ Timothy I. Miller Director June 3, 1998
- -------------------------------------------
Timothy I. Miller
/s/ Dan E. Molter Director June 3, 1998
- -------------------------------------------
Dan E. Molter
/s/ Kirk Moudy Director June 3, 1998
- -------------------------------------------
Kirk D. Moudy
/s/ Lindell Orr Director June 3, 1998
- -------------------------------------------
Lindell Orr
/s/ Lynn B. Powell, III Director June 3, 1998
- -------------------------------------------
Lynn B. Powell, III
/s/ Walter L. Presha Director June 3, 1998
- -------------------------------------------
Walter L. Presha
/s/ R. Jay Taylor Director June 3, 1998
- -------------------------------------------
R. Jay Taylor
/s/ Edward D. Wyke Director June 3, 1998
- -------------------------------------------
Edward D. Wyke
/s/ Brian M. Watterson Chief Financial Officer June 3, 1998
- ------------------------------------------- (Principal Financial Officer)
Brian M. Watterson
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, the Issuer
Trust has duly caused the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Bradenton, State of
Florida, on the 3rd day of June, 1998.
ABI CAPITAL TRUST
BY: AMERICAN BANCSHARES, INC., as
Depositor
By: /s/ Gerald L. Anthony
---------------------------
Gerald L. Anthony, President
and Chief Executive Officer
<PAGE> 158
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.*
3.1 -- Amended and Restated Articles of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of
the Company's Form 10-KSB for the fiscal year ended December 31, 1997 previously filed with the Commission.
3.2 -- Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-4 (Registration No. 333-45401) previously filed with the Commission.
4.1 -- Form of Indenture with respect to the Company's ___% Junior Subordinated Debentures.*
4.2 -- Form of Junior Subordinated Debentures (included in Exhibit 4.1).*
4.3 -- Form of Trust Agreement of ABI Capital Trust (including Certificate of Trust of ABI Capital Trust).*
4.4 -- Form of Amended and Restated Trust Agreement of ABI Capital Trust.*
4.5 -- Form of ___% Preferred Securities of ABI Capital Trust (included in Exhibit 4.4).*
4.6 -- Form of Guarantee Agreement.*
5.1 -- Opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Re: Validity of Securities.*
5.2 -- Opinion of Richards, Layton & Finger, P.A.*
8.1 -- Opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Re: Tax Opinion.*
10.1 -- Employment Agreement, dated December 1, 1995, by and between the Bank and Gerald L. Anthony, incorporated
herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form SB-2 (Registration No.
33-99972) previously filed with the Commission.
10.2 -- Employment Agreement, dated June 30, 1996, by and between the Bank and Philip W. Coon, incorporated by
reference to Exhibit 10.2 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
10.4 -- Employment Agreement, dated June 30, 1996, by and between the Bank and David R. Mady, incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
10.5 -- Employment Agreement, dated January 1, 1996, by and between the Bank and John S. Nash, incorporated by
reference to Exhibit 10.5 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
10.6 -- Employment Agreement, dated January 1, 1996, by and between the Bank and Michael Lewis, incorporated by
reference to Exhibit 10.6 to the Company's Registration Statement on Form SB-2 (Registration No. 33-99972)
previously filed with the Commission.
10.7 -- Employment Agreement, dated January 22, 1997, by and between the Bank and Stuart M. Gregory, incorporated
by reference to Exhibit 10.7 to the Company's Form 10-KSB for the fiscal year ended December 31, 1997
previously filed with the Commission.
10.8 -- Data Processing Agreement, dated April 1, 1995, by and between the Bank and M & I Data Services, Inc.,
incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form SB-2
(Registration No. 33-99972) previously filed with the Commission.
10.9 -- Mortgage Loan Subservice Agreement between Dovenmuehle Mortgage, Inc. and American Bank of Bradenton, dated
May 17, 1994, incorporated herein by reference to Exhibit 10.8 to the Company's Registration Statement on
Form SB-2 (Registration No. 33-99972) previously filed with the Commission.
10.10 -- American Bancshares, Inc. and American Bank of Bradenton Incentive Stock Option Plan of 1996, dated May 28,
1996, and Form of Incentive Stock Option Agreement, incorporated herein by reference to Exhibit 10.9 to the
Company's Form 10-KSB for the fiscal year ended December 31, 1996 previously filed with the Commission.
10.11 -- American Bancshares, Inc. 1997 Nonqualified Share Option Plan for Non-Employee Directors, dated March 18,
1997, and Form of Nonqualified Share Option Agreement, incorporated by reference to Exhibit 10.11 to the
Company's Form 10-KSB for the fiscal year ended December 31, 1997 previously filed with the Commission.
10.12 -- Loan Agreement, dated as of October 30, 1997, by and between American Bancshares, Inc. and Barnett Bank,
N.A., incorporated herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-4
(Registration No. 333-45401) previously filed with the Commission.
10.13 -- Assignment of Lease and Consent to Assignment, dated February 15, 1998, by and between the Finance Company,
G.J.M. Properties, Inc., and First Enterprise Acceptance Corporation, and Lease Agreement assumed thereby,
incorporated by reference to Exhibit 10.13 to the Company's Form 10-KSB for the fiscal year ended
December 31, 1997 previously filed with the Commission.
</TABLE>
<PAGE> 159
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
21.1 -- Subsidiaries of the Company, incorporated herein by reference to Exhibit 21.1 to the Company's Registration
Statement on Form S-4 (Registration No. 333-45401) previously filed with the Commission.
23.1 -- Consent of Coopers & Lybrand L.L.P.*
23.2 -- Consent of Hacker, Johnson, Cohen & Grieb, P.A.*
23.3 -- Consent of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. (included in Exhibit 5.1).*
23.4 -- Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2).*
24.1 -- Power of Attorney (contained in Signature section of the Registration Statement).*
25.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of
Bankers Trust Company, as trustee under the Junior Subordinated Indenture, the Amended and
Restated Trust Agreement, and the Guarantee Agreement relating to the ABI Capital Trust.
27.1 -- Financial Data Schedule (for SEC use only)*
99.1 -- Report of Hacker, Johnson, Cohen & Grieb, P.A.*
</TABLE>
- ---------------
* Exhibit filed herewith.
<PAGE> 1
EXHIBIT 1.1
$15,000,000
ABI CAPITAL TRUST
AMERICAN BANCSHARES, INC.
____% Preferred Securities
(Liquidation Amount $10 per Preferred Security)
UNDERWRITING AGREEMENT
______ __, 1998
ADVEST, INC.
One Rockefeller Plaza, 20th Floor
New York, New York 10020
Ladies and Gentlemen:
ABI Capital Trust (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C. Section 3801 et
seq.), and American Bancshares, Inc., a Florida corporation (the "Company"), as
depositor of the Trust and as guarantor, hereby confirm their agreement with
you, as the underwriter ("Underwriter"), as follows:
Section 1. Introduction.
Upon the terms and conditions set forth in this Underwriting Agreement
(this "Agreement"), the Trust agrees to, and the Company agrees to cause the
Trust to, issue and sell to the Underwriter an aggregate liquidation amount of
$15,000,000 (the "Firm Securities") of the Trust's ____% preferred securities
(the "Preferred Securities"). The Trust also proposes to, and the Company also
proposes to cause the Trust to, issue and sell to the Underwriter, at the
Underwriter's option, up to an additional $2,250,000 aggregate Liquidation
Amount of Preferred Securities (the "Option Securities") as set forth herein.
The term "Preferred Securities" as used herein, unless indicated otherwise,
shall mean the Firm Securities and the Option Securities.
The Preferred Securities and the Common Securities (as defined herein)
are to be issued pursuant to the terms of an Amended and Restated Trust
Agreement to be dated as of ______ __, 1998 (the "Trust Agreement"), among the
Company, as depositor, and,
<PAGE> 2
together with the Trust, the "Offerors," and Bankers Trust Company ("Trust
Company"), a New York banking corporation, as property trustee ("Property
Trustee") and Bankers Trust (Delaware) ("Trust Delaware" and, together with the
Trust Company, "Trustees"), a Delaware banking corporation, as Delaware trustee
("Delaware Trustee") and the holders from time to time of undivided interests in
the assets of the Trust. The Preferred Securities will be guaranteed by the
Company on a subordinated basis and subject to certain limitations with respect
to distributions and payments upon liquidation, redemption or otherwise (the
"Guarantee") pursuant to the Guarantee Agreement to be dated as of ______ __,
1998 (the "Guarantee Agreement"), between the Company and the Trust Company, as
Trustee (the "Guarantee Trustee"). The assets of the Trust will consist of ____%
junior subordinated deferrable interest debentures, due ______ __, 2028 (the
"Subordinated Debentures") of the Company which will be issued under a Junior
Subordinated Indenture to be dated as of ______ __, 1998 (the "Indenture"),
between the Company and the Trust Company, as Trustee (the "Indenture Trustee").
Under certain circumstances, the Subordinated Debentures will be distributable
to the holders of undivided beneficial interests in the assets of the Trust. The
entire proceeds from the sale of the Preferred Securities will be combined with
the entire proceeds from the sale by the Trust to the Company of the Trust's
common securities (the "Common Securities"), and will be used by the Trust to
purchase an equivalent amount of the Subordinated Debentures.
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (Nos. 333-_____ and
333-_____-01) and a related preliminary prospectus for the registration of the
Preferred Securities, the Guarantee, and the Subordinated Debentures under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Offerors have
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including the prospectus and all
information deemed to be a part of the registration statement at the time it
became effective pursuant to Rule 430A(b) of the Securities Act Regulations) is
hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Date (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Each prospectus
included in the registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Underwriter pursuant to Rule 424(a) of
the Securities Act Regulations (including the documents incorporated by
reference therein) is hereinafter called the "Preliminary Prospectus." The term
"Prospectus" means the final prospectus (including the documents incorporated by
reference therein, if any), as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Securities Act Regulations. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
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Section 2. Representations and Warranties.
Each of the Offerors represents and warrants to, and agrees with, the
Underwriter as follows:
(a) The Company is duly incorporated and validly existing as a
corporation with active status under the laws of the State of Florida with full
power and authority (corporate and other) to own, lease, and operate its
properties and conduct its business as described in the Prospectus (as defined
in Section 1 of this Agreement); the Company is duly registered under the Bank
Holding Company Act of 1956, as amended; the Company has no subsidiaries except
those described in the Registration Statement (each a "Subsidiary"); the Company
owns, directly or indirectly, beneficially and of record all of the outstanding
capital stock of each Subsidiary free and clear of any claim, lien, encumbrance
or security interest, except as described in the Prospectus. The Company and
each of its Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which any of them own
or lease properties, has an office, or in which the business conducted by any of
them make such qualification necessary, except where the failure to so qualify
would not have a material adverse effect on the condition (financial or
otherwise), business, assets, properties, results of operations, or net worth of
the Company and its Subsidiaries taken as a whole ("Material Adverse Effect");
and no proceeding has been instituted in any jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
(b) The Preferred Securities have been duly and validly
authorized for issuance and sale to the Underwriter pursuant to this Agreement
and, when executed and authenticated in accordance with the terms of the Trust
Agreement and delivered to the Underwriter against payment of the consideration
set forth herein, will constitute valid and legally binding obligations of the
Trust enforceable in accordance with their terms and entitled to the benefits
provided by the Trust Agreement (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance, or similar laws relating to or
affecting creditors' rights generally or general equity principles (whether
considered in a proceeding in equity or at law)). The Trust Agreement has been
duly authorized and, when executed by the proper officers of the Trust and
delivered by the Trust, will have been duly executed and delivered by the Trust
and, assuming due authorization and execution of the Trust Agreement by each
other party thereto, will constitute the valid and legally binding instrument of
the Trust, enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights generally
or general equity principles (whether considered in a proceeding in equity or at
law)). The Subordinated Debentures have been duly and validly authorized for
delivery by the Company and, when duly authenticated in accordance with the
terms of the Indenture and delivered to the Trust against payment of the
consideration set forth herein, will
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constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights generally
or general equity principles (whether considered in a proceeding in equity or at
law)) and entitled to the benefits provided by the Indenture. The Indenture has
been duly authorized and, when executed by the proper officers of the Company
and delivered by the Company, will have been duly executed and delivered by the
Company and, assuming due authorization and execution of the Indenture by each
other party thereto, will constitute the valid and legally binding instrument of
the Company, enforceable in accordance with its terms, (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights generally
or general equity principles (whether considered in a proceeding in equity or at
law)). The Guarantee Agreement has been duly authorized and, when executed by
the proper officers of the Company and delivered by the Company, will have been
duly executed and delivered by the Company and, assuming due authorization and
execution of the Guarantee by each other party thereto, will constitute the
valid and legally binding instrument of the Company, enforceable in accordance
with its terms, (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of debt,
moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Trust Agreement, the Guarantee
Agreement, and the Indenture have been duly qualified under the Trust Indenture
Act; and the Preferred Securities, the Common Securities, the Trust Agreement,
the Guarantee Agreement, the Subordinated Debentures and the Indenture conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(c) Neither the Trust nor the Company or any Subsidiary, is,
or with the giving of notice or lapse of time or both will be, in violation or
breach of, or in default under, nor will the execution or delivery of, or the
performance and consummation of the transactions contemplated by this Agreement
(including the offer, sale, or delivery of the Preferred Securities), conflict
with, or result in a violation or breach of, or constitute a default under, any
provision of the organization documents of the Trust or the Articles of
Incorporation, Bylaws (as amended or restated) of the Company, or other
governing documents of the Trust, the Company, or any Subsidiary, or of any
provision of any material agreement, contract, mortgage, deed of trust, lease,
loan agreement, indenture, note, bond, or other evidence of indebtedness, or
other material agreement or instrument to which the Trust, the Company, or any
Subsidiary is a party or by which any of them is bound or to which any of their
properties is subject, nor will the performance by the Offerors of their
obligations hereunder violate any rule, regulation, order, or decree, applicable
to the Trust, the Company or any Subsidiary of any court or any regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Trust, the Company or any Subsidiary or any of their respective properties, or
any order of any court or governmental agency or authority entered in any
proceeding to which the
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<PAGE> 5
Trust, the Company or any Subsidiary was or is now a party or by which it is
bound, except, with respect to any of the foregoing, as described in the
Prospectus or to the extent not material to the Company and the Trust taken as a
whole. No consent, approval, filing, authorization, registration, qualification,
or order, including with or by any bank regulatory agency, is required for the
execution, delivery, and performance of this Agreement or the consummation of
the transactions contemplated by this Agreement, other than such that have been
obtained or made, except as described in the Prospectus and except for
compliance with the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Blue Sky Laws applicable to the public
offering of the Preferred Securities by the Underwriter, the clearance of such
offering and the underwriting arrangements evidenced hereby with the National
Association of Securities Dealers, Inc. ("NASD"), and the listing of the
Preferred Securities on the Nasdaq Stock Market. This Agreement has been duly
authorized, executed, and delivered by the Company and the Trust and constitutes
a valid and binding obligation of the Company and the Trust and is enforceable
against the Company and the Trust in accordance with its terms.
(d) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus complies in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. As of the effective date of
the Registration Statement, and at all times subsequent thereto up to the
Closing Date or any Option Closing Date (as defined below), the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
contained or will contain all material statements that are required to be stated
therein in accordance with the Securities Act and the Securities Act Regulations
and conformed or will conform in all material respects to the requirements of
the Securities Act and the Securities Act Regulations, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto included or will include any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
no representation or warranty is made as to information contained in or omitted
from the Registration Statement, the Prospectus or any amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company and the Trust by or on behalf of the Underwriter.
(e) Coopers & Lybrand, LLP, which has audited, reviewed, and
expressed its opinion with respect to certain of the financial statements and
schedules filed with the Commission as a part of the Registration Statement and
included or to be included, as the case may be, in the Prospectus and in the
Registration Statement, and whose report is included in the Prospectus and the
Registration Statement are independent accountants as required by the Securities
Act and the Securities Act Regulations.
(f) The financial statements and schedules and the related
notes thereto included or to be included, as the case may be, in the
Registration Statement, the Preliminary Prospectus, and the Prospectus present
fairly the financial position of the
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<PAGE> 6
entities purported to be shown thereby as of the respective dates of such
financial statements and schedules, and the results of operations and changes in
equity and in cash flows of the entities purported to be shown thereby for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles consistently applied throughout the periods involved,
except as may be disclosed in the Prospectus. All adjustments necessary for a
fair presentation of the results of such periods have been made. The Company had
an outstanding capitalization as set forth under "Capitalization" in the
Prospectus as of the date indicated therein and there has been no material
change therein since such date except as disclosed in the Prospectus. The
financial, operating, and statistical information set forth in the Prospectus
under captions "Prospectus Summary," "Selected Consolidated Financial Data,"
"Use of Proceeds," "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business" and "Management" are
fairly presented and prepared on a basis consistent with the audited financial
statements of the Company.
(g) There is no litigation or governmental proceeding, action,
or investigation pending or, to the knowledge of the Trust or the Company,
threatened, to which the Trust, the Company, or any Subsidiary is or may be a
party or to which property owned or leased by the Company or any Subsidiary is
or may be subject, or related to environmental or discrimination matters, which
is required to be disclosed in the Registration Statement or the Prospectus by
the Securities Act or the Securities Act Regulations and is not so disclosed, or
which questions the validity of this Agreement or any action taken or to be
taken pursuant hereto.
(h) Either the Company or a Subsidiary, as the case may be,
has good and marketable title in fee simple to all items of real property and
good and marketable title to all the personal properties and assets reflected as
owned by the Company or a Subsidiary in the Prospectus (or elsewhere in the
Registration Statement), in each case clear of all liens, mortgages, pledges,
charges, or encumbrances of any kind or nature except those, if any, reflected
in the financial statements described above (or elsewhere in the Registration
Statement) or which are not material to the Company and its Subsidiaries taken
as a whole; all properties held or used by the Company or a Subsidiary under
leases, licenses, franchises or other agreements are held by them under valid,
existing, binding, and enforceable leases, franchises, licenses, or other
agreements with respect to which it is not in default, except where the failure
to do so would not have a Material Adverse Effect.
(i) Neither the Trust nor the Company or any Subsidiary has
taken or will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, stabilization or manipulation, under the Exchange Act or otherwise,
of the price of the Preferred Securities.
(j) Except as reflected in or contemplated by the Registration
Statement, since the respective dates as of which information is given in the
Registration
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<PAGE> 7
Statement and prior to the Closing Date and Option Closing Date (as such terms
are hereinafter defined):
(i) neither the Company nor any Subsidiary has or will have
incurred any material liabilities or obligations, direct or contingent,
or entered into any material transaction not in the ordinary course of
business without the prior consent of the Underwriter;
(ii) neither the Company nor any Subsidiary has or will have
paid or declared any dividend or other distribution with respect to its
capital stock and neither the Company nor any Subsidiary has or will be
delinquent in the payment of principal or interest on any material
outstanding debt obligations; and
(iii) there has not been and will not be any change in the
capital stock or any change in the indebtedness of the Company or any
Subsidiary (except as may result from the closing of the transactions
contemplated by this Agreement or as described in the Prospectus), or
any adverse change in the condition (financial or otherwise), or any
development involving a prospective adverse change in their respective
businesses (resulting from litigation or otherwise), properties,
condition (financial or otherwise), net worth, or results of operations
which is reasonably likely to have a Material Adverse Effect.
(k) There is no contract or other document, transaction, or
relationship required to be described in the Registration Statement, or to be
filed as an exhibit to the Registration Statement, by the Securities Act or by
the Securities Act Regulations that has not been described or filed as required.
(l) All documents delivered or to be delivered by the Offerors
or any of their representatives in connection with the issuance and sale of the
Preferred Securities were on the dates on which they were delivered, or will be
on the dates on which they are to be delivered, true, complete, and correct in
all material respects.
(m) The Company and each Subsidiary have filed all necessary
federal and all state and foreign income and franchise tax returns and paid all
taxes shown as due thereon; and no tax deficiency has been asserted or
threatened against the Company or any Subsidiary that would have a Material
Adverse Effect, except as described in the Prospectus.
(n) Neither the Trust nor the Company or any Subsidiary has,
directly or indirectly, at any time:
(i) made any unlawful contribution to any candidate for
political office, or failed to disclose any contribution in violation
of law; or
(ii) made any payment to any federal, state, local, or foreign
government officer or official, or other person charged with similar
public or quasi-public
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<PAGE> 8
duties, other than payments required or permitted by the laws of the
United States or any jurisdiction thereof or applicable foreign
jurisdictions.
(o) The Company or a Subsidiary owns or possesses adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, servicemark registrations,
copyrights, and licenses necessary for the conduct of the business of the
Company and the Subsidiaries or ownership of their respective properties, and
neither the Company nor any Subsidiary has received notice of conflict with the
asserted rights of others in respect thereof which has not been resolved.
(p) The Company and each Subsidiary have in place and
effective such policies of insurance, with limits of liability in such amounts,
as are normal and prudent in the ordinary scope of business similar to that of
the Company and such Subsidiary in the respective jurisdiction in which they
conduct business.
(q) The Company and each Subsidiary have and hold, and at the
Closing Date or Option Closing Date will have and hold, and are operating in
substantial compliance with, and have fulfilled and performed all of their
material obligations with respect to, all permits, certificates, franchises,
grants, easements, consents, licenses, approvals, charters, registrations,
authorizations, and orders (collectively, "Permits") required under all laws,
rules, and regulations in connection with their respective businesses, and all
of such Permits are in full force and effect; and there is no pending
proceeding, and neither the Company nor any Subsidiary has received notice of
any threatened proceeding, relating to the revocation or modification of any
such Permits. Neither the Company nor any Subsidiary is (by virtue of any
action, omission to act, contract to which it is a party or by which it is
bound, or any occurrence or state of facts whatsoever) in violation of any
applicable federal, state, municipal, or local statutes, laws, ordinances,
rules, regulations and/or orders issued pursuant to foreign, federal, state,
municipal, or local statutes, laws, ordinances, rules, or regulations (including
those relating to any aspect of banking, bank holding companies, environmental
protection, occupational safety and health, and equal employment practices)
heretofore or currently in effect, except such violation that has been fully
cured or satisfied without recourse or that is not reasonably likely to have a
Material Adverse Effect.
(r) The provisions of any employee pension benefit plan
("Pension Plan") as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), in which the Company or any
Subsidiary is a participating employer are in substantial compliance with ERISA,
and neither the Company nor any Subsidiary is in violation of ERISA. The
Company, each Subsidiary, or the plan sponsor thereof, as the case may be, has
duly and timely filed the reports required to be filed by ERISA in connection
with the maintenance of any Pension Plans in which the Company or any Subsidiary
is a participating employer, and no facts, including any "reportable event" as
defined by ERISA and the regulations thereunder, exist in connection with any
Pension Plan in which the Company or any Subsidiary is a participating employer
which might constitute grounds for the termination of such plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate
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<PAGE> 9
U.S. District Court of a trustee to administer any such plan. The provisions of
any employee benefit welfare plan, as defined in Section 3(1) of ERISA, in which
the Company or any Subsidiary is a participating employer, are in substantial
compliance with ERISA, and the Company, any Subsidiary, or the plan sponsor
thereof, as the case may be, has duly and timely filed the reports required to
be filed by ERISA in connection with the maintenance of any such plans.
(s) Neither the Company nor the Trust is an open-end
investment company, unit investment trust or face-amount certificate company
that is, or is required to be, registered under Section 8 of the Investment
Company Act of 1940, as amended, or subject to regulation under such Act.
(t) The deposits of American Bank are insured by the Federal
Deposit Insurance Corporation ("FDIC") up to the legal limits.
(u) Neither this Agreement nor any certificate, written
statement, or other document delivered, or to be delivered, by the Offerors or
any Subsidiary contains, or when delivered will contain, any untrue statement of
a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Any certificate signed by any director or officer of the Company or the
Trust, as the case may be, and delivered to the Underwriter or to counsel for
the Underwriter shall be deemed a representation and warranty of the Company or
the Trust, as the case may be, to the Underwriter as to the matters covered
thereby as of the date thereof.
Any certificate delivered by the Company or the Trust, as the case may
be, to their respective counsel for purposes of enabling such counsel to render
an opinion pursuant to Section 8 will also be furnished to the Underwriter and
counsel for the Underwriter and shall be deemed to be additional representations
and warranties to the Underwriter by the Company and the Trust as to the matters
covered thereby.
Section 3. Purchase Sale and Delivery to Underwriter, Closing.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Trust and the Company,
as the case may be, agree that the Trust will issue and sell to the Underwriter,
and the Underwriter agrees to purchase from the Trust, the Firm Securities at a
purchase price of $10 per Firm Security.
Payment of the purchase price for, and delivery of, the Firm Securities
shall be made at the offices of Arnold & Porter, 555 Twelfth Street, N.W.,
Washington, D.C. 20004 or at such other place as shall be agreed upon by the
Underwriter, the Trust, and the Company, at 9:00 A.M. Eastern Time, on the
fourth business day (unless postponed in accordance with the provisions of
Section 4) following the date of this Agreement, or such other time not later
than ten (10) business days after such date as shall be agreed
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upon by the Underwriter, the Trust, and the Company (such time and date of
payment and delivery being herein called the "Closing Date").
As compensation (the "Underwriting Commission") for the commitments of
the Underwriter contained in this Section 3, the Company hereby agrees to pay to
the Underwriter an amount equal to ___% of the public offering price of the
Preferred Securities. Such payment will be made on the Closing Date with respect
to the Firm Securities or on the Option Closing Date (as defined below) with
respect to the Option Securities.
Payment for the Firm Securities shall be made to the Trust by wire
transfer of immediately available funds, against delivery to the Underwriter of
the Firm Securities to be purchased by it. The Firm Securities shall be issued
in the form of one or more fully registered global securities (the "Global
Securities") in book-entry form in such denominations and registered in the name
of the nominee of The Depository Trust Company (the "DTC") or in such names as
the Underwriter may request in writing at least two business days before the
Closing Date. The Global Securities representing the Firm Securities shall be
made available for examination by the Underwriter and counsel to the Underwriter
not later than 9:30 A.M. Eastern Time on the last business day prior to the
Closing Date.
In addition, on the basis of the representations, warranties, and
agreements contained herein, but subject to the terms and conditions set forth
herein, the Trust hereby grants to the Underwriter an option to purchase from
the Trust the Option Securities at the same purchase price per Preferred
Security to be paid for the Firm Securities, for use solely in covering any
over-allotments made by the Underwriter in the sale and distribution of the Firm
Securities. The option granted hereunder may be exercised at any time (but not
more than once) within thirty (30) days after the date of this Agreement, upon
notice by the Underwriter to the Trust which sets forth the aggregate
liquidation amount of Option Securities as to which the Underwriter is
exercising the option, and the time and place at which the certificate
representing the Option Securities will be delivered. Such time of delivery may
not be earlier than the Closing Date and herein is called the "Option Closing
Date." The Option Closing Date shall be determined by the Underwriter, but if at
any time other than the Closing Date, shall not be earlier than three nor later
than five full business days after delivery of such notice to exercise.
Certificates for the Option Securities will be made available for inspection at
least 24 hours prior to the Option Closing Date at the offices of the DTC, or
its designated custodian, or at such other location as specified by the
Underwriter. The manner of payment for a delivery of the Option Securities shall
be the same as for the Firm Securities as specified in this Section 3.
Section 4. Representations and Warranties of the Underwriter.
The Underwriter represents and warrants to the Company that the
information set forth on page __ of the Prospectus relating to stabilization and
in the third paragraph, last sentence of the fourth paragraph, fifth paragraph
and eighth paragraph of the section in
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the Prospectus entitled "Underwriting" was the only written information
furnished to the Company by and on behalf of any Underwriter expressly for use
in connection with the preparation of the Registration Statement, and is correct
and complete in all material respects and does not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
Section 5. Offering by the Underwriter.
The Trust and the Company are advised by the Underwriter that the
Underwriter proposes to make a public offering of the Preferred Securities, on
the terms and conditions set forth in the Registration Statement from time to
time as and when the Underwriter deems advisable after the Registration
Statement becomes effective. Because the NASD is expected to view the Preferred
Securities as interests in a direct participation program, the offering of the
Preferred Securities is being made in compliance with the applicable provisions
of Rule 2810 of the NASD's Conduct Rules.
Section 6. Agreements of the Offerors.
Each of the Offerors covenants and agrees with the Underwriter that:
(a) If any information shall have been omitted from the
Registration Statement in reliance upon Rule 430A, the Company, at the earliest
possible time, will furnish the Underwriter with a copy of the Prospectus to be
filed by the Offerors with the Commission to comply with Rule 424(b) and Rule
430A under the Securities Act, and will file such Prospectus with the Commission
in compliance with such Rules. Upon compliance with such Rules, the Company will
so advise the Underwriter promptly. The Company will advise the Underwriter and
counsel to the Underwriter promptly of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, or of any notification received
by the Company of the suspension of qualification of the Preferred Securities
for sale in any jurisdiction or the initiation or threatening of any proceedings
for that purpose. The Company also will advise the Underwriter and counsel to
the Underwriter promptly of any request of the Commission for amendment or
supplement of the Registration Statement, of any Preliminary Prospectus, or of
the Prospectus, or for additional information, and the Offerors will not file
any amendment or supplement to the Registration Statement (either before or
after it becomes effective), to any Preliminary Prospectus, or to the Prospectus
(including a prospectus filed pursuant to Rule 424(b)) if the Underwriter has
not been furnished with a copy prior to such filing or if the Underwriter
reasonably objects to such filing.
(b) For the period during which a Prospectus relating to the
Preferred Securities is required to be delivered under the Securities Act, the
Offerors shall comply with all requirements imposed on them by the Securities
Act, as now and hereafter amended, and by the Securities Act Regulations, as
from time to time in force, so far as is necessary to permit the continuance of
sales or dealings in the Preferred Securities as
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<PAGE> 12
contemplated by the provisions hereof and the Prospectus. If any event occurs as
a result of which the Prospectus, including any subsequent amendment or
supplement, would include an untrue statement of a material fact, or would omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it becomes necessary at any time to amend the
Prospectus, including any amendment or supplement thereto, to comply with the
Securities Act, the Company promptly will advise the Underwriter and counsel to
the Underwriter thereof and the Offerors will promptly prepare and file with the
Commission an amendment or supplement that will correct such statement or
omission or an amendment that will effect such compliance; and, if any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement, the Company, upon request of
the Underwriter but at the expense of such Underwriter, will prepare promptly
such prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Securities Act.
(c) The Offerors will not, prior to the Option Closing Date or
thirty (30) days after the date of this Agreement, whichever occurs first,
without the prior consent of the Underwriter, incur any material liability or
obligation, direct or contingent, or enter into any material transaction, other
than in the ordinary course of business, or any transaction with a related party
which is required to be disclosed in the Prospectus pursuant to Item 404 of
Regulation S-K under the Securities Act, except as disclosed in or as
contemplated by the Prospectus.
(d) The Company will make generally available to its security
holders and the Underwriter an earnings statement of the Company as soon as
practicable, but in no event later than fifteen (15) months after the end of the
Company's current fiscal quarter, covering a period of twelve (12) consecutive
calendar months beginning after the effective date of the Registration
Statement, but beginning not later than four (4) months after such effective
date, which will satisfy the provisions of the last subsection of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by an underwriter or dealer, the Company
will furnish to the Underwriter, at the expense of the Company, copies of the
Registration Statement, the Prospectus, any Preliminary Prospectus, and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as the Underwriter may reasonably request, for
the purposes contemplated by the Securities Act.
(f) The Offerors will use their best efforts to take or cause
to be taken in cooperation with the Underwriter and counsel to the Underwriter
all actions required in qualifying or registering the Preferred Securities for
sale under the Blue Sky Laws of such jurisdictions as the Underwriter may
reasonably designate, provided the Offerors shall not be required to qualify
generally as foreign corporations or as a dealer in securities or to consent
generally to the service of process under the law of any such state
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<PAGE> 13
(except with respect to the offering and sale of the Preferred Securities), and
will continue such qualifications or registrations in effect so long as
reasonably requested by the Underwriter to effect the distribution of the
Preferred Securities (including, without limitation, compliance with all
undertakings given pursuant to such qualifications or registrations). In each
jurisdiction where any of the Preferred Securities shall have been qualified as
provided above, the Offerors will file such reports and statements as may be
required to continue such qualification for a period of not less than one (1)
year from the date of this Agreement.
(g) The Company will furnish to its security holders annual
reports containing financial statements audited by independent public
accountants. During the period ending three (3) years after the date of this
Agreement, (i) as soon as practicable after the end of the fiscal year, the
Company will furnish to the Underwriter two copies of the annual report of the
Company containing the audited consolidated balance sheet of the Company as of
the close of such fiscal year and corresponding audited consolidated statements
of earnings, stockholders' equity and cash flows for the year then ended, and
(ii) the Company will file promptly and will furnish to the Underwriter at or
before the filing thereof copies of all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13, 14, or 15 of the Exchange Act. During such three-year
period the Company also will furnish to the Underwriter one copy of the
following:
(i) as soon as practicable after the filing thereof, each
other report, statement, or other document filed by the Company with
the Commission;
(ii) as soon as practicable after the filing thereof, all
reports, statements, other documents and financial statements furnished
by the Company to Nasdaq pursuant to requirements of or agreements with
Nasdaq; and
(iii) as soon as available, each report, written statement, or
other document of the Company mailed to its stockholders as a group.
(h) The Offerors will use their best efforts to satisfy or
cause to be satisfied the conditions to the obligations of the Underwriter in
Section 8 hereof.
(i) The Offerors shall deliver the requisite notice of
issuance to the NASD and shall take all reasonably necessary or appropriate
action within its power to maintain the authorization for trading of the
Preferred Securities on the Nasdaq Stock Market for a period of at least
thirty-six (36) months after the date of this Agreement.
(j) The Trust shall comply in all respects with the
undertakings given by the Trust in connection with the qualification or
registration of the Preferred Securities for offering and sale under the Blue
Sky Laws.
(k) The Trust shall apply the proceeds from its sale of the
Preferred Securities, combined with the entire proceeds from the sale by the
Trust to the Company
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of the Trust's Common Securities, to purchase an equivalent amount of
Subordinated Debentures. All the proceeds to be received by the Company from the
sale of the Subordinated Debentures will be used in the manner and for the
purposes specified under the heading "Use of Proceeds" in the Prospectus. The
Offerors shall file, and will furnish or cause to be furnished to the
Underwriter and counsel to the Underwriter copies of all reports as may be
required in accordance with Rule 463 under the Securities Act.
(l) Except for the sale of Preferred Securities pursuant to
this Agreement, neither the Company nor any Subsidiary shall, directly or
indirectly, offer, sell, contract to sell, issue, distribute, grant any option,
right, or warrant to purchase or otherwise dispose of the Preferred Securities
or substantially similar securities of the Trust, in the open market or
otherwise, for a period of one hundred eighty (180) days after the later of the
effective date of the Registration Statement or the date of this Agreement,
without the express prior written consent of the Underwriter.
Section 7. Payment of Expenses and Fees.
(a) Whether or not the transactions contemplated hereunder are
consummated, or if this Agreement is terminated for any reason, the Company will
pay or cause to be paid the costs, fees, and expenses incurred in connection
with the offering of the Preferred Securities as follows:
(i) All costs, fees, and expenses incurred in connection with
the performance of the obligations of the Company and the Trust
hereunder, including all fees and expenses of the Company's and the
Trust's accountants and counsel, all costs and expenses incurred in
connection with the printing, filing, and distribution (including
delivery and shipping costs) of the Registration Statement, each
Preliminary Prospectus, and the Prospectus (including all amendments
and exhibits thereto and the financial statements therein), and
agreements and supplements provided for herein, this Agreement and
other underwriting documents, including various Underwriter's letters,
and the Preliminary and Supplemental Blue Sky Memoranda;
(ii) All filing and registration fees and expenses, including
the legal fees and disbursements of counsel, incurred in connection
with qualifying or registering all or any part of the Preferred
Securities, the Guarantee, and the Subordinated Debentures for offer
and sale under the Blue Sky Laws;
(iii) All fees and expenses of the Offerors' registrar and
transfer agent; all transfer taxes, if any, and all other fees and
expenses incurred in connection with the sale and delivery of the
Preferred Securities to the Underwriter;
(iv) The filing fees of the NASD and applicable fees charged
by Nasdaq for inclusion of the Preferred Securities for quotation on
the National Market System; and
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(v) All other costs and expenses incident to the performance
of the obligations of the Company and the Trust hereunder which are not
otherwise provided for in this Section 7(a).
(b) On the consummation of the offering of the Firm
Securities, the Company shall pay Advest, Inc. $25,000 as a financial advisory
fee.
Section 8. Conditions to the Obligations of the Underwriter.
The obligations of the Underwriter under this Agreement shall be
subject to the accuracy of the representations and warranties on the part of the
Company and the Trust set forth herein as of the Closing Date, and if
applicable, as of the Option Closing Date, as the case may be, to the accuracy
of the statements of the Offerors' directors and officers, to the performance by
the Company and the Trust of their obligations hereunder, and to the following
additional conditions, except to the extent expressly waived in writing by the
Underwriter:
(a) The Registration Statement and all post-effective
amendments thereto shall have been declared effective by the Commission no later
than 5:30 p.m. Eastern Time, on the date of this Agreement, or such later time
as shall have been consented to by the Underwriter, but in any event not later
than 5:30 p.m., Eastern Time, on the third full business day following the date
hereof; if the Offerors omitted information from the Registration Statement at
the time it became effective in reliance on Rule 430A under the Securities Act,
the Prospectus shall have been filed with the Commission in compliance with Rule
424(b) and Rule 430A under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceeding for the issuance of such an order
shall have been initiated or shall be pending or, to the knowledge of the
Offerors or the Underwriter, threatened or contemplated by the Commission; and
any request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been disclosed
to the Underwriter and complied with to the Underwriter's satisfaction.
(b) The Preferred Securities, the Guarantee, and the
Subordinated Debentures shall have been qualified or registered for sale, or
subject to an available exemption from such qualification or registration, under
the Blue Sky Laws of such jurisdictions as shall have been reasonably specified
by the Underwriter and the offering contemplated by this Agreement shall have
been cleared by the NASD.
(c) Since the dates as of which information is given in the
Registration Statement:
(i) There shall not have been any adverse change, or any
development involving a prospective adverse change, in the ability of
the Company or any Subsidiary to conduct their respective business
(whether by reason of any court, legislative, other governmental
action, order, decree, or otherwise), or in the general
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<PAGE> 16
affairs, condition (financial and otherwise) business, properties,
management, financial position or earnings, results of operations, or
net worth of the Company or any Subsidiary, whether or not arising from
transactions in the ordinary course of business, that is reasonably
likely to have a Material Adverse Effect; and
(ii) Neither the Company nor any Subsidiary shall have
sustained any loss or interference from any labor dispute, strike,
fire, flood, windstorm, accident, or other calamity (whether or not
insured) or from any court or governmental action, order, or decree,
that is reasonably likely to have a Material Adverse Effect; and
In the reasonable opinion of the Underwriter, the effect on the Company or any
Subsidiary of the occurrence of any event described in Section 8(c)(i) or
Section 8(c)(ii) is not so material or adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Preferred
Securities on the terms and in the manner contemplated in the Registration
Statement and the Prospectus.
(d) There shall have been furnished to the Underwriter on the
Closing Date and the Option Closing Date, except as otherwise expressly provided
below:
(i) An opinion of Carlton, Fields, Ward, Emmanuel, Smith &
Cutler, P.A. counsel to the Company, dated as of the Closing Date and
any Option Closing Date, in form and substance substantially in the
form attached hereto as Exhibit A. In rendering such opinion, counsel
may state that they are passing only on matters of Florida state law
and United States federal law, and may either (A) rely upon an opinion
or opinions, each dated as of the Closing Date or the Option Closing
Date, as the case may be, of other counsel retained by them or the
Company as to the laws of any jurisdiction other than the United States
or the State of Florida, provided that such reliance is expressly
authorized by each opinion so relied upon, and a copy of each such
opinion is delivered to the Underwriter, and counsel shall state in
their opinion that both they and the Underwriter are justified in
relying thereon, or (B) assume that the laws of the State of New York
and/or Delaware are identical to the laws of the State of Florida in
all respects material to the opinion being rendered by counsel to the
Company, provided that such assumption is expressly disclosed in the
opinion.
(ii) An opinion, dated the Closing Date and the Option Closing
Date, of White & Case, counsel to the Trust Company and Trust Delaware,
substantially in the form attached hereto as Exhibit B. In rendering
such opinion, counsel may rely upon an opinion or opinions, each dated
the Closing Date and the Option Closing Date, as the case may be, of
other counsel retained by them or the Company as to the laws of any
jurisdiction other than the United States or the State of New York,
provided that such reliance is expressly authorized by each opinion so
relied upon, and a copy of each such opinion is delivered to the
Underwriter, and counsel shall state in their opinion that both they
and the Underwriter are justified in relying thereon.
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(iii) An opinion, dated the Closing Date and the Option
Closing Date, of Richards, Layton & Finger, special Delaware counsel to
the Company and the Trust, substantially to the effect and in the form
attached hereto as Exhibit C.
(iv) An opinion, dated the Closing Date and the Option Closing
Date, of Richards, Layton & Finger, special Delaware counsel to Trust
Delaware, substantially to the effect and in the form attached hereto
as Exhibit D.
(v) An opinion, dated the Closing Date and the Option Closing
Date, of Arnold & Porter, counsel to the Underwriter as to such matters
as the Underwriter shall reasonably request. In rendering such opinion,
counsel may rely upon an opinion or opinions, each dated the Closing
Date and the Option Closing Date, as the case may be, of other counsel
retained by them or the Company as to the laws of any jurisdiction
other than the United States or the State of New York, provided that
such reliance is expressly authorized by each opinion so relied upon,
and a copy of each such opinion is delivered to the Underwriter, and
counsel shall state in their opinion that both they and the Underwriter
are justified in relying thereon.
In rendering the opinions specified in this Section 8(d),
insofar as such opinions involve factual matters, such counsel may rely, to the
extent such counsel deems proper, upon certificates of officers of the Company,
its Subsidiaries, and the Trust and certificates of public officials.
(e) At the time this Agreement is executed and also on the
Closing Date and the Option Closing Date, as the case may be, there shall be
delivered to the Underwriter a letter addressed to the Underwriter from Coopers
& Lybrand, LLP, the Company's independent accountants, the first letter to be
dated the date of this Agreement, the second letter to be dated the Closing
Date, and the third letter to be dated the Option Closing Date, if any, which
shall be in form and substance reasonably satisfactory to the Underwriter and
shall contain information as of a date within five days of the date of such
letter. There shall not have been any change set forth in any letter referred to
in this subsection (e) that makes it impracticable or inadvisable in the
judgment of the Underwriter to proceed with the public offering or purchase of
the Preferred Securities as contemplated hereby.
(f) On the Closing Date and on the Option Closing Date, a
certificate signed by the Chairman of the Board, the President, a Vice Chairman
of the Board or any Executive or Senior Vice President and the principal
financial or accounting officer of the Company, dated the Closing Date or the
Option Closing Date, as the case may be, to the effect that the signers of such
certificate have carefully examined the Registration Statement and this
Agreement and that:
(i) The representations and warranties of the Offerors in this
Agreement are true and correct in all material respects on and as of
the Closing Date or the Option Closing Date, as the case may be, with
the same effect as if made on the Closing Date or the Option Closing
Date, as the case may be, and the Offerors have
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<PAGE> 18
complied in all material respects with all the agreements and satisfied
in all material respects all the conditions on its part to be performed
or satisfied at or prior to the Closing Date or the Option Closing
Date, as the case may be; and
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or
any amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and, to the knowledge of
the respective signatories, no proceeding for that purpose has been
instituted or is pending or contemplated under the Securities Act;
(iii) Each of the respective signatories of the certificate
has carefully examined the Registration Statement, the Prospectus, and
any amendments or supplements thereto, and such documents contain all
material statements and information required to be made therein, and
neither the Registration Statement nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and, since the date on which
the Registration Statement was initially filed, no event has occurred
that was required to be set forth in an amended or supplemented
prospectus or in an amendment to the Registration Statement that has
not been so set forth; provided, however, that no representation need
be made as to information contained in or omitted from the Registration
Statement or any amendment or supplement in reliance upon and in
conformity with written information furnished to the Company and the
Trust by or on behalf of the Underwriter; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there has not been any material
adverse change or a development reasonably likely to have a material
adverse change in the business, properties, financial condition, or
earnings of the Company and its Subsidiaries taken as a whole, whether
or not arising from transactions in the ordinary course of business,
except as disclosed in the Registration Statement as heretofore amended
or (but only if the Underwriter expressly consents thereto in writing)
as disclosed in an amendment or supplement thereto filed with the
Commission and delivered to the Underwriter after the execution of this
Agreement; since such date and except as so disclosed or in the
ordinary course of business, neither the Company nor any Subsidiary has
incurred any liability or obligation, direct or indirect, or entered
into any transaction that is material to the Company or such
Subsidiary, as the case may be, not contemplated in the Prospectus;
since such date and except as so disclosed there has not been any
change in the outstanding capital stock of the Company, or any change
that is material to the Company and its Subsidiaries taken as a whole
in the short-term debt or long-term debt of the Company or any
Subsidiary; since such date and except as so disclosed, neither the
Company nor any of its Subsidiaries have incurred any material
contingent obligations, and no material litigation is pending or, to
their knowledge threatened against the Company or any Subsidiary; and,
since such date and except as so disclosed, neither the Company nor any
of its Subsidiaries have sustained any material loss or interference
from any strike, fire, flood, windstorm, accident or other calamity
(whether or not insured) or from any court or governmental action,
order, or decree.
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(g) Prior to the Closing Date and any Option Closing Date, the
Company shall have furnished to the Underwriter such further information,
certificates and documents as the Underwriter may reasonably request in
connection with the offering of the Preferred Securities.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriter by notice from the Underwriter to the Company at any time
without liability on the part of any Underwriter, including the Underwriter, or
the Company, except for expenses to be paid by the Company pursuant to Section 7
hereof or reimbursed by the Company pursuant to Section 9 and except to the
extent provided in Section 11.
Section 9. Reimbursement of Underwriter's Expenses.
If the sale of the Preferred Securities to the Underwriter on the
Closing Date is not consummated because the offering is terminated or
indefinitely suspended by the Company or by the Underwriter for any reason
permitted by this Agreement, other than the Underwriter's inability to legally
act as such, the Company will reimburse the Underwriter for the Underwriter's
reasonable out-of-pocket expenses, including fees and disbursements of counsel,
that shall have been incurred by the Underwriter in connection with the proposed
purchase and sale of the Preferred Securities. Any such termination or
suspension shall be without liability of any party to the other except that the
provisions of this Section 9, and Sections 7 and 11 shall remain effective and
shall apply.
Section 10. Maintain Effectiveness of Registration Statement.
The Underwriter and the Company will use their respective best efforts
to prevent the issuance of any stop order or other such order suspending the
effectiveness of the Registration Statement and, if such stop order is issued,
to obtain the lifting thereof as soon as possible.
Section 11. Indemnification and Contribution.
(a) The Offerors agree to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, expenses, liabilities, or actions in respect thereof ("Claims"), joint
or several to which such Underwriter or each such controlling person may become
subject under the Securities Act, the Exchange Act, the Securities Act
Regulations, Blue Sky Laws, or other federal or state statutory laws or
regulations, at common law or otherwise (including payments made in settlement
of any litigation, if such settlement is effected with the written consent of
the Company, which consent shall not be unreasonably withheld), insofar as such
Claims arise out of or are based upon the inaccuracy or breach of any
representation, warranty, or covenant of the Company or the Trust contained in
this Agreement, any untrue statement or alleged untrue statement of any material
fact contained in the
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<PAGE> 20
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any application filed under any Blue Sky
Law or other document executed by the Offerors for that purpose or based upon
written information furnished by the Offerors and filed in any state or other
jurisdiction to qualify or register any or all of the Preferred Securities under
the securities laws thereof (any such document, application, or information
being hereinafter called a "Blue Sky Application"), or arise out of or are based
upon the omission or alleged omission to state in any of the foregoing a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Company agrees to reimburse the Underwriter and each
such controlling person promptly for any legal fees or other expenses incurred
by such Underwriter or any such controlling person in connection with
investigating or defending any such Claim or appearing as a third-party witness
in connection with any such Claim; provided, however, that the Company will not
be liable in any such case to the extent that:
(i) Any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto or in any Blue Sky
Application in reliance upon and in conformity with the written
information furnished by or on behalf of the Underwriter to the
Offerors expressly for use therein pursuant to Section 4 of this
Agreement; or
(ii) Such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (A) any such
Claim suffered or incurred by the Underwriter (or any person who
controls such Underwriter) resulted from an action, claim, or suit by
any person who purchased Preferred Securities that are the subject
thereof from such Underwriter in the offering of the Preferred
Securities, and (B) such Underwriter failed to deliver a copy of the
Prospectus (as then amended if the Offerors shall have amended the
Prospectus) to such person at or prior to the confirmation of the sale
of such Preferred Securities in any case where such delivery is
required by the Securities Act, unless such failure was due to failure
by the Company to provide copies of the Prospectus (as so amended) to
the Underwriter as required by this Agreement.
(b) The Underwriter agrees to indemnify and hold harmless the
Offerors, each of their directors, each of their officers who sign the
Registration Statement, and each person who controls the Company or the Trust
within the meaning of the Securities Act, against any Claim to which the
Offerors, or any such director, officer, or controlling person may become
subject under the Securities Act, the Exchange Act, the Securities Act
Regulations, Blue Sky Laws, or other federal or state statutory laws or
regulations, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter and the Underwriter, which consent shall not be unreasonably
withheld), insofar as such Claim arises out of or is based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, or
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<PAGE> 21
arises out of or is based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or in any
Blue Sky Application, in reliance upon and in conformity with the written
information furnished by or on behalf of such Underwriter to the Offerors
pursuant to Section 4 of this Agreement. The Underwriter will reimburse any
legal fees or other expenses reasonably incurred by the Offerors, or any such
director, officer, or controlling person in connection with investigating or
defending any such Claim, and from any and all Claims resulting from failure of
such Underwriter to deliver a copy of the Prospectus, if the person asserting
such Claim purchased Preferred Securities from such Underwriter and a copy of
the Prospectus (as then amended if the Offerors shall have amended the
Prospectus) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Preferred Securities to such person, and if the
Prospectus (as so amended) would have cured the defect giving rise to such Claim
(unless such failure was due to a failure by the Company and the Trust to
provide sufficient copies of the Prospectuses (as so amended) to each
Underwriter).
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) of this Section 11 of notice of the commencement of any
action in respect of a Claim, such indemnified party will, if a Claim in respect
thereof is to be made against an indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof. In case
any such action is brought against any indemnified party, and such indemnified
party notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with all other indemnifying parties, similarly notified,
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to the indemnified party and/or other indemnified parties
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
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(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party will not be liable to such
indemnified party under subsection (a) or (b) of this Section 11 for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance with
the proviso to the last sentence of subsection (c) of this Section 11
(it being understood, however, that the indemnified party shall not be
liable for the legal fees and expenses of more than one separate
counsel (plus local counsel), approved by the Underwriter if the
Underwriter or its controlling persons are the indemnified parties); or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the action.
(e) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party or insufficient to hold harmless an
indemnified party under subsection (a) or (b) of this Section 11 in respect of
any Claim referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, subject, to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Offerors on the one hand and the
Underwriter on the other hand from the offering of the Preferred
Securities; or
(ii) if the allocation provided by clause (e)(i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (e)(i)
above, but also the relative fault of the Offerors on the one hand and
the Underwriter on the other hand in connection with the statements or
omissions that resulted in such Claim, as well as any other relevant
equitable considerations.
The respective relative benefits received by the Offerors on the one
hand and the Underwriter on the other hand shall be deemed to be in such
proportion that the Underwriter is responsible for that portion of a Claim
represented by the percentage that the amount of the Underwriting Commission
bears to the public offering price of the Preferred Securities, and the Company
(including the Company's directors, officers, and controlling persons) is
responsible for the remaining portion of such Claim.
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The relative fault of the Offerors on the one hand and the Underwriter
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 Offerors on the one hand or the Underwriter on the other hand
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such untrue statement or omission. The amount
paid or payable by a party as a result of the Claims referred to above shall be
deemed to include, subject to the limitations set forth in subsections (c) and
(d) of this Section 11, any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
(f) The Offerors and the Underwriter agree that it would not
be just and equitable if contribution pursuant to this Section 11 were
determined by pro rata or per capita allocation or by any other method or
allocation that does not take into account the equitable considerations referred
to in subsection (e) of this Section 11. Notwithstanding the other provisions of
this Section 11, the Underwriter shall not be required to contribute any amount
in excess of the amount by which the total price at which the Preferred
Securities underwritten by it and distributed to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(g) The obligations of the Company, the Trust, and the
Underwriter under this Section 11 shall be in addition to any liability that the
Company, the Trust, or the Underwriter may otherwise have.
Section 12. Effective Date.
This Agreement shall become effective immediately on the date hereof.
Section 13. Termination.
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof, this Agreement may be terminated by the Underwriter
prior to the Closing Date and the option from the Company and the Trust referred
to in Section 3, if exercised, may be canceled by the Underwriter at any time
prior to the Option Closing Date, if:
(a) The Offerors shall have failed, refused, or been unable,
at or prior to the Closing Date or Option Closing Date, as the case may be to
perform any agreement on its part to be performed hereunder.
(b) Any other condition to the obligations of the Underwriter
hereunder is not fulfilled; or
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(c) In the Underwriter's reasonable judgment, payment for and
delivery of the Preferred Securities is rendered impracticable or inadvisable
because:
(i) Additional governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been
generally established on any national securities exchange or
over-the-counter market, or trading in securities generally shall have
suspended on any national securities exchange or on the Nasdaq Stock
Market, or a general banking moratorium shall have been established by
federal or state authorities;
(ii) Any event shall have occurred or shall exist that makes
untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or that is not
reflected in the Registration Statement but should be reflected therein
to make the statements or information contained therein not misleading
in any material respect; or
(iii) Any outbreak or escalation of major hostilities or other
national or international calamity or any substantial change in
political, financial, or economic conditions shall have occurred or
shall have accelerated to such extent, in the Underwriter's reasonable
judgment, as to have a material adverse effect on the general
securities market of the United States or make it impracticable or
inadvisable to proceed with completion of the sale and payment for the
Preferred Securities as provided in this Agreement.
Any termination pursuant to this Section 13 shall be without liability
on the part of the Underwriter to the Company or on the part of the Company to
the Underwriter (except for expenses to be paid by the Company pursuant to
Section 7 or reimbursed by the Company pursuant to Section 9 and except as to
indemnification and contribution to the extent provided in Section 11).
Section 14. Representations and Indemnities to Survive Delivery.
The respective indemnity and contribution agreements of the Company and
the Underwriter, and the representations, warranties, covenants, other written
statements of the Offerors and of their directors and officers set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of the Underwriter, the Offerors, or
any of its or their partners, officers, directors, or any controlling person, as
the case may be, and will survive delivery of and payment for the Preferred
Securities sold hereunder. The respective indemnity and contribution of the
Company and the Underwriter, the provisions of Section 7(a) and Section 9 of
this Agreement, and the representations and warranties of the Offerors will
survive the termination or cancellation of this Agreement.
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Section 15. Notices.
All communications hereunder shall be in writing and, if sent to the
Underwriter, will be mailed, delivered, or telecopied (with receipt confirmed)
to Advest, Inc., at One Rockefeller Plaza, 20th Floor, New York, New York 10020,
Attention: Thomas G. Rudkin, Managing Director (Fax No. (212) 584-4292) with a
copy to Steven Kaplan, Arnold & Porter, 555 Twelfth Street, N.W., Washington,
D.C. 20004, (Fax No. (202) 942-5999); and if sent to the Company or the Trust
will be mailed, delivered, or telecopied (with receipt confirmed) to American
Bancshares, Inc., 4702 Cortez Road West, Bradenton, Florida 34210, Attention:
Gerald L. Anthony, Chief Executive Officer (Fax No. (941) 798-3712) with a copy
to Richard A. Denmon, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., One
Harbour Place, 777 South Harbour Island Boulevard, Tampa, Florida 33602 (Fax.
No. (813) 229-4133).
Section 16. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors or assigns, and to the benefit of
the directors and officers (and their personal representatives) and controlling
persons referred to in Section 11, and no other person shall acquire or have any
right or obligation hereunder. The terms "successors or assigns," as used in
this Agreement, shall not include any purchaser of the Preferred Securities from
any Underwriter merely by reason of such purchase.
Section 17. Partial Unenforceability.
If any section, subsection, clause, or provision of this Agreement is
for any reason determined to be invalid or unenforceable, such determination
shall not affect the validity or enforceability of any other section,
subsection, clause, or provision hereof.
Section 18. Applicable Law.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
Section 19. Entire Agreement.
This Agreement embodies the entire agreement among the parties hereto
with respect to the transactions contemplated herein, and there have been and
are no agreements among the parties with respect to such transactions other than
as set forth or provided for herein.
Section 20. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
25
<PAGE> 26
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed counterparts hereof,
whereupon it will become a binding agreement among the Company, the Trust and
the Underwriter, in accordance with its terms.
Very truly yours,
AMERICAN BANCSHARES, INC.
By:
---------------------------
Name:
Title:
ABI CAPITAL TRUST
By: AMERICAN BANCSHARES, INC.,
as Depositor
By:
----------------------
Name:
Title:
ADVEST, INC.
By:
---------------------------
Name:
Title:
26
<PAGE> 27
EXHIBIT A
The opinion of special counsel to the Company to be delivered pursuant
to Section 8(d)(i) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Company is a corporation existing and in active status under the
laws of the State of Florida with requisite corporate power and authority to own
its properties and conduct its business as described in the Registration
Statement, except for such power and authority the absence of which would not
have a material adverse effect on the Company, and is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended.
2. The Company and each Subsidiary have been duly incorporated or
organized and are validly existing as corporations or banking associations in
good standing under the laws of the jurisdiction of organization, with full
corporate power and authority to own, lease, and operate their respective
properties and conduct their respective businesses as described in the
Registration Statement; the Company and each Subsidiary are qualified to do
business as foreign corporations under the corporation laws of each jurisdiction
in which the Company or such Subsidiary, as the case may be, owns or leases
properties, has an office, or in which business is conducted and such
qualification is required, except where the failure to so qualify would not have
a material adverse effect.
3. The Company has full corporate power and authority to execute,
deliver, and perform the Underwriting Agreement; the Underwriting Agreement has
been duly authorized, executed and delivered by the Company, and constitutes a
legal, valid, and binding obligation of the Company and is enforceable against
each of the Company and the Trust in accordance with its terms.
4. The Trust Agreement has been duly authorized, executed and delivered
by the Company, and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
5. The Guarantee Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
6. The Indenture has been duly authorized, executed and delivered by
the Company, has been duly qualified under the Trust Indenture Act, and is a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
7. The Subordinated Debentures have been duly authorized, executed and
delivered by the Company and when duly authenticated in accordance with the
Indenture
27
<PAGE> 28
and delivered and paid for in accordance with the Junior Subordinated Debenture
Purchase Agreement to be dated as of ______ __, 1998, by and between the Company
and the Trust, will be valid and binding obligations of the Company, entitled to
the benefits of the Indenture and enforceable against the Company in accordance
with their terms.
8. The Trust is not an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in the Investment Company
Act of 1940, as amended.
9. The statements set forth in the Registration Statement under the
captions "Supervision and Regulation," "Description of Preferred Securities,"
"Description of Junior Subordinated Debentures," "Description of Guarantee" and
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guarantee," insofar as they purport to describe the provisions of the
laws referred to therein, fairly summarize the legal matters described therein.
10. The statements of law or legal conclusions and opinions set forth
in the Registration Statement under the caption "Certain Federal Income Tax
Consequences," subject to the assumptions and conditions described therein,
constitute such counsel's opinion.
11. The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion and, to such
counsel's knowledge and information, no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the Commission.
12. The Registration Statement and the Prospectus and any amendment or
supplement thereto made by the Company prior to the Closing Date or any Option
Closing Date (other than the financial statements and financial and statistical
data included therein, as to which no opinion need be rendered), when it or they
became effective or were filed with the Commission, as the case may be, and in
each case at the Closing Date or any Option Closing Date, complied as to form in
all material respects with the requirements of the Securities Act, the Trust
Indenture Act, and the applicable rules and regulations under said acts, and
such counsel has no reason to believe that the Registration Statement (other
than the financial statements and financial and statistical data included
therein, as to which no opinion need be rendered), at the time it became
effective, contained any untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements contained therein, not
misleading, or that the Prospectus (other than the financial statements and
financial and statistical data included therein, as to which no opinion need be
rendered), at the time it was filed with the Commission or at the Closing Date
or any Option Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
28
<PAGE> 29
13. To such counsel's knowledge, except as disclosed in the
Registration Statement, there are no material legal or governmental proceedings
pending to which the Company or any Subsidiary is a party or of which any
property of the Company or any Subsidiary is the subject which are required to
be disclosed in the Registration Statement or which would affect the
consummation of the transactions contemplated in this Agreement, the Indenture
or the Preferred Securities; and to such counsel's knowledge there are no
proceedings which are threatened by governmental authorities or others.
14. To such counsel's knowledge there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described in the Registration Statement or to be filed as exhibits thereto other
than those described therein or filed or incorporated by reference as exhibits
thereto, and to such counsel's knowledge such instruments as are summarized in
the Registration Statement are fairly summarized in all material respects.
15. No approval, authorization, consent, registration, qualification,
or other order of any public board or body is required in connection with the
execution and delivery of this Agreement, the Trust Agreement, the Guarantee
Agreement, and the Indenture or the issuance and sale of the Preferred
Securities or the consummation by the Company of the other transactions
contemplated by this Agreement, the Trust Agreement, the Guarantee Agreement, or
the Indenture, except such as have been obtained under the Securities Act, the
Exchange Act, and the Trust Indenture Act or such as may be required under the
blue sky or securities laws of various states in connection with the offering
and sale of the Preferred Securities (as to which such counsel need express no
opinion).
16. The execution and delivery of this Agreement, the Trust Agreement,
the Guarantee Agreement, and the Indenture, the issue and sale of the Preferred
Securities and the Subordinated Debentures, the compliance by the Company with
the provisions of the Preferred Securities, the Subordinated Debentures, the
Indenture, and this Agreement and the consummation of the transactions herein
and therein contemplated will not constitute a breach of, or default under, the
articles of incorporation or by-laws of the Company or a breach or default under
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument known to such counsel to which either the Company or any Subsidiary
is a party or by which either of them or any of their respective properties may
be bound except for such breaches as would not have a material adverse effect on
the Company and its Subsidiaries considered as one enterprise, nor will such
action result in a violation on the part of the Company or any Subsidiary of any
applicable law or regulation or of any administrative, regulatory, or court
decree known to such counsel.
29
<PAGE> 30
EXHIBIT B
The opinion of counsel to the Trust Company and Trust Delaware to be
delivered pursuant to Section 8(d)(ii) of the Underwriting Agreement shall be
substantially to the effect that:
1. The Trust Company is duly incorporated and is validly existing in
good standing as a banking corporation with trust powers under the laws of the
State of New York.
2. The Indenture Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Indenture, and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of the Indenture.
3. The Guarantee Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Guarantee Agreement, and
has taken all necessary corporate action to authorize the execution, delivery
and performance by it of the Guarantee Agreement.
4. The Property Trustee has the requisite power and authority to
execute and deliver the Trust Agreement, and has taken all necessary corporate
action to authorize the execution and delivery of the Trust Agreement.
5. Each of the Indenture and the Guarantee Agreement has been duly
executed and delivered by the Indenture Trustee and the Guarantee Trustee,
respectively, and constitutes a legal, valid and binding obligation of the
Indenture Trustee and the Guarantee Trustee, respectively, enforceable against
the Indenture Trustee and the Guarantee Trustee, respectively in accordance with
its respective terms, except that certain payment obligations may be enforceable
solely against the assets of the Trust and except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, liquidation,
fraudulent conveyance and transfer or other similar laws affecting the
enforcement of creditors' rights generally, and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether such enforceability is considered
in a proceeding in equity or at law), and by the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.
6. The Subordinated Debentures delivered on the date hereof have been
duly authenticated by the Indenture Trustee in accordance with the terms of the
Indenture.
30
<PAGE> 31
EXHIBIT C
The opinion of counsel, as special Delaware counsel to the Company and
the Trust to be delivered pursuant to Section 8(d)(iii) of the Underwriting
Agreement shall be substantially to the effect that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, and all
filings required under the laws of the State of Delaware with respect to the
creation and valid existence of the Trust as a business trust have been made.
2. Under the Delaware Business Trust Act and the Trust Agreement the
Trust has the trust power and authority to own its property and to its conduct
its business, all as described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation of
the Company and the Trustees, and is enforceable against the Company and the
Trustees, in accordance with its terms.
4. Under the Delaware Business Trust Act and the Trust Agreement, the
Trust has the trust power and authority (i) to execute and deliver, and to
perform its obligations under, the Underwriting Agreement, and (ii) to issue and
perform its obligations under the Preferred Securities and the Common
Securities.
5. Under the Delaware Business Trust Act and the Trust Agreement, the
execution and delivery by the Trust of the Underwriting Agreement, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust.
6. The Preferred Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and, subject to the qualifications set
forth herein, fully paid and nonassessable undivided beneficial interests in the
assets of the Trust and are entitled to the benefits of the Trust Agreement. The
Holders, as beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Holders may be obligated, pursuant to the Trust
Agreement, (i) to provide indemnity and/or security in connection with and pay
taxes or governmental charges arising from transfers or exchanges of Preferred
Securities Certificates and the issuance of replacement Preferred Securities
Certificates, and (ii) to provide security or indemnity in connection with
requests of or directions to the Property Trustee to exercise its rights and
powers under the Trust Agreement.
31
<PAGE> 32
7. Under the Delaware Business Trust Act and the Trust Agreement, the
issuance of the Preferred Securities and Common Securities is not subject to
preemptive rights.
8. The Common Securities have been duly authorized by the Trust
Agreement and are duly and validly issued undivided beneficial interests in the
assets of the Trust and are entitled to the benefits of the Trust Agreement.
9. The issuance and sale by the Trust of the Preferred Securities and
Common Securities, the purchase by the Trust of the Subordinated Debentures, the
execution, delivery and performance by the Trust of the Underwriting Agreement,
the consummation by the Trust of the transactions contemplated by the
Underwriting Agreement and the compliance by the Trust with its obligations
thereunder will not violate (i) any of the provisions of the Certificate of
Trust or the Trust Agreement or (ii) any applicable Delaware law or
administrative regulation.
32
<PAGE> 33
EXHIBIT D
The opinion of counsel, as special Delaware counsel to Trust Delaware
to be delivered pursuant to Section 8(d)(iv) of the Underwriting Agreement shall
be substantially to the effect that:
1. Trust Delaware is duly incorporated and is validly existing in good
standing as a banking corporation with trust powers under the laws of the State
of Delaware.
2. The Trust Delaware has the requisite power and authority to execute
and deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
33
<PAGE> 1
EXHIBIT 4.1
DRAFT
MAY 28, 1998
================================================================================
JUNIOR SUBORDINATED INDENTURE
Between
AMERICAN BANCSHARES, INC.
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
______ __, 1998
================================================================================
<PAGE> 2
ABI CAPITAL TRUST
Certain Sections of this Junior Subordinated Indenture relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Junior Subordinated
Act Section Indenture Section
- --------------- -------------------
<S> <C> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8, 6.10
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1, 7.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(c)
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(c)
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2, 7.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(f)
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Compliance Certificate and Opinions . . . . . . . . 11
Section 1.3. Forms of Documents Delivered to Trustee . . . . . . 11
Section 1.4. Acts of Holders . . . . . . . . . . . . . . . . . . 12
Section 1.5. Notices, Etc. to Trustee and Company. . . . . . . . 14
Section 1.6. Notice to Holders; Waiver . . . . . . . . . . . . . 14
Section 1.7. Conflict with Trust Indenture Act . . . . . . . . . 15
Section 1.8. Effect of Headings and Table of Contents. . . . . . 15
Section 1.9. Successors and Assigns. . . . . . . . . . . . . . . 15
Section 1.10. Separability Clause . . . . . . . . . . . . . . . . 15
Section 1.11. Benefits of Indenture . . . . . . . . . . . . . . . 15
Section 1.12. Governing Law . . . . . . . . . . . . . . . . . . . 15
Section 1.13. Non-Business Days . . . . . . . . . . . . . . . . . 16
ARTICLE II. SECURITY FORMS
Section 2.1. Forms Generally. . . . . . . . . . . . . . . . . . 16
Section 2.2. Form of Face of Security . . . . . . . . . . . . . 17
Section 2.3. Form of Reverse of Security. . . . . . . . . . . . 20
Section 2.4. Additional Provisions Required in Global Security. 23
Section 2.5. Form of Trustee's Certificate of Authentication. . 24
ARTICLE III. THE SECURITIES
Section 3.1. Title and Terms . . . . . . . . . . . . . . . . . . 25
Section 3.2. Denominations . . . . . . . . . . . . . . . . . . . 25
Section 3.3. Execution, Authentication, Delivery and Dating. . . 26
Section 3.4. Temporary Securities. . . . . . . . . . . . . . . . 27
Section 3.5. Global Securities . . . . . . . . . . . . . . . . . 27
Section 3.6. Registration, Transfer and Exchange Generally;
Certain Transfers and Exchanges;
Securities Act Legends. . . . . . . . . . . . . . . 29
Section 3.7. Mutilated, Lost and Stolen Securities . . . . . . . 31
Section 3.8. Payment of Interest and Additional Interest;
Interest Rights Preserved . . . . . . . . . . . . . 32
Section 3.9. Persons Deemed Owners . . . . . . . . . . . . . . . 33
Section 3.10. Cancellation. . . . . . . . . . . . . . . . . . . . 34
Section 3.11. Computation of Interest . . . . . . . . . . . . . . 34
Section 3.12. Deferrals of Interest Payment Dates . . . . . . . . 34
Section 3.13. Right of Set-Off. . . . . . . . . . . . . . . . . . 35
Section 3.14. Agreed Tax Treatment. . . . . . . . . . . . . . . . 36
Section 3.15. CUSIP Numbers . . . . . . . . . . . . . . . . . . . 36
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 3.16. Shortening of Stated Maturity 36
ARTICLE IV. SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture . . . . . . 36
Section 4.2. Application of Trust Money. . . . . . . . . . . . . 37
ARTICLE V. REMEDIES
Section 5.1. Events of Default . . . . . . . . . . . . . . . . . 38
Section 5.2. Acceleration of Maturity; Rescission and Annulment. 38
Section 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee. . . . . . . . . . . . . 40
Section 5.4. Trustee May File Proofs of Claim. . . . . . . . . . 40
Section 5.5. Trustee May Enforce Claim Without
Possession of Securities. . . . . . . . . . . . . . 41
Section 5.6. Application of Money Collected. . . . . . . . . . . 41
Section 5.7. Limitation on Suits . . . . . . . . . . . . . . . . 42
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders
of Preferred Securities . . . . . . . . . . . . . . 42
Section 5.9. Restoration of Rights and Remedies. . . . . . . . . 43
Section 5.10. Rights and Remedies Cumulative. . . . . . . . . . . 43
Section 5.11. Delay or Omission Not Waiver. . . . . . . . . . . . 43
Section 5.12. Control by Holders. . . . . . . . . . . . . . . . . 43
Section 5.13. Waiver of Past Defaults . . . . . . . . . . . . . . 44
Section 5.14. Undertaking for Costs . . . . . . . . . . . . . . . 44
Section 5.15. Waiver of Usury, Stay or Extension Laws . . . . . . 45
ARTICLE VI. THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities . . . . . . . . 45
Section 6.2. Notice of Defaults. . . . . . . . . . . . . . . . . 46
Section 6.3. Certain Rights of Trustee . . . . . . . . . . . . . 47
Section 6.4. Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . . . . . . . . . . 48
Section 6.5. May Hold Securities . . . . . . . . . . . . . . . . 48
Section 6.6. Money Held in Trust . . . . . . . . . . . . . . . . 48
Section 6.7. Compensation and Reimbursements . . . . . . . . . . 48
Section 6.8. Disqualification; Conflicting Interests . . . . . . 49
Section 6.9. Corporate Trustee Required;
Eligibility . . . . . . . . . . . . . . . . . . . . 49
Section 6.10. Resignation and Removal; Appointment
of Successor. . . . . . . . . . . . . . . . . . . . 50
Section 6.11. Acceptance of Appointment by
Successor . . . . . . . . . . . . . . . . . . . . . 51
Section 6.12. Merger, Conversion, Consolidation or
Succession to Business. . . . . . . . . . . . . . . 52
Section 6.13. Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 6.14. Appointment of Authenticating Agent 52
ARTICLE VII. HOLDER'S LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
Section 7.1. Company to Furnish Trustee Names and
Addresses of Holders. . . . . . . . . . . . . . . . 54
Section 7.2. Preservation of Information,
Communications to Holders . . . . . . . . . . . . . 54
Section 7.3. Reports by Trustee and Paying Agent . . . . . . . . 54
Section 7.4. Reports by Company. . . . . . . . . . . . . . . . . 55
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only
on Certain Terms. . . . . . . . . . . . . . . . . . 55
Section 8.2. Successor Company Substituted . . . . . . . . . . . 56
ARTICLE IX. SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent
of Holders. . . . . . . . . . . . . . . . . . . . . 57
Section 9.2. Supplemental Indentures With Consent of Holders . . 58
Section 9.3. Execution of Supplemental Indentures. . . . . . . . 59
Section 9.4. Effect of Supplemental Indentures . . . . . . . . . 59
Section 9.5. Conformity with Trust Indenture Act . . . . . . . . 59
Section 9.6. Reference in Securities to Supplemental
Indentures. . . . . . . . . . . . . . . . . . . . . 59
ARTICLE X. COVENANTS
Section 10.1. Payment of Principal, Premium and Interest. . . . . 60
Section 10.2. Maintenance of Office or Agency . . . . . . . . . . 60
Section 10.3. Money for Security Payments to be Held in Trust . . 60
Section 10.4. Statement as to Compliance. . . . . . . . . . . . . 62
Section 10.5. Waiver of Certain Covenants . . . . . . . . . . . . 62
Section 10.6. Additional Sums . . . . . . . . . . . . . . . . . . 62
Section 10.7. Additional Covenants. . . . . . . . . . . . . . . . 63
Section 10.8. Federal Tax Reports . . . . . . . . . . . . . . . . 64
ARTICLE XI. REDEMPTION OF SECURITIES
Section 11.1. Applicability of This Article . . . . . . . . . . . 64
Section 11.2. Election to Redeem; Notice to Trustee . . . . . . . 64
Section 11.3. Selection of Securities to be Redeemed. . . . . . . 64
Section 11.4. Notice of Redemption. . . . . . . . . . . . . . . . 65
Section 11.5. Deposit of Redemption Price . . . . . . . . . . . . 66
Section 11.6. Payment of Securities Called for Redemption . . . . 66
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 11.7. Right of Redemption of Securities
Initially Issued to the Issuer Trust. . . . . . . . 66
ARTICLE XII. SINKING FUNDS
Sinking Funds . . . . . . . . . . . . . . . . . . . 67
ARTICLE XIII. SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness . . . 67
Section 13.2. No Payment When Senior Indebtedness
in Default; Payment Over of Proceeds
Upon Dissolution, Etc.. . . . . . . . . . . . . . . 67
Section 13.3 Payment Permitted If No Default . . . . . . . . . . 69
Section 13.4. Subrogation to Rights of Holders of
Senior Indebtedness . . . . . . . . . . . . . . . . 69
Section 13.5. Provisions Solely to Define Relative Rights . . . . 70
Section 13.6. Trustee to Effectuate Subordination . . . . . . . . 70
Section 13.7. No Waiver of Subordination Provisions . . . . . . . 70
Section 13.8. Notice to Trustee . . . . . . . . . . . . . . . . . 71
Section 13.9. Reliance on Judicial Order or
Certificate of Liquidating Agent. . . . . . . . . . 71
Section 13.10. Trustee Not Fiduciary for Holders of
Senior Indebtedness . . . . . . . . . . . . . . . . 72
Section 13.11. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights. . . 72
Section 13.12. Article Applicable to Paying Agents . . . . . . . . 72
Section 13.13. Certain Conversions or Exchanges
Deemed Payment. . . . . . . . . . . . . . . . . . . 72
</TABLE>
iv
<PAGE> 7
JUNIOR SUBORDINATED INDENTURE
THIS JUNIOR SUBORDINATED INDENTURE, dated as of ______ __, 1998
between AMERICAN BANCSHARES, INC., a Florida corporation (the "Company"),
having its principal office at 4702 Cortez Road West, Bradenton, Florida, 34210
and BANKERS TRUST COMPANY, as Trustee, having its principal office at Four
Albany Street, 4th Floor, New York, New York 10006 (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of its unsecured junior subordinated
deferrable interest debentures due ______ __, 2028 (the "Securities") of
substantially the tenor hereinafter provided, including Securities issued to
evidence loans made to the Company from the proceeds from the issuance from
time to time by ABI Capital Trust, a Delaware business trust (the "Issuer
Trust") of undivided preferred beneficial interests in the assets of such
Issuer Trust (the "Preferred Securities") and common undivided interests in the
assets of such Issuer Trust (the "Common Securities" and, collectively with the
Preferred Securities, the "Trust Securities"), and to provide the terms and
conditions upon which the Securities are to be authenticated, issued and
delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as such term is defined in Section 1.1 hereof)
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, and
intending to be legally bound hereby, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned
to them in this Article, and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
<PAGE> 8
(c) the words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect at the time of computation;
(e) whenever the context may require, any gender shall be deemed
to include the other;
(f) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Indenture; and
(g) the words "hereby", "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.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities similar to the Trust
Securities will qualify as Tier 1 capital of the Company up to an amount not to
exceed, when taken together with all cumulative preferred stock of the Company,
if any, 25% of the Company's Tier 1 capital, or any subsequent limitation
adopted by the Federal Reserve.
"Act" when used with respect to any Holder has the meaning specified
in Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on
any interest on the Securities of any series the payment of which has not been
made on the applicable Interest Payment Date and which shall accrue at the rate
per annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Administrator" means, in respect of the Issuer Trust, each Person
appointed in accordance with the Trust Agreement, solely in such Person's
capacity as Administrator of the Issuer Trust and not in such Person's
individual capacity, or any successor Administrator appointed as therein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
2
<PAGE> 9
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Global Security, in each case
to the extent applicable to such transaction and as in effect from time to
time.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means the board of directors of the Company or
the executive committee of the board of directors of the Company (or any other
committee of the board of directors of the Company performing similar
functions) or, for purposes of this Indenture, a committee designated by the
board of directors of the Company (or such committee), comprised of two or more
members of the board of directors of the Company or officers of the Company, or
both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or any Assistant Secretary of the Company to have been duly adopted
by the Board of Directors, or such committee of the Board of Directors or
officers of the Company to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" means any day other than (a) a Saturday or Sunday, (b)
a day on which banking institutions in the State of Florida or the City of New
York are authorized or required by law or executive order to remain closed, or
(c) a day on which the Corporate Trust Office of the Trustee, or, with respect
to the Securities initially issued to the Issuer Trust, the "Corporate Trust
Office" (as defined in the Trust Agreement) of the Property Trustee or the
Delaware Trustee under the Trust Agreement, is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Company that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in,
the laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount (as such term is defined in the Trust
Agreement) of such Preferred Securities as "Tier 1 Capital" (or the then
equivalent thereof), except as otherwise restricted under the 25% Capital
Limitation, for purposes of the risk-based capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Company.
3
<PAGE> 10
"Commission" means 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 instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Common Stock" means the common stock, $1.175 par value per share, of
the Company.
"Company" means the Person named as the "Company" in the preamble of
this instrument until a successor entity shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor entity.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by any Chairman of the Board
of Directors, any Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Chief Financial Officer, its Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at the date hereof is located at Four Albany Street,
4th Floor, New York, New York 10006.
"Creditor" has the meaning specified in Section 6.7.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Delaware Trustee" in the Trust Agreement, solely in its
capacity as Delaware Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in the form of one or more Global Securities, the Person
designated as Depositary by the Company pursuant to Section 3.1 (or any
successor thereto).
"Discount Security" means any security that provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 5.2.
"Dollar" or "$" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.
The term "entity" includes a bank, corporation, association, company,
limited liability company, joint-stock company or business trust.
"Event of Default," has the meaning specified in Article V.
4
<PAGE> 11
"Exchange Act" means the Securities Exchange Act of 1934 and any
successor statute thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Federal Reserve" means Board of Governors of the Federal Reserve
System.
"Global Security" means a Security in the form prescribed in Section
2.4 evidencing all or part of the Securities, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"Guarantee" means, with respect to the Issuer Trust, the Guarantee
Agreement, dated ______ __, 1998, executed by the Company for the benefit of
the Holders of the Preferred Securities issued by the Issuer Trust as modified,
amended or supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on such Securities.
"Investment Company Act" means the Investment Company Act of 1940 and
any successor statute thereto, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel, rendered by a law firm experienced in such matters, to the
effect that, as a result of the occurrence of a change in law or regulation or
a written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Preferred Securities of the Issuer Trust.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
5
<PAGE> 12
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(c).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Chief Executive Officer,
President or a Vice President, and by the Chief Financial Officer, Treasurer,
an Associate Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person, and delivered to the Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(a) a statement by each officer signing the Officers' Certificate
that such officer 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 such officer in rendering the Officers'
Certificate;
(c) a statement that 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 such officer,
such condition or covenant has been complied with;
provided, however, that the Officers' Certificate delivered pursuant to the
provisions of Section 10.4 hereof shall comply with the provisions of Section
314 of the Trust Indenture Act.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Company or any Affiliate of the Company.
"Original Issue Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities for whose payment money in the necessary amount has
been theretofore deposited with the Trustee or any Paying Agent in trust for
the Holders of such Securities; and
(c) Securities in substitution for or in lieu of other Securities
which have been authenticated and delivered or that have been paid pursuant to
Section 3.6, unless proof
6
<PAGE> 13
satisfactory to the Trustee is presented that any such Securities are held by
Holders in whose hands such Securities are valid, binding and legal obligations
of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor (other than, for the avoidance of doubt, the
Issuer Trust to which Securities of the applicable series were initially
issued) shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities that the Trustee knows to be so owned shall be so disregarded.
Securities so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor (other than, for the avoidance of doubt, the
Issuer Trust). Upon the written request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and identifying
all Securities, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Securities or any Affiliate
of the Company or such obligor (other than, for the avoidance of doubt, the
Issuer Trust), and, subject to the provisions of Section 6.1, the Trustee shall
be entitled to accept such Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the
Company to pay the principal of (or premium, if any) or interest on, or other
amounts in respect of any Securities on behalf of the Company.
"Person" means any individual, partnership, trust, unincorporated
organization or entity (as defined herein) or government or any agency or
political subdivision thereof.
"Place of Payment" means, with respect to the Securities, the place or
places where the principal of (and premium, if any) and interest on the
Securities are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a mutilated,
destroyed, lost or stolen Security shall be deemed to evidence the same debt as
the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the first recital
of this Indenture.
"Principal Subsidiary Bank" means each of (a) American Bank, (b) any
other banking subsidiary of the Company the consolidated assets of which
constitute 20% or more of the consolidated assets of the Company and its
consolidated subsidiaries, (c) any other banking
7
<PAGE> 14
subsidiary designated as a Principal Subsidiary Bank pursuant to a Board
Resolution and set forth in an Officers' Certificate delivered to the Trustee,
and (d) any subsidiary of the Company that owns, directly or indirectly, any
voting securities, or options, warrants or rights to subscribe for or purchase
voting securities, of any Principal Subsidiary Bank under clause (a), (b) or
(c), and in the case of clause (a), (b), (c) or (d) their respective successors
(whether by consolidation, merger, conversion, transfer of substantially all
their assets and business or otherwise) so long as any such successor is a
banking subsidiary (in the case of clause (a), (b) or (c)) or a subsidiary (in
the case of clause (d)) of the Company.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Property Trustee" in the Trust Agreement, solely in its
capacity as Property Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as therein provided.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or the terms of such Security.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date with respect to the Securities means, unless otherwise provided pursuant
to Section 3.1 with respect to the Securities, the close of business on March
15, June 15, September 15 or December 15 next preceding such Interest Payment
Date (whether or not a Business Day).
"Responsible Officer", when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any
managing director, principal, vice president, assistant vice president,
assistant treasurer, assistant secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Annex A.
"Restricted Securities Legend" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 2.2 to
be placed upon a Restricted Security.
"Rights Plan" means any plan of the Company providing for the issuance
by the Company to all holders of its Common Stock, $1.175 par value per share,
of rights entitling the
8
<PAGE> 15
holders thereof to subscribe for or purchase shares of any class or series of
capital stock of the Company which rights (a) are deemed to be transferred with
such shares of such Common Stock, (b) are not exercisable, and (c) are also
issued in respect of future issuances of such Common Stock, in each case until
the occurrence of a specified event or events.
"Securities" or "Security" means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any successor
statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means, whether recourse is to all or a portion
of the assets of the Company and whether or not contingent, (a) every
obligation of the Company for money borrowed; (b) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (c) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (d) every obligation of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (e) every capital lease obligation of the Company; (f) every
obligation of the Company for claims (as defined in Section 101(4) of the
United States Bankruptcy Code of 1978, as amended) in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements; and (g) every obligation of the type
referred to in clauses (a) through (f) of another person and all dividends of
another person the payment of which, in either case, the Company has guaranteed
or is responsible or liable, directly or indirectly, as obligor or otherwise.
Senior Indebtedness shall not include (a) any obligations which, by their
terms, are expressly stated to rank pari passu in right of payment with, or to
not be superior in right of payment to, the Junior Subordinated Debentures, (b)
any Senior Indebtedness of the Company which when incurred and without respect
to any election under Section 1111(b) of the United States Bankruptcy Code of
1978, as amended, was without recourse to the Company, (c) any indebtedness of
the Company to any of its subsidiaries, (d) indebtedness to any executive
officer or director of the Company, or (e) any indebtedness in respect of debt
securities issued to any trust, or a trustee of such trust, partnership or
other entity affiliated with the Company that is a financing entity of the
Company in connection with the issuance of such financing entity of securities
that are similar to the Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
pursuant to the terms of such Security as the fixed date on which the principal
of such Security or such installment of principal or interest is
9
<PAGE> 16
due and payable, as such date may, in the case of such principal, be shortened
or extended as provided pursuant to the terms of such Security and this
Indenture.
"Subsidiary" means an entity more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.7 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel, rendered by a law firm 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 or administrative pronouncement or action or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities of the
Issuer Trust, there is more than an insubstantial risk that (a) the Issuer
Trust is, or will be within 90 days of the delivery of such Opinion of Counsel,
subject to United States federal income tax with respect to income received or
accrued on the corresponding series of Securities issued by the Company to the
Issuer Trust, (b) interest payable by the Company on the Securities is not, or
within 90 days of the delivery of such Opinion of Counsel will not be,
deductible by the Company, in whole or in part, for United States federal
income tax purposes, or (c) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated as of ______ __, 1998, as amended, modified or supplemented from time to
time, among the trustees of the Issuer Trust named therein, the Company, as
depositor, and the holders from time to time of undivided beneficial ownership
interests in the assets of the Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the preamble of
this Indenture, solely in its capacity as such and not in its individual
capacity, until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
shall mean the Trustee with respect to Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, or any successor statute, in
each case as amended from time to time, except as provided in Section 9.5.
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<PAGE> 17
"Trust Securities" has the meaning specified in the first recital of
this Indenture.
"Vice President," when used with respect to the Company, means any
duly appointed vice president, whether or not designated by a number or a word
or words added before or after the title "vice president."
Section 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent
(including covenants compliance with which constitutes a condition 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 (including covenants compliance
with which constitutes a condition precedent), if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 10.4) shall include:
(a) a statement by each individual signing such certificate or
opinion that such individual has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions of such
individual contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he or she
has made such examination or investigation as is necessary to enable him or her
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 such individual,
such condition or covenant has been complied with.
Section 1.3. Forms of Documents Delivered to Trustee.
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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<PAGE> 18
(b) Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions, or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Section 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments is or
are delivered to the Trustee, and, where it is hereby expressly required, to
the Company. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 6.1) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section
1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him or her the
execution thereof. Where such execution is by a Person acting in other than
his or her individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his or her authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be provided in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security and the
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<PAGE> 19
Holder of every Security issued upon the transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done or suffered to be done
by the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders of Securities, provided that the Company may not set a record date
for, and the provisions of this Section 1.4(f) shall not apply with respect to,
the giving or making of any notice, declaration, request or direction referred
to in Section 1.4(g). If any record date is set pursuant to this Section
1.4(f), the Holders of Outstanding Securities on such record date, and no other
Holders, shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date, provided, however that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined below) by Holders of the requisite principal amount
of Outstanding Securities on such record date. Nothing in this Section 1.4(f)
shall be construed to prevent the Company from setting a new record date for
any action for which a record date has previously been set pursuant to this
Section 1.4(f) (whereupon the record date previously set shall automatically
and with no action by any Person be cancelled and of no effect), and nothing in
this Section 1.4(f) shall be construed to render ineffective any action taken
by Holders of the requisite principal amount of Outstanding Securities on the
date such action is taken. Promptly after any record date is set pursuant to
this Section 1.4(f), the Company, at its own expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Trustee in writing and to each Holder of Securities in
the manner set forth in Section 1.6.
(g) The Trustee may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(b), or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities. If any record date is
set pursuant to this Section 1.4(g), the Holders of Outstanding Securities on
such record date, and no other Holders, shall be entitled to join in such
notice, declaration, request or direction, whether or not such Holders remain
Holders after such record date, provided, however that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this Section 1.4(g) shall be construed to prevent the
Trustee from setting a new record date for any action for which a record date
has previously been set pursuant to this Section 1.4(g) (whereupon the record
date previously set shall automatically and with no action by any Person be
cancelled and of no effect) and nothing in this paragraph shall be construed to
render ineffective any action taken by Holders of the requisite principal amount
of Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Company in writing and to
each Holder of Securities in the manner set forth in Section 1.6.
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<PAGE> 20
(h) With respect to any record date set pursuant to this Section
1.4, the party hereto that sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto
in writing, and to each Holder of Securities in the manner set forth in Section
1.6 on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this Section 1.4(h). Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
(i) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
Section 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder, any holder of Preferred Securities
or the Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, or
(b) the Company by the Trustee, any Holder or any holder of
Preferred Securities shall be sufficient for every purpose (except as otherwise
provided in Section 5.1) hereunder if in writing and mailed, first class,
postage prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the Company.
Section 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the
suspension of or irregularities in regular mail services or for any other
reason, it shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any provision of
this Indenture or of the Securities, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with
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<PAGE> 21
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
Section 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required thereunder to be a part
of and govern this Indenture, the provision of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
and assigns, the holders of Senior Indebtedness, the Holders of the Securities
and, to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13,
9.1 and 9.2, the holders of Preferred Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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<PAGE> 22
Section 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of
any Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or the Securities) payment of interest or principal
(and premium, if any) or other amounts in respect of such Security need not be
made on such date, but may be made on the next succeeding Business Day (and no
interest shall accrue in respect of the amounts whose payment is so delayed for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day) except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (in each case
with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
Section 2.1. Forms Generally.
(a) The Securities and the Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article II, or in such
other form or forms as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with applicable tax laws or the rules of
any securities exchange or as may, consistently herewith, be determined by the
officers executing such securities, as evidenced by their execution of the
Securities. If the form of Securities is established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 with respect to the authentication and delivery of
such Securities.
(b) The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods, if required by any
securities exchange on which the Securities may be listed, on a steel engraved
border or steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may
be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
(c) Securities distributed to holders of Global Preferred
Securities (as defined in the Trust Agreement) upon the dissolution of the
Issuer Trust shall be distributed in the form of one or more Global Securities
registered in the name of a Depositary or its nominee, and deposited with the
Securities Registrar, as custodian for such Depositary, or with such
Depositary, for credit by the Depositary to the respective accounts of the
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct). Securities distributed to holders
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<PAGE> 23
of Preferred Securities other than Global Preferred Securities upon the
dissolution of the Issuer Trust shall not be issued in the form of a Global
Security or any other form intended to facilitate book-entry trading in
beneficial interests in such Securities.
Section 2.2. Form of Face of Security.
AMERICAN BANCSHARES, INC.
____% Junior Subordinated Deferrable Interest Debentures due ______ __, 2028
[If the Security is a Restricted Security, insert - THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY ANY INITIAL INVESTOR THAT IS NOT A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT, (I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF
RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), OR (B) BY AN INITIAL INVESTOR THAT IS A
QUALIFIED INSTITUTIONAL BUYER OR BY ANY SUBSEQUENT INVESTOR, AS SET FORTH IN
(A) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
AND, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE
STATES AND OTHER JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS
SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.
SECURITIES OWNED BY AN INITIAL INVESTOR THAT IS NOT A QUALIFIED INSTITUTIONAL
BUYER MAY NOT BE HELD IN GLOBAL FORM AND MAY NOT BE TRANSFERRED WITHOUT
CERTIFICATION THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS, AS
PROVIDED IN THE INDENTURE REFERRED TO BELOW. NO REPRESENTATION CAN BE MADE AS
TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE
SECURITIES.]
No. $__________
American Bancshares, Inc., a Florida corporation (hereinafter called
the "Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to ABI
Capital Trust, or registered assigns, the principal sum of __________ Dollars
on ______ __, 2028, or such other principal amount represented hereby as may be
set forth in the records of the Securities Registrar hereinafter referred to in
accordance with the Indenture provided that the Company may shorten the Stated
Maturity of the principal of this Security to a date not earlier than ______
__, 2003. The Company further promises to
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<PAGE> 24
pay interest on said principal from ________ __, 1998, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on March 31, June
30, September 30 and December 31 of each year, commencing ________ __, 1998 at
the rate of ____% per annum, together with Additional Sums, if any, as provided
in Section 10.6 of the Indenture, until the principal hereof is paid or duly
provided for or made available for payment; provided that any overdue principal,
premium or Additional Sums and any overdue installment of interest shall bear
Additional Interest at the rate of ____% per annum (to the extent that the
payment of such interest shall be legally enforceable), compounded quarterly
from the dates such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand. The amount of interest
payable for any period less than a full interest period shall be computed on the
basis of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. The amount of interest payable for any full
interest period shall be computed by dividing the applicable rate per annum by
four. The interest 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) is
registered at the close of business on the Regular Record Date for such interest
installment, which shall be the 15th day of March, June, September and December
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either 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 for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or 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 said
Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Security,
from time to time to defer the payment of interest on this Security for up to
20 consecutive quarterly interest payment periods with respect to each deferral
period (each an "Extension Period"), during which Extension Periods the Company
shall have the right to make partial payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid including Additional Interest, as provided below; provided
however, that no Extension Period shall extend beyond the Stated Maturity of
the principal of this Security, as then in effect, and no such Extension Period
may end on a date other than an Interest Payment Date; and provided further,
however, that during any such Extension Period, the Company shall not (a)
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, or (b) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank
pari passu in all respects with or junior in interest to this Security, (other
than (i) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of
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<PAGE> 25
capital stock of the Company (or securities convertible into or exercisable for
such capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a Subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (iii) 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, (iv) any declaration of a dividend in connection with any Rights
Plan, or the issuance of rights, stock or other property under any Rights Plan,
or the redemption or repurchase of rights pursuant thereto, or (v) any dividend
in the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights is
the same stock as that on which the dividend is being paid or ranks pari passu
with or junior to such stock). Prior to the termination of any such Extension
Period, the Company may further defer the payment of interest, provided that no
Extension Period shall exceed 20 consecutive quarterly interest payment periods,
extend beyond the Stated Maturity of the principal of this Security or end on a
date other than an Interest Payment Date. Upon the termination of any such
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above conditions. No interest
shall be due and payable during an Extension Period, except at the end thereof,
but each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest (to the extent that
the payment of such interest shall be legally enforceable) at the rate of ____%
per annum, compounded quarterly and calculated as set forth in the first
paragraph of this Security, from the date on which such amounts would otherwise
have been due and payable until paid or made available for payment. The Company
shall give the Holder of this Security and the Trustee notice of its election to
begin any Extension Period at least one Business Day prior to the next
succeeding Interest Payment Date on which interest on this Security would be
payable but for such deferral or so long as such securities are held by ABI
Capital Trust, at least one Business Day prior to the earlier of (a) the next
succeeding date on which Distributions on the Preferred Securities of the Issuer
Trust would be payable but for such deferral, and (b) the date on which the
Property Trustee of the Issuer Trust is required to give notice to holders of
such Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than one Business Day prior to such record
date.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for
that purpose in the United States, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided however, that at the option of the Company
payment of interest may be made (a) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register, or (b)
if to a Holder of $1,000,000 or more in aggregate principal amount of this
Security, by wire transfer in immediately available funds upon written request
to the Trustee not later than 15 calendar days prior to the date on which the
interest is payable.
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<PAGE> 26
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payments 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 actions as may be necessary or appropriate to 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,
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.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual or facsimile signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
AMERICAN BANCSHARES, INC.
By:_______________________________
Name:
Title:
Attest:
___________________________________________
Secretary or Assistant Secretary
Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued under the
Junior Subordinated Indenture, dated as of ______ __, 1998 (herein called the
"Indenture"), between the Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Securities, and of the
terms upon which the Securities are, and are to be, authenticated and
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<PAGE> 27
delivered. This security is one of the series designated on the face hereof,
limited in aggregate principal amount to $__________.
All terms used in this Security that are defined in the Indenture or,
if not defined in the Indenture, in the Amended and Restated Trust Agreement
dated as of ______ __, 1998 (as modified, amended or supplemented from time to
time the "Trust Agreement"), relating to ABI Capital Trust (the "Issuer Trust")
among the Company, as Depositor, the Trustees named therein and the Holders
from time to time of the Trust Securities issued pursuant thereto shall have the
meanings assigned to them in the Indenture or the Trust Agreement, as the case
may be.
The Company has the right to redeem this Security (a) on or after
______ __, 2003 in whole at any time or in part from time to time, or (b) in
whole (but not in part), at any time within 90 days following the occurrence
and during the continuation of a Tax Event, Investment Company Event, or
Capital Treatment Event, in each case at the Redemption Price described below,
and subject to possible regulatory approval. The Redemption Price shall equal
100% of the principal amount hereof being redeemed, together with accrued
interest to but excluding the date fixed for redemption.
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.
[If applicable, insert - The Indenture contains provisions for
defeasance at any time [of the entire indebtedness of this Security] [or]
[certain restrictive covenants and Events of Default with respect to this
Security] [, in each case] upon compliance by the Company with certain
conditions set forth in the Indenture.]
The Indenture permits, with certain exceptions as therein provided,
the Company and the Trustee at any time to enter into a supplemental indenture
or indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
[If the Security is not a Discount Security, insert - As provided in
and subject to the provisions of the Indenture, if an Event of Default with
respect to the Securities at the time Outstanding occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Securities may declare the
principal amount of all the Securities to be due and payable immediately, by a
notice in writing
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to the Company (and to the Trustee if given by Holders), provided that, if upon
an Event of Default, the Trustee or such Holders fail to declare the principal
of all the Outstanding Securities to be immediately due and payable, the holders
of at least 25% in aggregate Liquidation Amount of the Preferred Securities then
outstanding shall have the right to make such declaration by a notice in writing
to the Company and the Trustee; and upon any such declaration the principal
amount of and the accrued interest (including any Additional Interest) on all
the Securities shall become immediately due and payable, provided that the
payment of principal and interest (including any Additional Interest) on such
Securities shall remain subordinated to the extent provided in Article XIII of
the Indenture.]
[If the Security is a Discount Security, insert - As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time Outstanding occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities may declare an amount of
principal of the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
if upon an Event of Default, the Trustee or such Holders fail to declare such
principal amount of the Outstanding Securities to be immediately due and
payable, the Holders of at least 25% in aggregate Liquidation Amount of the
Preferred Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Company and the Trustee. The
principal amount payable upon such acceleration shall be equal to [insert
formula for determining the amount]. Upon any such declaration, such amount of
the principal of and the accrued interest (including any Additional Interest)
on all the Securities shall become immediately due and payable, provided that
the payment of such principal and interest (including any Additional Interest)
on all the Securities shall remain subordinated to the extent provided in
Article XIII of the Indenture. Upon payment (a) of the amount of principal so
declared due and payable and (b) of interest on any overdue principal, premium
and interest (in each case to the extent that the payment of such interest shall
be legally enforceable), all of the Company's obligations in respect of the
payment of the principal of and premium and interest, if any, on this Security
shall terminate.]
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 Additional Interest) on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained under Section 10.2
of the Indenture for such purpose, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Securities Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities,
of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
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As provided in the Indenture and subject to certain limitations
therein set forth, Securities are exchangeable for a like aggregate principal
amount of Securities and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agrees that for United States federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE COMPANY,
DOES NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
Section 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any Global
Security issued hereunder shall, in addition to the provisions contained in
Sections 2.2 and 2.3, bear a legend in substantially the following form:
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 MAY NOT BE
TRANSFERRED EXCEPT 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, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
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Section 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
as Trustee
By:_____________________________________
Authorized Signatory
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<PAGE> 31
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms.
(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is $__________.
(b) Subject to Section 3.16, the Securities' Stated Maturity shall
be ______ __, 2028.
(c) The Securities, established pursuant to a Board Resolution,
shall bear interest at a per annum rate equal to ____% from ________ __, 1998
or from the most recent Interest Payment Date to which interest has been paid
or duly provided for, as the case may be, payable quarterly (subject to
deferral as set forth in Section 3.12), in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing ________ __, 1998, until
the principal thereof is paid or made available for payment. Interest will
compound quarterly and will accrue at a per annum rate equal to ____% to the
extent permitted by applicable law, on any interest installment in arrears for
more than one quarterly period or during an extension of an interest payment
period as set forth below in Section 3.12.
(d) The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Paying Agent in the
United States maintained for such purpose and at any other office or agency
maintained by the Company for such purpose in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the
Company payment of interest may be made (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or (ii) if to a Holder of $1,000,000 or more in aggregate principal
amount of this Security, by wire transfer in immediately available funds upon
written request to the Trustee not later than 15 calendar days prior to the
date on which the interest is payable, at such place and to such account as may
be designated by the Person entitled thereto as specified in the Security
Register.
(e) Securities may be issuable in whole or in part in the form of
one or more Global Securities and, in such case, the Depositary for such Global
Securities shall be The Depository Trust Company.
(f) The securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article XIII.
Section 3.2. Denominations.
The Securities shall be in registered form without coupons and shall
be issuable in denominations of $10 and any integral multiple thereof.
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Section 3.3. Execution, Authentication, Delivery and Dating.
(a) The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or one
of its Vice Presidents, and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
(b) Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities. At any
time and from time to time after the execution and delivery of this Indenture,
the Company may deliver Securities executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of
the Securities have been established by or pursuant to one or more Board
Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Opinion
of Counsel stating:
(i) if the form of such Securities has been established
by or pursuant to Board Resolution as permitted by Section 2.1, that
such form has been established in conformity with the provisions of
this Indenture;
(ii) if the terms of such Securities have been established
by or pursuant to Board Resolution as permitted by Section 3.1, that
such terms have been established in conformity with the provisions of
this Indenture; and
(iii) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(c) If such form or terms have been so established, the Trustee
shall not be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner that is not reasonably acceptable to the Trustee.
(d) Notwithstanding the provisions of Section 3.1 and Section
3.3(b), if all Securities are not to be originally issued at one time, it shall
not be necessary to deliver the Officers' Certificate otherwise required
pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise
required pursuant to Section 3.3(b) at or prior to the authentication of each
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<PAGE> 33
Security if such documents are delivered at or prior to the authentication upon
original issuance of the first Security to be issued.
(e) Each Security shall be dated the date of its authentication.
(f) No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual or facsimile
signature of one of its authorized officers, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
3.10, for all purposes of this Indenture such Security shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to
the benefits of this Indenture.
Section 3.4. Temporary Securities.
(a) Pending the preparation of definitive Securities, the Company
may execute, and upon receipt of a Company Order the Trustee shall authenticate
and deliver, temporary Securities that are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any 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 evidenced by their
execution of such Securities.
(b) If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. 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 of the Company designated for that purpose
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 deliver in exchange therefor one or more definitive
securities, of any authorized denominations having the same Original Issue Date
and Stated Maturity and having the same terms as such temporary Securities.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as definitive Securities.
Section 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in
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<PAGE> 34
whole or in part may be registered, in the name of any Person other than the
Depositary for such Global Security or a nominee thereof unless (i) such
Depositary advises the Trustee in writing that such Depositary is no longer
willing or able to properly discharge its responsibilities as Depositary with
respect to such Global Security, and the Company is unable to locate a qualified
successor within 90 days of receipt of such notice from the Depositary, (ii) the
Company executes and delivers to the Trustee a Company Order stating that the
Company elects to terminate the book-entry system through the Depositary, or
(iii) there shall have occurred and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities
or cancelled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Securities Registrar for exchange or
cancellation as provided in this Article III. If any Global Security is to be
exchanged for other Securities or cancelled in part, or if another Security is
to be exchanged in whole or in part for a beneficial interest in any Global
Security, then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article III or (ii) the principal
amount thereof shall be reduced, or increased by an amount equal to the portion
thereof to be so exchanged or cancelled, or equal to the principal amount of
such other Security to be so exchanged for a beneficial interest therein, as
the case may be, by means of an appropriate adjustment made on the records of
the Securities Registrar, whereupon the Trustee, in accordance with the
Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any
such surrender or adjustment of a Global Security by the Depositary,
accompanied by registration instructions, the Trustee shall, subject to Section
3.6(b) and as otherwise provided in this Article III, authenticate and deliver
any Securities issuable in exchange for such Global Security (or any portion
thereof) in accordance with the instructions of the Depositary. The Trustee
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of a
Global Security, shall be the Holder of such Global Security for all purposes
under this Indenture and the Securities, and owners of beneficial interests in
a Global Security shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a Global
Security shall be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
agent. Neither the Trustee nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Depositary.
(f) The rights of owners of beneficial interests in a Global
Security shall be exercised only through the Depositary and shall be limited to
those established by law and agreements between such owners and the Depositary
and/or its Agent Members.
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Section 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and transfers of Securities. Such register is herein sometimes
referred to as the "Securities Register." The Trustee is hereby appointed
"Securities Registrar" for the purpose of registering Securities and transfers
of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
offices or agencies of the Company designated for that purpose, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations of like tenor and aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of like tenor and aggregate
principal amount and bearing such restrictive legends as may be required by
this Indenture, upon surrender of the Securities to be exchanged at such office
or agency. Whenever any securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities that the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall
(if so required by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or
such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (i) to issue, exchange or register the transfer of
any Security during a period beginning at the opening of business 15 days
before the day of selection for redemption of Securities pursuant to Article XI
and ending at the close of business on the day of mailing of the notice of
redemption, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except, in the case of any such
Security to be redeemed in part, any portion thereof not to be redeemed.
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(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture, transfers and exchanges of Securities and
beneficial interests in a Global Security shall be made only in accordance with
this Section 3.6(b).
(i) Restricted Non-Global Security to Global Security.
If the Holder of a Restricted Security (other than a Global Security)
wishes at any time to transfer all or any portion of such
Security to a Person who wishes to take delivery thereof in the form of
a beneficial interest in a Global Security, such transfer may be
effected only in accordance with the provisions of this clause (b)(i)
and subject to the Applicable Procedures. Upon receipt by the
Securities Registrar of (A) such Security as provided in Section 3.6(a)
and instructions satisfactory to the Securities Registrar directing
that a beneficial interest in the Global Security in a specified
principal amount not greater than the principal amount of such Security
be credited to a specified Agent Member's account and (B) a Restricted
Securities Certificate duly executed by such Holder or such Holder's
attorney duly authorized in writing, then the Securities Registrar
shall cancel such Security (and issue a new Security in respect of any
untransferred portion thereof) as provided in Section 3.6(a) and
increase the aggregate principal amount of the Global Security by the
specified principal amount as provided in Section 3.5(c).
(ii) Non-Global Security to Non-Global Security. A
Security that is not a Global Security may be transferred, in whole or
in part, to a Person who takes delivery in the form of another
Security that is not a Global Security as provided in Section 3.6(a),
provided that if the Security to be transferred in whole or in part is
a Restricted Security, the Securities Registrar shall have received a
Restricted Securities Certificate duly executed by the transferor
Holder or such Holder's attorney duly authorized in writing.
(iii) Exchanges Between Global Security and Non-Global
Security. A beneficial interest in a Global Security may be exchanged
for a Security that is not a Global Security as provided in Section
3.5.
(iv) Initial Transfers of Non-Global Securities. In the
case of Securities initially issued other than in global form, an
initial transfer or exchange of such Securities that does not involve
any change in beneficial ownership may be made to an Institutional
Accredited Investor or Investors as if such transfer or exchange were
not an initial transfer or exchange; provided, however that written
certification shall be provided by the transferee and transferor of
such Securities to the Securities Registrar that such transfer or
exchange does not involve a change in beneficial ownership.
(c) Restricted Securities Legend. Except as set forth below, all
Securities shall bear a Restricted Securities Legend:
(i) subject to the following clauses of this Section
3.6(c), a Security or any portion thereof that is exchanged, upon
transfer or otherwise, for a Global Security or any portion thereof
shall bear the Restricted Securities Legend while represented thereby;
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<PAGE> 37
(ii) subject to the following clauses of this Section
3.6(c), a new Security which is not a Global Security and is issued in
exchange for another Security (including a Global Security) or any
portion thereof, upon transfer or otherwise, shall, if such new
Security is required pursuant to Section 3.6(b)(ii) or (iii) to be
issued in the form of a Restricted Security, bear a Restricted
Securities Legend;
(iii) a new Security (other than a Global Security) that
does not bear a Restricted Security Legend may be issued in exchange
for or in lieu of a Restricted Security or any portion thereof that
bears such a legend if, in the Company's judgment, placing such a
legend upon such new Security is not necessary to ensure compliance
with the registration requirements of the Securities Act, and the
Trustee, at the written direction of the Company in the form of an
Officer's Certificate, shall authenticate and deliver such a new
Security as provided in this Article III;
(iv) notwithstanding the foregoing provisions of this
Section 3.6(c), a Successor Security of a Security that does not bear
a Restricted Securities Legend shall not bear such form of
legend unless the Company has reasonable cause to believe that such
Successor Security is a "restricted security" within the meaning of
Rule 144, in which case the Trustee, at the written direction of the
Company in the form of an Officer's Certificate, shall authenticate
and deliver a new Security bearing a Restricted Securities Legend in
exchange for such Successor Security as provided in this Article III;
and
(v) Securities distributed to a holder of Preferred
Securities upon dissolution of an Issuer Trust shall bear a Restricted
Securities Legend if the Preferred Securities so held bear a similar
legend.
Section 3.7. Mutilated, Lost and Stolen Securities.
(a) If any mutilated Security, including any temporary Securities,
is surrendered to the Trustee together with such security or indemnity as may
be required by the Company or the Trustee to save each of them harmless, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security, of like tenor and aggregate principal amount,
bearing the same legends, and bearing a number not contemporaneously
outstanding.
(b) If there shall be delivered to the Company and to the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or
the Trustee that such Security has been acquired by a bona fide purchaser or a
protected purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security, of like tenor and aggregate principal amount and
bearing the same legends as such destroyed, lost or stolen Security, and
bearing a number not contemporaneously outstanding.
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(c) If any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
(d) Upon the issuance of any new Security under this Section 3.7,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
(e) Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
(f) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.8. Payment of Interest and Additional Interest; Interest Rights
Preserved.
(a) Interest and Additional Interest on any Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date, shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest in respect of Securities, except that, unless
otherwise provided in the Securities, interest payable on the Stated Maturity
of the principal of a Security shall be paid to the Person to whom principal is
paid. The initial payment of interest on any Security that is issued between a
Regular Record Date and the related Interest Payment Date shall be payable as
provided in such Security or in the Board Resolution pursuant to Section 3.1
with respect to the Securities.
(b) Any interest on any Security that is due and payable, but is
not timely paid or duly provided for, on any Interest Payment Date for
Securities (herein called "Defaulted Interest"), shall forthwith cease to be
payable to the registered Holder on the relevant Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities in
respect of which interest is in default (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 Security and the date of the proposed payment, and which
shall be fixed 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
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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 be not more than 15 days and
not 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 Holder of a Security at the address of
such Holder as it appears in the Securities Register not less than 10
days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company, cause a
similar notice to be published at least once in a newspaper,
customarily published in the English language on each Business Day and
of general circulation in the Borough of Manhattan, The City of New
York, but such publication shall not be a condition precedent to the
establishment of 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 the Securities (or their respective
Predecessor Securities) are registered on such Special Record Date and
shall no longer be payable pursuant to the following clause (ii).
(ii) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities in
respect of which interest is in default may be listed and, upon such
notice as may be required by such exchange (or by the Trustee if the
Securities are not listed), if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause (ii), such
payment shall be deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue interest, that were carried by such other Security.
Section 3.9. Persons Deemed Owners.
(a) The Company, the Trustee and any agent of the Company or the
Trustee shall treat the Person in whose name any Security is registered as the
owner of such Security for the purpose of receiving payment of principal of and
(subject to Section 3.8) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
(b) No holder of any beneficial interest in any Global Security
held on its behalf by a Depositary shall have any rights under this Indenture
with respect to such Global Security, and such Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner of
such Global Security for all purposes whatsoever. Notwithstanding
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the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by a Depositary or impair,
as between a Depositary and such holders of beneficial interests, the operation
of customary practices governing the exercise of the rights of the Depositary
(or its nominee) as Holder of any Security.
Section 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled
by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities canceled as provided in this Section 3.10, except as
expressly permitted by this Indenture. All canceled Securities shall be
destroyed by the Trustee and the Trustee shall deliver to the Company a
certificate of such destruction.
Section 3.11. Computation of Interest.
Interest on the Securities for any period shall be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed in any partial month in such period, and interest on the Securities for
a full period shall be computed by dividing the rate per annum by the number of
interest periods that together constitute a full twelve months.
Section 3.12. Deferrals of Interest Payment Dates.
(a) So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time during the term of the
Securities, from time to time to defer the payment of interest on such
Securities for such period or periods (each an "Extension Period") not to
exceed the number of consecutive interest periods that equal 20 consecutive
quarterly periods with respect to each Extension Period, during which Extension
Periods the Company shall have the right to make partial payments of interest
on any Interest Payment Date. No Extension Period shall end on a date other
than an Interest Payment Date. At the end of any such Extension Period, the
Company shall pay all interest then accrued and unpaid on the Securities
(together with Additional Interest thereon, if any, at the rate specified for
the Securities to the extent permitted by applicable law); provided, however,
that no Extension Period shall extend beyond the Stated Maturity of the
principal of the Securities; and provided further, however, that, during any
such Extension Period, the Company shall 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, or (ii) make any payment
of principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu in all respects
with or junior in interest to the Securities (other than (A) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any
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one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (B) as a
result of a reclassification or an exchange or conversion of any class or series
of the Company's capital stock (or any capital stock of a Subsidiary of the
Company) for any class or series of the Company's capital stock or of any class
or series of the Company's indebtedness for any class or series of the Company's
capital stock, (C) 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, (D) any
declaration of a dividend in connection with any Rights Plan, or the issuance of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (E) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Event of Default has
occurred and is continuing and provided further, that no Extension Period shall
exceed the period or periods specified in such Securities, extend beyond the
Stated Maturity of the principal of such Securities or end on a date other than
an Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due on any Interest Payment Date, the Company may elect to begin a new
Extension Period, subject to the above conditions. No interest or Additional
Interest shall be due and payable during an Extension Period, except at the end
thereof, but each installment of interest that would otherwise have been due and
payable during such Extension Period shall bear Additional Interest. The
Company shall give the Holders of the Securities and the Trustee notice of its
election to begin any such Extension Period at least one Business Day prior to
the next succeeding Interest Payment Date on which interest on Securities would
be payable but for such deferral or, with respect to any Securities issued to
the Issuer Trust, so long as any such Securities are held by the Issuer Trust,
at least one Business Day prior to the earlier of (x) the next succeeding date
on which Distributions (as defined in the Trust Agreement) on the Preferred
Securities of the Issuer Trust would be payable but for such deferral, and (y)
the date on which the Property Trustee of the Issuer Trust is required to give
notice to holders of such Preferred Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business Day
prior to such record date.
(b) The Trustee shall promptly give notice of the Company's
election to begin any such Extension Period to the Holders of the Outstanding
Securities.
Section 3.13. Right of Set-Off.
With respect to the Securities initially issued to the Issuer Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set off any payment it is otherwise required to make in respect of any
such Security to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee
or to a holder of Preferred Securities pursuant to an action undertaken under
Section 5.8 of this Indenture.
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Section 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by
its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree that
for United States federal, state and local tax purposes it is intended that
such Security constitutes indebtedness.
Section 3.15. 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
notice of redemption and other similar or related materials as a convenience to
Holders; provided that any such notice or other materials 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 redemption or other
materials 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.
Section 3.16. Shortening of Stated Maturity.
The Company shall have the right to shorten the Stated Maturity of the
principal of the Securities at any time to any date not earlier than ______ __,
2003, provided that the Company shall give notice to the Holders, the Trustee
and, in the case of Securities issued to an Issuer Trust, the Issuer Trust of
such shortening no less than 90 days prior to the effectiveness thereof.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and as otherwise provided
in this Section 4.1) and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:
(a) either
(i) all Securities theretofore authenticated and
delivered (other than (A) Securities that have been destroyed, lost or
stolen and that have been replaced or paid as provided in Section 3.7
and (B) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
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(ii) all such Securities not theretofore delivered to the
Trustee for cancellation
(A) have become due and payable,
(B) will become due and payable at their Stated
Maturity within one year of the date of deposit, or
(C) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in trust
for such purpose an amount in the currency or currencies in which the
Securities are payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for the principal (and premium, if any) and interest (including any Additional
Interest) to the date of such deposit (in the case of Securities that have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
(d) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 6.7, the
obligations of the Company to any Authenticating Agent under Section 6.14 and,
if money shall have been deposited with the Trustee pursuant to subclause (ii)
of clause (a) of this Section, the obligations of the Trustee under Section 4.2
and the last paragraph of Section 10.3 shall survive.
Section 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by the Trustee, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest and Additional Interest for the payment of which such money
or obligations have been deposited with or received by the Trustee.
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ARTICLE V
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the
Securities, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any interest upon any Security,
including any Additional Interest in respect thereof, when it becomes due and
payable and continuance of such default for a period of 30 days (subject to the
deferral of any due date in the case of an Extension Period);
(b) default in the payment of the principal of (or premium, if
any, on) any Security at its Stated Maturity;
(c) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the
Securities or in this Indenture for a period of 90 days after the date on which
written notice of such failure (a "Notice of Default"), requiring the Company
to remedy the same, shall have been given to the Company by the Trustee by
registered or certified mail or to the Company and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities; or
(d) the occurrence of the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding with
respect to the Company or all or substantially all of its property; or a court
or other governmental agency shall enter a decree or order appointing a
receiver or similar official and such decree or order shall remain unstayed and
undischarged for a period of 60 days.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default (other than an Event of Default
specified in Section 5.1(d)) with respect to Securities at the time Outstanding
occurs and is continuing, then, and in every such case, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities may declare the principal amount (or, if the Securities are Discount
Securities, such portion of the principal amount as may be specified in the
terms) of all the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided,
however that, if, upon an Event of Default, the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities fail to declare
the principal of all the Outstanding Securities to be immediately due and
payable, the holders of at least 25% in aggregate Liquidation Amount (as
defined in the Trust Agreement) of the Preferred Securities issued by the
Issuer Trust then outstanding shall have the right to make such declaration by
a notice in writing to the Company and the Trustee; and upon any such
declaration
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such principal amount (or specified portion thereof) of and the accrued interest
(including any Additional Interest) on all the Securities shall become
immediately due and payable. If an Event of Default specified in Section 5.1(d)
with respect to Securities at the time Outstanding occurs, the principal amount
of all the Securities (or, if the Securities are Discount Securities, such
portion of the principal amount of such Securities as may be specified by the
terms) shall automatically, and without any declaration or other action on the
part of the Trustee or any Holder, become immediately due and payable. Payment
of principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII notwithstanding
that such amount shall become immediately due and payable as herein provided.
(b) At any time after such a declaration of acceleration with
respect to the Securities has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article V, provided the Holders of a majority in aggregate principal
amount of the Outstanding Securities, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a
sum sufficient to pay:
(A) all overdue installments of interest on all
Securities;
(B) any accrued Additional Interest on all
Securities;
(C) the principal of (and premium, if any, on)
any Securities that have become due otherwise than by such
declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Securities; and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(ii) all Events of Default with respect to Securities,
other than the non-payment of the principal of Securities that has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.13.
(c) If the Holders of Securities fail to annul such declaration
and waive such default, the holders of a majority in aggregate Liquidation
Amount (as defined in the Trust Agreement) of Preferred Securities issued by
the Issuer Trust then outstanding shall also have the right to rescind and
annul such declaration and its consequences by written notice to the Company
and the Trustee, subject to the satisfaction of the conditions set forth in
clauses (a) and (b) above of this Section 5.2.
(d) No such rescission shall affect any subsequent default or
impair any right consequent thereon.
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Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
(a) The Company covenants that if:
(i) default is made in the payment of any installment of
interest (including any Additional Interest) on any Security when such
interest becomes due and payable and such default continues for a
period of 30 days or
(ii) default is made in the payment of the principal of
(and premium, if any, on) any Security at the Stated Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of the Securities, the whole amount then due and payable
on the Securities for principal (and premium, if any) and interest (including
any Additional Interest), and, in addition thereto, all amounts owing the
Trustee under Section 6.7.
(b) If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
and collect the monies adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.
(c) If an Event of Default with respect to Securities occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial or
administrative proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) 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
on the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest (including any Additional
Interest) owing and unpaid in respect to the
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Securities and to file such other papers or documents as may be
necessary or advisable and to take any and all actions as are
authorized under the Trust Indenture Act in order to have the claims of
the Holders and any predecessor to the Trustee under Section 6.7
allowed in any such judicial or administrative proceedings; and
(ii) in particular, the Trustee shall be authorized to collect
and receive any monies or other property payable or deliverable on any
such claims and to distribute the same in accordance with Section 5.6;
and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator, conservator (or other similar official) in any such judicial or
administrative proceeding is hereby authorized by each Holder to make such
payments to the Trustee for distribution in accordance with Section 5.6, and in
the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it and any
predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to accept or adopt on behalf of any Holder 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 Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
Section 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall,
subject to Article XIII and after provision for the payment of all the amounts
owing the Trustee and any predecessor Trustee under Section 6.7, its agents and
counsel, be for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
Section 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to the Securities pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal (and premium, if
any) or interest (including any Additional Interest), upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
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SECOND: Subject to Article XIII, to the payment of the amounts then
due and unpaid upon Securities for principal (and premium, if any) and interest
(including any Additional Interest) in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest (including any Additional
Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
Section 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless:
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities, as
hereinbefore provided;
(b) the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Securities; it being understood
and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing itself of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
Securities, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Sections 3.8 and 3.12) interest (including any Additional Interest) on such
Security on the Stated Maturity (or in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such right
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shall not be impaired without the consent of such Holder. Any registered holder
of the Preferred Securities issued by the Issuer Trust shall have the right,
upon the occurrence of an Event of Default described in Section 5.1(a) or
5.1(b), to institute a suit directly against the Company for enforcement of
payment to such holder of principal of (and premium, if any) and (subject to
Sections 3.8 and 3.12) interest (including any Additional Interest) on the
Securities having a principal amount equal to the aggregate Liquidation Amount
(as defined in the Trust Agreement) of such Preferred Securities held by such
holder.
Section 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities
issued by the Issuer Trust has instituted any proceeding to enforce any right
or remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee, such
Holder or such holder of Preferred Securities, then, and in every such case,
the Company, the Trustee, such Holders and such holder of Preferred Securities
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Trustee, such Holder and such holder of Preferred
Securities shall continue as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
(a) No delay or omission of the Trustee, any Holder of any
Security with respect to the Securities or any holder of any Preferred Security
to exercise any right or remedy accruing upon any Event of Default with respect
to the Securities shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein.
(b) Every right and remedy given by this Article V or by law to
the Trustee or to the Holders and the right and remedy given to the holders of
Preferred Securities by Section 5.8 may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Holders or the holders of
Preferred Securities, as the case may be.
Section 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding
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for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee, with respect to the Securities, provided that:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall
have the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding so
directed would be unjustly prejudicial to the Holders not joining in any such
direction or would involve the Trustee in personal liability.
Section 5.13. Waiver of Past Defaults.
(a) The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities affected thereby and, the holders of a
majority in aggregate Liquidation Amount (as defined in the Trust Agreement) of
the Preferred Securities issued by the Issuer Trust may waive any past default
hereunder and its consequences except a default:
(i) in the payment of the principal of (or premium, if
any) or interest (including any Additional Interest) on any Security
(unless such default has been cured and the Company has paid to or
deposited with the Trustee a sum sufficient to pay all matured
installments of interest (including Additional Interest) and all
principal of (and premium, if any) all Securities due otherwise than
by acceleration), or
(ii) in respect of a covenant or provision hereof that
under Article IX cannot be modified or amended without the consent of
each Holder of any Outstanding Security affected thereby.
(b) Any such waiver shall be deemed to be on behalf of the Holders
of all the Securities, or in the case of waiver by holders of Preferred
Securities issued by the Issuer Trust, by all holders of Preferred Securities
issued by the Issuer Trust.
(c) Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 5.14. Undertaking for 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
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reasonable costs, including reasonable attorneys' fees, 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 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in aggregate principal amount of the Outstanding Securities, or to any
suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest (including any Additional
Interest) on any Security on or after the Stated Maturity.
Section 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon 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 that by any provisions 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) In case an Event of Default has occurred and is continuing,
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 person would exercise or use under the circumstances in the conduct of
his or her own affairs.
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(c) 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:
(i) this subsection shall not be construed to limit the
effect of Section 6.1(a);
(ii) the 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 Trustee was negligent in ascertaining the pertinent
facts; and
(iii) 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 Holders pursuant to Section 5.12 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 with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of (or premium, if any) or interest (including any Additional Interest) on any
Security, 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 Holders of
Securities; and provided further, that, in the case of any default of the
character specified in Section 5.1(c), no such notice to Holders of Securities
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section 6.2, the term "default" means any event that is, or
after notice or lapse of time or both would become, an Event of Default with
respect to the Securities.
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Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(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, direction, consent, order, bond, debenture,
Security 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 or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the
written advice of such counsel or any Opinion of Counsel 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 reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction; provided, however, that nothing herein shall relieve the
Trustee of its obligations upon the occurrence of an Event of Default that has
not been cured or waived to exercise with respect to the Securities such of the
rights and powers vested in the Trustee by this Indenture, and to use the same
degree of care and skill in exercising such rights and powers as a reasonably
prudent person would 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, direction, consent, order, bond,
indenture, Security or other paper or document, but the Trustee in its
discretion may make such inquiry or investigation into such facts or matters as
it may see fit, and, if the Trustee shall determine to make such inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney; 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 or
attorneys and the 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.
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Section 6.4. Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Securities Registrar or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and, subject
to Sections 6.8 and 6.13, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Securities Registrar or such other agent.
Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 6.7. Compensation and Reimbursement.
(a) The Company agrees to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder in such
amounts as the Company and the Trustee shall agree from time to time (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust).
(b) The Company agrees to reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense disbursement or advance as may be
attributable to its negligence, bad faith or willful misconduct.
(c) Since the Issuer Trust is being formed solely to facilitate an
investment in the Preferred Securities, the Company, as Holder of the Common
Securities, hereby covenants to pay all debts and obligations (other than with
respect to the Preferred Securities and the Common Securities) and all
reasonable costs and expenses of the Issuer Trust (including without limitation
all costs and expenses relating to the organization of the Issuer Trust, the
fees and expenses of the trustees and all reasonable costs and expenses
relating to the operation of the Issuer Trust) and to pay any and all taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed on the Issuer Trust by the United States, or any
taxing authority, so that the net amounts received and retained by the Issuer
Trust and the Property Trustee after paying such expenses will be equal to the
amounts the Issuer Trust and the Property
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Trustee would have received had no such costs or expenses been incurred by or
imposed on the Issuer Trust. The foregoing obligations of the Company are for
the benefit of, and shall be enforceable by, any person to whom any such debts,
obligations, costs, expenses and taxes are owed (each, a "Creditor") whether or
not such Creditor has received notice thereof. Any such Creditor may enforce
such obligations directly against the Company, and the Company irrevocably
waives any right or remedy to require that any such Creditor take any action
against the Issuer Trust or any other person before proceeding against the
Company. The Company shall execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
(d) The Company shall indemnify the Trustee, its directors,
officers, employees and agents for, and hold them harmless against, any loss,
liability or expense (including the reasonable compensation and the expenses
and disbursements of its agents and counsel) incurred without negligence, bad
faith or willful misconduct, arising out of or in connection with the
acceptance or administration of this trust or the performance of its duties
hereunder, including the reasonable costs and expenses of defending against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. This indemnification shall survive the termination
of this Indenture or the resignation or removal of the Trustee.
(e) When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 5.1(d) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor
statute.
Section 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities issued hereunder shall be subject to,
and shall comply fully with, the provisions of Section 310(b) of the Trust
Indenture Act. Nothing herein shall prevent the Trustee from filing with the
Commission the application referred to in the second to last paragraph of said
Section 310(b).
Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee with respect to the Securities
issued hereunder which shall be:
(a) a Person organized and doing business under the laws of the
United States of America or of any state or territory thereof or of the
District of Columbia, authorized under such laws to exercise corporate trust
powers and subject to supervision or examination by federal, state, territorial
or District of Columbia authority, or
(b) an entity organized and doing business under the laws of a
foreign government that is permitted to act as Trustee pursuant to a rule,
regulation or order of the Commission, authorized under such laws to exercise
corporate trust powers, and subject to supervision or examination by authority
of such foreign government or a political subdivision thereof substantially
equivalent to supervision or examination applicable to United States
institutional
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trustees; in either case having a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by federal or state
authority. If such entity 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 6.9, the combined capital and
surplus of such entity 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
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VI. Neither the Company nor any Person
directly or indirectly controlling, controlled by or under common control with
the Company shall serve as Trustee for the Securities issued hereunder.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities by giving written notice thereof to the Company. If an instrument
of acceptance by a successor Trustee shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the
Securities by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months,
(ii) the Trustee shall cease to be eligible under Section
6.9 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall
be adjudged 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, (x) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to the Securities issued
hereunder, or (y) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of such Holder and
all others similarly situated, petition any court of competent
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jurisdiction for the removal of the Trustee with respect to the Securities
issued hereunder and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee with respect to the Securities. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities shall be appointed
by Act of the Holders of a majority in aggregate principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee with respect to the Securities and
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of such Holder and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities and each appointment of a
successor Trustee with respect to the Securities by mailing written notice of
such event by first-class mail, postage prepaid, to the Holders of Securities
as their names and addresses appear in the Securities Register. Each notice
shall include the name of the successor Trustee with respect to the Securities
and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, 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, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in Section 6.11(a).
(c) No successor Trustee shall accept its appointment unless, at
the time of such acceptance, such successor Trustee shall be qualified and
eligible under this Article VI.
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Section 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
entity succeeding to all or substantially all of the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
entity shall be otherwise qualified and eligible under this Article VI, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Securities shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or
in the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 6.14. Appointment of Authenticating Agent.
(a) The Trustee may appoint an Authenticating Agent or Agents with
respect to the Securities, which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon original issue and upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 3.6, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be an entity organized and doing business under
the laws of the United States of America, 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 not less than
$50,000,000 and subject to supervision or examination by federal or state
authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section the combined capital
and surplus of such Authenticating Agent 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 6.14, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 6.14.
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(b) Any entity into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any entity resulting from
any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any entity succeeding to all or substantially all of the
corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such entity shall be otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the Trustee or the Authenticating Agent.
(c) An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written
notice thereof 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
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provision of
this Section.
(c) The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payment, subject to the
provisions of Section 6.7.
(d) If an appointment is made pursuant to this Section 6.14, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the
following form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
as Trustee
By:_____________________________________
As Authenticating Agent
By:_____________________________________
As Authenticating Agent
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ARTICLE VII
HOLDERS LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) quarterly, not more than 15 days after March 15, June 15,
September 15, and December 15 in each year, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders as of such
dates, excluding from any such list names and addresses received by the Trustee
in its capacity as Securities Registrar, 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, excluding from any such list names and addresses
received by the Trustee in its capacity as Securities Registrar.
Section 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as
Securities Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) 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 agent of either of them shall be held accountable by reason of
the disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 7.3. Reports by Trustee and Paying Agent.
(a) The Trustee shall transmit to Holders 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.
(b) Reports so required to be transmitted at stated intervals of
not more than 12 months shall be transmitted within 60 days of January 31 in
each calendar year, commencing with January 31, 1999.
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(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities exchange
upon which any Securities are listed and also with the Commission. The Company
will notify the Trustee when any Securities are listed on any securities
exchange.
(d) The Paying Agent shall comply with all withholding, backup
withholding, tax and information reporting requirements under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations issued
thereunder with respect to payments on, or with respect to, the Securities.
Section 7.4. Reports by Company.
The Company shall file or cause to be filed with the Trustee and with
the Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided in the Trust Indenture
Act. In the case of information, documents or reports required to be filed
with the Commission pursuant to Section 13(a) or Section 15(d) of the Exchange
Act, the Company shall file or cause the filing of such information documents
or reports with the Trustee within 15 days after the same is required to be
filed with the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless:
(a) if the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the entity formed by such consolidation or into
which the Company is merged or the Person that acquires by conveyance or
transfer, or that leases, the properties and assets of the Company
substantially as an entirety shall be an entity organized and existing under
the laws of the United States of America or any state thereof or the District
of Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of (and premium, if any), and interest
(including any Additional Interest) on all the Securities of every series and
the performance of every covenant of this Indenture on the part of the Company
to be performed or observed; provided, however, that nothing herein shall be
deemed to restrict or prohibit, and no supplemental indenture shall be required
in the case of, the merger of a Principal Subsidiary Bank with and into a
Principal Subsidiary Bank or the Company, the consolidation of Principal
Subsidiary Banks into a Principal Subsidiary Bank or the Company, or the sale or
other disposition of all or substantially all of the assets of any Principal
Subsidiary Bank to another
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Principal Subsidiary Bank or the Company, if, in any such case in which the
surviving, resulting or acquiring entity is not the Company, the Company would
own, directly or indirectly, at least 80% of the voting securities of the
Principal Subsidiary Bank (and of any other Principal Subsidiary Bank any voting
securities of which are owned, directly or indirectly, by such Principal
Subsidiary Bank) surviving such merger, resulting from such consolidation or
acquiring such assets;
(b) immediately after giving effect to such transaction, no Event
of Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have occurred and be continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and any such supplemental indenture
comply with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with and, in the case of a
transaction subject to this Section 8.1 but not requiring a supplemental
indenture under paragraph (a) of this Section 8.1, an Officer's Certificate or
Opinion of Counsel to the effect that the surviving, resulting or successor
entity is legally bound by the Indenture and the Securities; and the Trustee,
subject to Section 6.1, may rely upon such Officers' Certificates and Opinions
of Counsel as conclusive evidence that such transaction complies with this
Section 8.1.
Section 8.2. Successor Company Substituted.
(a) Upon any consolidation or merger by the Company with or into
any other Person, or any conveyance, transfer or lease by the Company of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1, the successor entity formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.
(b) Such successor Person may cause to be executed, and may issue
either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder that theretofore shall not have been signed by
the Company and delivered to the Trustee; 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 shall authenticate and
shall deliver any Securities that previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication
pursuant to such provisions and any Securities that such successor Person
thereafter shall cause to be executed and delivered to the Trustee on its
behalf for the purpose pursuant to such provisions. 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.
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(c) In case of any such consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form may be made in the Securities
thereafter to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may amend
or waive any provision of this Indenture or enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(a) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the Company herein
and in the Securities contained;
(b) to convey, transfer, assign, mortgage or pledge any property
to or with the Trustee or to surrender any right or power herein conferred upon
the Company;
(c) to facilitate the issuance of Securities in certificated or
other definitive form;
(d) to add to the covenants of the Company for the benefit of the
Holders of the Securities or to surrender any right or power herein conferred
upon the Company;
(e) to add any additional Events of Default for the benefit of the
Holders of the Securities;
(f) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall not apply to any
Outstanding Securities;
(g) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause (g)
shall not adversely affect the interest of the Holders of Securities in any
material respect or, in the case of the Securities issued to the Issuer Trust
and for so long as any of the Preferred Securities issued by the Issuer Trust
shall remain outstanding, the holders of such Preferred Securities;
(h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities and to add to
or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.11(b); or
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(i) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto 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 Securities under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any Security,
or reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount of principal
of a Discount Security that would be due and payable upon a declaration of
acceleration of the Stated Maturity thereof pursuant to Section 5.2, or change
the place of payment where, or the coin or currency in which, any Security or
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date),
(b) reduce the percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(c) modify any of the provisions of this Section, Section 5.13 or
Section 10.5, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities issued to the Issuer
Trust, so long as any of the Preferred Securities issued by the Issuer Trust
remains outstanding, (i) no such amendment shall be made that adversely affects
the holders of such Preferred Securities in any material respect, and no
termination of this Indenture shall occur, and no waiver of any Event of
Default or compliance with any covenant under this Indenture shall be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount (as defined in the Trust Agreement) of such
Preferred Securities then outstanding unless and until the principal of (and
premium, if any, on) the Securities and all accrued and (subject to Section
3.8) unpaid interest (including any Additional Interest) thereon have been paid
in full, and (ii) no amendment shall be made to Section 5.8 of this Indenture
that would impair the rights of the holders of Preferred Securities issued by
the Issuer Trust provided therein without the prior consent of the holders of
each such Preferred Security then outstanding unless and until the principal of
(and
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premium, if any, on) the Securities of such series and all accrued and (subject
to Section 3.8) unpaid interest (including any Additional Interest) thereon have
been paid in full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article IX or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 6.1) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture, and that all conditions precedent herein provided for relating to
such action have been complied with. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article
IX, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
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ARTICLE X
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the Securities
that it will duly and punctually pay the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities in accordance
with the terms of such Securities and this Indenture.
Section 10.2. Maintenance of Office or Agency.
(a) The Company will maintain in each Place of Payment an office
or agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company initially appoints the Trustee,
acting through its Corporate Trust Office, as its agent for said purposes. The
Company will give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail
to maintain such office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
(b) The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all of such purposes, and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in each Place of Payment for Securities for such purposes. The Company
will give prompt written notice to the Trustee of any such designation and any
change in the location of any such office or agency.
Section 10.3. Money for Security Payments to be Held in Trust.
(a) If the Company shall at any time act as its own Paying Agent
with respect to the Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest (including Additional Interest)
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest (including Additional Interest) so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided,
and will promptly notify the Trustee of its failure so to act.
(b) Whenever the Company shall have one or more Paying Agents, it
will, prior to 10:00 a.m., New York City time, on each due date of the
principal of (or premium, if any) or interest, including Additional Interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest, including Additional Interest so
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becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal (and premium, if any) or interest, including
Additional Interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its failure so to act.
(c) The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest (including Additional
Interest) on the Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(ii) give the Trustee notice of any default by the Company
(or any other obligor upon such Securities) in the making of any
payment of principal (and premium, if any) or interest (including
Additional Interest) in respect of any Security;
(iii) at any time during the continuance of any default
with respect to the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums so held in trust by
such Paying Agent; and
(iv) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent.
(d) The Company may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same terms as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
(e) Any money deposited with the Trustee or any Paying Agent, or
then held by the Company in trust for the payment of the principal of (and
premium, if any) or interest (including Additional Interest) on any Security
and remaining unclaimed for two years after such principal (and premium, if
any) or interest (including Additional Interest) has become due and payable
shall (unless otherwise required by mandatory provision of applicable escheat
or abandoned or unclaimed property law) be paid on Company Request to the
Company, or (if then held by the Company) shall (unless otherwise required by
mandatory provision of applicable escheat or abandoned or unclaimed property
law) be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English
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language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, the City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
Section 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate covering the preceding calendar year, stating whether or
not to the best knowledge of the signers thereof the Company is in default in
the performance, observance or fulfillment of or compliance with any of the
terms, provisions, covenants and conditions of this Indenture, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge. For the purpose of this
Section 10.4, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture.
Section 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, if any, the Company may omit in any particular instance to comply
with any covenant or condition provided pursuant to Section 3.1, 9.1(c) or
9.1(d) with respect to the Securities, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company in respect of any such
covenant or condition shall remain in full force and effect.
Section 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing and
except as otherwise specified as contemplated by Section 2.1 or Section 3.1,
if: (a) the Issuer Trust is the Holder of all of the Outstanding Securities,
and (b) a Tax Event described in clause (a) or (c) of the definition of "Tax
Event" in Section 1.1 hereof has occurred and is continuing in respect of the
Issuer Trust, the Company shall pay the Issuer Trust (and its permitted
successors or assigns under the Trust Agreement) for so long as the Issuer
Trust (or its permitted successor or assignee) is the registered holder of the
Outstanding Securities, such additional sums as may be necessary in order that
the amount of Distributions (including any Additional Amount (as defined in the
Trust Agreement)) then due and payable by the Issuer Trust on the Preferred
Securities and Common Securities that at any time remain outstanding in
accordance with the terms thereof shall not be reduced as a result of such
Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the
Securities there is a reference in any context to the payment of principal of
or interest on the Securities, such mention shall be deemed to include mention
of the payments of the Additional Sums provided for in this paragraph to the
extent that, in such context, Additional Sums are, were or would be payable in
respect thereof pursuant to the provisions of this paragraph and express
mention of the payment of Additional Sums (if
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applicable) in any provisions hereof shall not be construed as excluding
Additional Sums in those provisions hereof where such express mention is not
made; provided, however, that the deferral of the payment of interest pursuant
to Section 3.12 or the Securities shall not defer the payment of any Additional
Sums that may be due and payable.
Section 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities that
it shall not: (a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any shares of
the Company's capital stock, or (b) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Securities, (other than (i) repurchases, redemptions or
other acquisitions of shares of capital stock of the Company in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of any one or more employees, officers, directors or consultants,
in connection with a dividend reinvestment or stockholder stock purchase plan
or in connection with the issuance of capital stock of the Company (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period or other event referred to below, (ii) as a result
of a reclassification, exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a Subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or
series of the Company's indebtedness for any class or series of the Company's
capital stock, (iii) 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, (iv) any
declaration of a dividend in connection with any Rights Plan, or the issuance
of rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (v) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock) if at such time (A) there shall have occurred any event
(x) of which the Company has actual knowledge that with the giving of notice or
the lapse of time, or both, would constitute an Event of Default with respect
to the Securities, and (y) which the Company shall not have taken reasonable
steps to cure, (B) if the Securities are held by the Issuer Trust, the Company
shall be in default with respect to its payment of any obligations under the
Guarantee relating to the Preferred Securities issued by the Issuer Trust, or
(C) the Company shall have given notice of its election to begin an Extension
Period with respect to the Securities as provided herein and shall not have
rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing.
The Company also covenants with each Holder of Securities issued to
the Issuer Trust (a) to hold, directly or indirectly, 100% of the Common
Securities of the Issuer Trust, provided that any permitted successor of the
Company as provided under Section 8.2 may succeed to the Company's ownership of
such Common Securities, (b) as holder of such Common Securities, not to
voluntarily terminate, windup or liquidate the Issuer Trust, other than (i) in
connection with a distribution of the Securities to the holders of the
Preferred Securities in liquidation of the Issuer Trust, or (ii) in connection
with certain mergers, consolidations or amalgamations permitted by
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the Trust Agreement, and (c) to use its reasonable efforts, consistent with the
terms and provisions of the Trust Agreement, to cause the Issuer Trust to
continue not to be taxable as a corporation for United States federal income tax
purposes.
Section 10.8. Federal Tax Reports.
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested by each Paying Agent in order that each Paying
Agent may prepare the information which it is required to report for such year
on Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information shall include the
amount of original issue discount includible in income for each authorized
minimum denomination of principal amount at Stated Maturity of outstanding
Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of this Article.
Redemption of Securities as permitted or required by any form of
Security issued pursuant to this Indenture shall be made in accordance with
such form of Security and this Article; provided, however, that, if any
provision of any such form of Security shall conflict with any provision of
this Article XI, the provision of such form of Security shall govern.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company, the Company shall, not less than 30 nor more than
60 days prior to the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee and, in the case of Securities
held by the Issuer Trust, the Property Trustee under the Trust Agreement of
such date and of the principal amount of Securities to be redeemed and provide
the additional information required to be included in the notice or notices
contemplated by Section 11.4; provided, that, for so long as such Securities
are held by the Issuer Trust, such notice shall be given not less than 45 nor
more than 75 days prior to such Redemption Date (unless a shorter notice shall
be satisfactory to the Property Trustee under the Trust Agreement). In the
case of any redemption of Securities prior to the expiration of any restriction
on such redemption provided in the terms of such Securities, the Company shall
furnish the Trustee with an Officers' Certificate and an Opinion of Counsel
evidencing compliance with such restriction.
Section 11.3. Selection of Securities to be Redeemed.
(a) If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities
not previously called for redemption, by such method as the
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Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of a portion of the principal amount of any Security, provided
that the unredeemed portion of the principal amount of any Security shall be in
an authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
(b) The Trustee shall promptly notify the Company in writing of
the Securities selected for partial redemption and the principal amount thereof
to be redeemed. For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security that has been or
is to be redeemed.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the Redemption Date, to each Holder of Securities to be
redeemed, at the address of such Holder as it appears in the Securities
Register.
With respect to Securities to be redeemed, each notice of redemption
shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the estimate of
the Redemption Price provided pursuant to the Indenture together with a
statement that it is an estimate and that the actual Redemption Price will be
calculated on the third Business Day prior to the Redemption Date (if such an
estimate of the Redemption Price is given, a subsequent notice shall be given as
set forth above setting forth the Redemption Price promptly following the
calculation thereof);
(c) if less than all Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption, the respective
principal amounts) of the particular Securities to be redeemed;
(d) that, on the Redemption Date, the Redemption Price will become
due and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(f) such other provisions as may be required in respect of the
terms of the Securities; and
(g) that the redemption is for a sinking fund, if such is the
case.
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Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice, if mailed in the manner provided above, shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, a 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.
Section 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4, the
Company will deposit with the Trustee or with one or more Paying Agents (or if
the Company is acting as its own Paying Agent, the Company will segregate and
hold in trust as provided in Section 10.3) an amount of money sufficient to pay
the Redemption Price of, and any accrued interest (including Additional
Interest) on, all the Securities (or portions thereof) that are to be redeemed
on that date.
Section 11.6. Payment of Securities Called for Redemption.
(a) If any notice of redemption has been given as provided in
Section 11.4, the Securities or portion 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 accrued interest (including any Additional Interest) to the
Redemption Date. On presentation and surrender of such Securities at a Place
of Payment in said notice specified, the said Securities or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
Redemption Price, together with accrued interest (including any Additional
Interest) to the Redemption Date; provided, however, that, installments of
interest (including Additional Interest) whose Stated Maturity is on or prior
to the Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, registered as such at the close of business
on the relevant record dates according to their terms and the provisions of
Section 3.8.
(b) Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Company, a new Security or Securities, of
authorized denominations, in aggregate principal amount equal to the unredeemed
portion of the Security so presented and having the same Original Issue Date,
Stated Maturity and terms.
(c) If any Security called for redemption shall not be so paid
under surrender thereof for redemption, the principal of and premium, if any, on
such Security shall, until paid, bear interest from the Redemption Date at the
rate prescribed therefor in the Security.
Section 11.7. Right of Redemption of Securities Initially Issued to the
Issuer Trust.
(a) The Company, at its option, may redeem such Securities (i) on
or after ______ __, 2003, in whole at any time or in part from time to time, or
(ii) upon the occurrence and during
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the continuation of a Tax Event, an Investment Company Event or a Capital
Treatment Event, at any time within 90 days following the occurrence and during
the continuation of such Tax Event, Investment Company Event or Capital
Treatment Event, in whole (but not in part), in each case at a Redemption Price
specified in such Security, together with accrued interest (including Additional
Interest) to the Redemption Date.
(b) If less than all the Securities are to be redeemed, the
aggregate principal amount of such Securities remaining Outstanding after
giving effect to such redemption shall be sufficient to satisfy any provisions
of the Trust Agreement.
ARTICLE XII
SINKING FUNDS
Except as may be provided in any supplemental or amended indenture, no
sinking fund shall be established or maintained for the retirement of
Securities.
ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness.
Section 13.2. No Payment When Senior Indebtedness in Default; Payment Over
of Proceeds Upon Dissolution, Etc.
(a) If the Company shall default in the payment of any principal
of (or premium, if any) or interest on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, upon written notice of
such default to the Company by the holders of Senior Indebtedness or any
trustee therefor, unless and until such default shall have been cured or waived
or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of (or premium, if any) or interest (including
Additional Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.
(b) In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company, its creditors or its property, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
67
<PAGE> 74
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshalling of the assets of the Company (each such event, if
any, herein sometimes referred to as a "Proceeding"), all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made to any Holder on
account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other entity
provided for by a plan of reorganization or readjustment, the payment of which
is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of the Securities shall be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the priorities
then existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any Proceeding) shall have
been paid in full.
(c) In the event of any Proceeding, after payment in full of all
sums owing with respect to Senior Indebtedness, the Holders of the Securities,
together with the holders of any obligations of the Company ranking on a parity
with the Securities, shall be entitled to be paid from the remaining assets of
the Company the amounts at the time due and owing on account of unpaid
principal of (and premium, if any) and interest on the Securities and such
other obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or any
obligations of the Company ranking junior to the Securities, and such other
obligations. If, notwithstanding the foregoing, any payment or distribution of
any character or any security, whether in cash, securities or other property
(other than securities of the Company or any other entity provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in these subordination provisions with respect to
the indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof and
before all Senior Indebtedness shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder of
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
same.
(d) The Trustee and the Holders shall take such action (including,
without limitation, the delivery of this Indenture to an agent for the holders
of Senior Indebtedness or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders of
a majority in principal amount of the Senior Indebtedness at the time
outstanding, be necessary or appropriate to assure the effectiveness of the
subordination effected by these provisions.
68
<PAGE> 75
(e) The provisions of this Section 13.2 shall not impair any
rights, interests, remedies or powers of any secured creditor of the Company in
respect of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
(f) The securing of any obligations of the Company, otherwise
ranking on a parity with the Securities or ranking junior to the Securities
shall not be deemed to prevent such obligations from constituting,
respectively, obligations ranking on a parity with the Securities or ranking
junior to the Securities.
Section 13.3. Payment Permitted if No Default.
Nothing contained in this Article XIII or elsewhere in this Indenture
or in any of the Securities shall prevent (a) the Company, at any time, except
during the pendency of the conditions described in the first paragraph of
Section 13.2 or of any Proceeding referred to in Section 13.2, from making
payments at any time of principal of (and premium, if any) or interest
(including Additional Interest) on the Securities, or (b) the application by
the Trustee of any monies deposited with it hereunder to the payment of or on
account of the principal of (and premium, if any) or interest (including any
Additional Interest) on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of
this Article.
Section 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on
all Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior
Indebtedness pursuant to the provisions of this Article (equally and ratably
with the holders of all indebtedness of the Company that by its express terms
is subordinated to Senior Indebtedness of the Company to substantially the same
extent as the Securities are subordinated to the Senior Indebtedness and is
entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior Indebtedness) to the rights of the
holders of such Senior Indebtedness to receive payments and distributions of
cash, property and securities applicable to the Senior Indebtedness until the
principal of (and premium if any) and interest (including Additional Interest)
on the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and no
payments pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
69
<PAGE> 76
Section 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities on
the one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article XIII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Company and the
Holders of the Securities, the obligations of the Company, which are absolute
and unconditional, to pay to the Holders of the Securities the principal of
(and premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms; (b) affect the relative rights against the Company of the Holders
of the Securities and creditors of the Company other than their rights in
relation to the holders of Senior Indebtedness; or (c) prevent the Trustee or
the Holder of any Security (or to the extent expressly provided herein, the
holder of any Preferred Security) from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, including filing
and voting claims in any Proceeding, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
Section 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof 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
provided in this Article XIII and appoints the Trustee his or her
attorney-in-fact for any and all such purposes.
Section 13.7 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness 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 or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder may
have or be otherwise charged with.
(b) Without in any way limiting the generality of Section 13.7(a),
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to such Holders of the Securities
and without impairing or releasing the subordination provided in this Article
XIII or the obligations hereunder of such Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extent the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner for
the collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
70
<PAGE> 77
Section 13.8. Notice to Trustee.
(a) 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 to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article XIII 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 to or by
the Trustee in respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder of Senior
Indebtedness or from any trustee, agent or representative therefor; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section at least two Business Days prior to the date upon which by the
terms hereof any monies may become payable for any purpose (including, the
payment of the principal of (and premium, if any, on) or interest (including
any Additional Interest) on any Security), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such monies and to apply the same to the purpose 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.
(b) Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or herself to be a holder of Senior Indebtedness (or a
trustee or attorney-in-fact therefor) to establish that such notice has been
given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor). 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
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of 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, 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.
Section 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, conservator,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders of Securities, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
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 XIII.
71
<PAGE> 78
Section 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall
not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness
and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company or
to any other Person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article or otherwise.
Section 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness that
may at any time be 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.
Section 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article XIII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
Section 13.13. Certain Conversions or Exchanges Deemed Payment.
For purposes of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on account of the principal of (or
premium, if any, on) or interest (including any Additional Interest) on such
Securities or on account of the purchase or other acquisition of such
Securities, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion or exchange of a
Security shall be deemed to constitute payment on account of the principal of
such security. For the purposes of this Section, the term "junior securities"
means (a) shares of any stock of any class of the Company, and (b) securities
of the Company that are subordinated in right of payment to all Senior
Indebtedness that may be outstanding at the time of issuance or delivery of
such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
72
<PAGE> 79
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
AMERICAN BANCSHARES, INC.
By:_____________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Trustee
By:_____________________________________
Name:
Title:
73
<PAGE> 80
ANNEX A
FORM OF RESTRICTED SECURITIES CERTIFICATE
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.6(b) of
the Indenture referred to below)
[ ],
as Securities Registrar
[address]
Re: Junior Subordinated Debentures of American Bancshares, Inc. (the
"Securities")
Reference is made to the Junior Subordinated Indenture, dated as of
______ __, 1998 (the "Indenture"), between American Bancshares, Inc., a Florida
corporation, and Bankers Trust Company, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S, Rule 144A or Rule 144 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used here as
so defined.
This certificate relates to $________ aggregate principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
CERTIFICATE No(s).
CURRENTLY IN GLOBAL FORM: Yes ____ No ____ (check one)
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (a) it is the sole beneficial owner
of the Specified Securities or (b) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as the
"Owner". If the Specified Securities are represented by a Global Security,
they are held through a Depositary or an Agent Member in the name of the
Undersigned, as or on behalf of the Owner. If the Specified Securities are not
represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Restricted Security. In connection with
<PAGE> 81
such transfer, the Owner hereby certifies that, unless such transfer is being
effected pursuant to an effective registration statement under the Securities
Act, it is being effected in accordance with Rule 144A, Rule 904 of Regulation S
or Rule 144 under the Securities Act and all applicable securities laws of the
states of the United States and other jurisdictions. Accordingly, the Owner
hereby further certifies that:
(a) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(i) the Specified Securities are being transferred to a
person that the Owner and any person acting on its behalf reasonably
believe is a "qualified institutional buyer" within the meaning of
Rule 144A, acquiring for its own account or for the account of a
qualified institutional buyer; and
(ii) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the
Owner may be relying on Rule 144A in connection with the transfer; and
(b) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(i) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting in
behalf of any of the foregoing;
(ii) the offer of the Specified Securities was not made to
a person in the United States;
(iii) either;
(A) at the time the buy order was
originated, the Transferee was outside the United States or
the Owner and any person acting on its behalf reasonably
believed that the Transferee was outside the United States, or
(B) the transaction is being executed
in, on or through the facilities of the Eurobond market, as
regulated by the Association of International Bond Dealers, or
another designated offshore securities market and neither the
Owner nor any person acting on its behalf know that the
transaction has been prearranged with a buyer in the United
States;
(iv) no directed selling efforts within the meaning of
Rule 902 of Regulation S have been made in the United States by or on
behalf of the Owner or any affiliate thereof; and
(v) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
(c) Rule 144 Transfers. If the transfer is being effected
pursuant to Rule 144:
<PAGE> 82
(i) the transfer is occurring after a holding period of at
least two years (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the date the Specified Securities were acquired from the
Company or from an affiliate (as such term is defined in Rule 144) of the
Company, whichever is later, and is being effected in accordance with the
applicable amount, manner of sale and notice requirements of paragraphs (e),
(f) and (h) of Rule 144;
(ii) the transfer is occurring after a holding period by the
Owner of at least three years has elapsed since the date the Specified
Securities were acquired from the Company or from an affiliate (as such term
is defined in Rule 144) of the Company, whichever is later, and the Owner is
not, and during the preceding three months has not been, an affiliate of the
Company; or
(iii) the Owner is a Qualified Institutional Buyer under Rule
144A or has acquired the Securities otherwise in accordance with Sections
(1), (2) or (3) hereof and is transferring the Securities to an
institutional accredited investor in a transaction exempt from the
requirements of the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers (as defined
in the Trust Agreement relating to the Issuer Trust to which the Securities
were initially issued).
(Print the name of the Undersigned, as such
term is defined in the second paragraph of
this certificate.)
Dated: ____________________ By:______________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the title of
the person signing on behalf of the Undersigned must be stated.)
<PAGE> 1
EXHIBIT 4.3
TRUST AGREEMENT
OF
ABI CAPITAL TRUST
THIS TRUST AGREEMENT is made as of May 20, 1998 (this "Trust
Agreement"), by and among American Bancshares, Inc., a Florida corporation, as
depositor (the "Depositor"), and Bankers Trust (Delaware), as trustee, and
Bankers Trust Company, as trustee (jointly, the "Trustees"). The Depositor and
the Trustees hereby agree as follows:
1. The trust created hereby shall be known as ABI Capital Trust
(the "Trust"), in which name the Trustees or the Depositor, to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over
to the Trust the sum of $10. It is the intention of the parties hereto that
the Trust created hereby constitute a business trust under Chapter 38 of Title
12 of the Delaware Code, 12 Del. C. Section 3801, et seq. (the "Business Trust
Act"), and that this document constitute the governing instrument of the Trust.
The Trustees are hereby authorized and directed to execute and file a
certificate of trust with the Delaware Secretary of State in accordance with
the provisions of the Business Trust Act.
3. The Depositor and the Trustees will enter into an amended and
restated Trust Agreement or Declaration of Trust satisfactory to each such
party and substantially in the form included as an exhibit to the 1933 Act
Registration Statement (as defined below), to provide for the contemplated
operation of the Trust created hereby and the issuance of the Preferred or
Capital Securities and Common Securities referred to therein. Prior to the
execution and delivery of such amended and restated Trust Agreement or
Declaration of Trust, the Trustees shall not have any duty or obligation
hereunder or with respect of the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise. Notwithstanding the foregoing, the Trustees may take all actions
deemed proper as are necessary to effect the transactions contemplated herein.
4. The Depositor, as sponsor of the Trust, is hereby authorized,
in its discretion, (i) to file with the Securities and Exchange Commission (the
"Commission") and to execute, in the case of the 1933 Act Registration
Statement and 1934 Act Registration Statement (as herein defined), on behalf of
the Trust, (a) a Registration Statement (the "1933 Act Registration
Statement"), including all pre-effective and post-effective amendments thereto,
relating to the registration under the Securities Act of 1933, as amended (the
"1933 Act"), of the Preferred or Capital Securities of the Trust, (b) any
preliminary prospectus or prospectus or supplement thereto relating to the
Preferred or Capital Securities of the Trust required to be filed pursuant to
the 1933 Act, and (c) a Registration Statement on Form 8-A or other appropriate
form (the "1934 Act Registration Statement"), including all pre-effective and
post-effective amendments thereto, relating to the registration of the
Preferred or Capital Securities of the Trust under the Securities Exchange Act
of 1934, as amended; (ii) to file with the New York Stock Exchange or other
<PAGE> 2
exchange, or the National Association of Securities Dealers ("NASD"), and
execute on behalf of the Trust a listing application and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred or Capital Securities of
the Trust to be listed on the New York Stock Exchange or such other exchange,
or the NASD's Nasdaq National Market; (iii) to file and execute on behalf of
the Trust, such applications, reports, surety bonds, irrevocable consents,
appointments of attorney for service of process and other papers and documents
that shall be necessary or desirable to register the Preferred or Capital
Securities of the Trust under the securities or "Blue Sky" laws of such
jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or
desirable; (iv) to execute and deliver letters or documents to, or instruments
for filing with, a depository relating to the Preferred or Capital Securities
of the Trust; and (v) to execute, deliver and perform on behalf of the Trust an
underwriting agreement with one or more underwriters relating to the offering
of the Preferred or Capital Securities of the Trust.
In the event that any filing referred to in this Section 4 is required
by the rules and regulations of the Commission, the New York Stock Exchange or
other exchange, NASD, or state securities or "Blue Sky" laws to be executed on
behalf of the Trust by the Trustees, the Trustees, in their capacity as
trustees of the Trust, are hereby authorized to join in any such filing and to
execute on behalf of the Trust any and all of the foregoing, it being
understood that the Trustees, in their capacity as trustees of the Trust, shall
not be required to join in any such filing or execute on behalf of the Trust
any such document unless required by the rules and regulations of the
Commission, the New York Stock Exchange or other exchange, NASD, or state
securities or "Blue Sky" laws.
5. This Trust Agreement may be executed in one or more
counterparts.
6. The number of trustees of the Trust initially shall be two and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Depositor which
may increase or decrease the number of trustees of the Trust; provided,
however, that to the extent required by the Business Trust Act, one trustee of
the Trust shall either be 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. Subject to the foregoing, the Depositor
is entitled to appoint or remove without cause any trustee of the Trust at any
time. Any trustee of the Trust may resign upon thirty days' prior notice to
the Depositor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.
AMERICAN BANCSHARES, INC.,
as Depositor
By: /s/ Gerald L. Anthony
-------------------------------------
Name: Gerald L. Anthony
Title: President & CEO
BANKERS TRUST (DELAWARE), not in its
individual capacity but solely as trustee
of the Trust
By: /s/ M. Lisa Wilkins
-------------------------------------
Name: M. Lisa Wilkins
Title: Assistant Secretary
BANKERS TRUST COMPANY, not in its
individual capacity but solely as trustee
of the Trust
By: /s/ Susan Johnson
-------------------------------------
Name: Susan Johnson
Title: Assistant Vice President
3
<PAGE> 4
CERTIFICATE OF TRUST
OF
ABI CAPITAL TRUST
THIS CERTIFICATE OF TRUST of ABI Capital Trust (the "Trust"),
dated as of May 20, 1998, is being duly executed and filed by the undersigned,
as trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. Section 3801, et seq.).
(i) Name. The name of the business trust being formed
hereby is ABI Capital Trust.
(ii) Delaware Trustee. The name and business address of
the trustee of the Trust in the State of Delaware are Bankers Trust (Delaware),
E.A. Delle Donne Corporate Center, Montgomery Bldg., 1011 Centre Road, Suite
200, Wilmington, Delaware 19805-1266.
(iii) Effective Date. This Certificate of Trust shall be
effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
BANKERS TRUST (DELAWARE), not in its
individual capacity but solely
as trustee of the Trust
By: /s/ M. Lisa Wilkins
---------------------------------
Name: M. Lisa Wilkins
Title: Assistant Secretary
BANKERS TRUST COMPANY, not in its
individual capacity but solely
as trustee of the Trust
By: /s/ Susan Johnson
---------------------------------
Name: Susan Johnson
Title: Assistant Vice President
<PAGE> 1
EXHIBIT 4.4
DRAFT
MAY 28, 1998
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
AMERICAN BANCSHARES, INC.
as Depositor
BANKERS TRUST COMPANY,
as Property Trustee,
and
BANKERS TRUST (DELAWARE),
as Delaware Trustee
dated as of
______ __, 1998
ABI CAPITAL TRUST
================================================================================
<PAGE> 2
ABI CAPITAL TRUST
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- ----------------- -----------------
<S> <C> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . 8.9
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)(ii)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8, 10.10(b)
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 10.10(b)
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10(b), (f)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . 10.10(c)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15(c), 10.10(c)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8, 10.10(c)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10(c)
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16, 10.10(d)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 8.17, 10.10(d), (e)
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 8.17, 10.10(d), (e)
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . 8.17, 10.10(d), (e)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.17, 10.10(e)
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(d)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(c)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(d)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 8.14
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10(a)
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Trust Agreement.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE I. DEFINED TERMS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. CONTINUATION OF THE ISSUER TRUST
Section 2.1. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2. Office of the Delaware Trustee;
Principal Place of Business . . . . . . . . . . . . . . . . . 12
Section 2.3. Initial Contribution of Trust Property,
Organizational Expenses . . . . . . . . . . . . . . . . . . . 13
Section 2.4. Issuance of the Preferred Securities . . . . . . . . . . . . . . 13
Section 2.5. Issuance of the Common Securities;
Subscription and Purchase of Junior
Subordinated Debentures . . . . . . . . . . . . . . . . . . . 13
Section 2.6. Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.7. Authorization to Enter into Certain
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.8. Assets of Trust . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.9. Title to Trust Property . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III. PAYMENT ACCOUNT
Section 3.1. Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
Section 4.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.2. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.3. Subordination of Common Securities . . . . . . . . . . . . . . . 21
Section 4.4. Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.5. Tax Returns and Reports . . . . . . . . . . . . . . . . . . . . . 22
Section 4.6. Payment of Taxes, Duties, Etc.
of the Issuer Trust . . . . . . . . . . . . . . . . . . . . . 23
Section 4.7. Payments under Indenture or Pursuant
to Direct Actions . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.8. Liability of the Holder of Common
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V. TRUST SECURITIES CERTIFICATES
Section 5.1. Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.2. The Trust Securities Certificates . . . . . . . . . . . . . . . . 24
Section 5.3. Execution and Delivery of Trust
Securities Certificates . . . . . . . . . . . . . . . . . . . 24
Section 5.4. Global Preferred Security . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 5.5. Registration of Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Preferred Securities
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.6. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates . . . . . . . . . . . . . . . . 27
Section 5.7. Persons Deemed Holders . . . . . . . . . . . . . . . . . . . . . 28
Section 5.8. Access to List of Holders'
Names and Addresses . . . . . . . . . . . . . . . . . . . . . 28
Section 5.9. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . 28
Section 5.10. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . 28
Section 5.11. Ownership of Common Securities
by Depositor . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.12. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . 29
Section 5.13. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI. ACTS OF HOLDERS; MEETINGS; VOTING
Section 6.1. Limitations on Holder's Voting
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.2. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.3. Meetings of Holders . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.4. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.5. Proxies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.6. Holder Action by Written Consent . . . . . . . . . . . . . . . . 33
Section 6.7. Record Date for Voting and Other
Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.8. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.9. Inspection of Records . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties
of the Property Trustee and
the Delaware Trustee . . . . . . . . . . . . . . . . . . . . . 35
Section 7.2. Representations and Warranties of
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII. THE ISSUER TRUSTEES; THE ADMINISTRATORS
Section 8.1. Certain Duties and Responsibilities . . . . . . . . . . . . . . . 37
Section 8.2. Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.3. Certain Rights of Property Trustee . . . . . . . . . . . . . . . 39
Section 8.4. Not Responsible for Recitals
or Issuance of Securities . . . . . . . . . . . . . . . . . . 41
Section 8.5. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.6. Compensation; Indemnity; Fees . . . . . . . . . . . . . . . . . . 41
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and
Administrators . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.9. Co-Trustees and Separate Trustee . . . . . . . . . . . . . . . . 43
Section 8.10. Resignation and Removal; Appointment
of Successor . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 8.11. Acceptance of Appointment by
Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . . . 46
Section 8.13. Preferential Collection of Claims
Against Depositor or Issuer Trust . . . . . . . . . . . . . . 46
Section 8.14. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . 47
Section 8.15. Reports by Property Trustee . . . . . . . . . . . . . . . . . . . 47
Section 8.16. Reports to the Property Trustee . . . . . . . . . . . . . . . . . 48
Section 8.17. Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.18. Number of Issuer Trustees . . . . . . . . . . . . . . . . . . . . 48
Section 8.19. Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.20. Appointment of Administrators . . . . . . . . . . . . . . . . . . 49
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER
Section 9.1. Dissolution Upon Expiration Date . . . . . . . . . . . . . . . . 49
Section 9.2. Early Dissolution . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 9.3. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 9.4. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Issuer Trust . . . . . . . . . . . . . 52
ARTICLE X. MISCELLANEOUS PROVISIONS
Section 10.1. Limitation of Rights of Holders . . . . . . . . . . . . . . . . . 53
Section 10.2. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.3. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.4. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.5. Payments Due on Non-Business Day . . . . . . . . . . . . . . . . 55
Section 10.6. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.8. Reports, Notices and Demands . . . . . . . . . . . . . . . . . . 55
Section 10.9. Agreement Not to Petition . . . . . . . . . . . . . . . . . . . . 56
Section 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . 56
Section 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture . . . . . . . . . . . . . . . . . . . 58
</TABLE>
iii
<PAGE> 6
EXHIBITS
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Preferred Securities Certificate
iv
<PAGE> 7
AMENDED AND RESTATED TRUST AGREEMENT
THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of ______ __, 1998
(this "Trust Agreement"), is among (a) AMERICAN BANCSHARES, INC., a Florida
corporation (including any successors or assigns, the "Depositor"), (b) BANKERS
TRUST COMPANY, a New York banking corporation, as property trustee (in such
capacity, the "Property Trustee" and, in its separate corporate capacity and
not in its capacity as Property Trustee, the "Bank"), and (c) BANKERS TRUST
(DELAWARE), a Delaware banking corporation, as Delaware trustee (the "Delaware
Trustee") (the Property Trustee and the Delaware Trustee are referred to
collectively herein as the "Issuer Trustees") and (d) the several Holders, as
hereinafter defined.
RECITALS
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into a certain Trust Agreement, dated as of ______,
1998 (the "Original Trust Agreement"), and by the execution and filing by
the Delaware Trustee with the Secretary of State of the State of Delaware of
the Certificate of Trust, filed on ______ __, 1998 (the "Certificate of
Trust"), a copy of which is attached hereto as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (a) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (b) the issuance and sale of the Preferred
Securities by the Issuer Trust pursuant to the Underwriting Agreement, (c) the
acquisition by the Issuer Trust from the Depositor of all of the right, title
and interest in the Junior Subordinated Debentures, (d) the appointment of the
Administrators and (e) the addition of the Property Trustee as a party to the
Original Trust Agreement.
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of
the other parties and for the benefit of the Holders, hereby amends and
restates the Original Trust Agreement in its entirety and agrees, intending to
be legally bound, as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned
to them in this Article and include the plural as well as the singular;
<PAGE> 8
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) the words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) all accounting terms used but not defined herein have the
meanings assigned to them in accordance with United States generally accepted
accounting principles as in effect at the time of computation;
(e) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement;
(f) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were
originally issued shall refer to the date the ___% Preferred Securities were
originally issued.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities similar to the Trust
Securities will qualify as Tier 1 capital of the Company up to an amount not to
exceed, when taken together with all cumulative preferred stock of the Company,
if any, 25% of the Company's Tier 1 capital, or any subsequent limitation
adopted by the Federal Reserve.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or for a given period, the amount of Additional Interest
(as defined in the Indenture) paid by the Depositor on a Like Amount of Junior
Subordinated Debentures for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrators" means each Person appointed in accordance with
Section 8.20 solely in such Person's capacity as Administrator of the Issuer
Trust heretofore formed and continued hereunder and not in such Person's
individual capacity, or any successor Administrator appointed as herein
provided; with the initial Administrators being Gerald L. Anthony and Brian M.
Watterson.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
2
<PAGE> 9
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Preferred Security or beneficial interest
therein, the rules and procedures of the Depositary for such Preferred
Security, in each case to the extent applicable to such transaction and as in
effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction
in the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or
(b) the institution by such Person of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or State bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
similar official) of such Person or of any substantial part of its property or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they
become due and its willingness to be adjudicated a bankrupt, or the taking of
corporate action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or
the executive committee of the board of directors of the Depositor (or any
other committee of the board of directors of the Depositor performing similar
functions) or, for purposes of this Trust Agreement a committee designated by
the board of directors of the Depositor (or any such committee), comprised of
two or more members of the board of directors of the Depositor or officers of
the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect
on the date of such certification, and delivered to the Issuer Trustees.
3
<PAGE> 10
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of Florida or in the City of New
York, are authorized or required by law or executive order to remain closed or
(c) a day on which the Property Trustee's Corporate Trust Office or the
Delaware Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Depositor that, as a result of the occurrence
of any amendment to, or change (including any announced prospective change) in,
the laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there is more than an
insubstantial risk that the Depositor will not be entitled to treat an amount
equal to the Liquidation Amount of such Preferred Securities as "Tier 1
Capital" (or the then equivalent thereof), except as otherwise restricted under
the 25% Capital Limitation, for purposes of the risk-based capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Depositor.
"Cede" means Cede & Co.
"Certificate Depositary Agreement" means the agreement among the
Issuer Trust, the Depositor and the Depositary, as the initial Clearing Agency,
dated as of the Closing Date, substantially in the form attached hereto as
Exhibit B, as the same may be amended and supplemented from time to time.
"Certificate of Trust" has the meaning specified in the preamble to
this Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depositary shall be
the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means the Time of Delivery for the Firm Securities,
which date is also the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended or any
successor statute, in each case as amended from time to time.
"Commission" means 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 instrument 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.
4
<PAGE> 11
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached hereto as
Exhibit C.
"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $10 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Corporate Trust Office" means (a) with respect to the Property
Trustee or the Debenture Trustee, the principal office of the Property Trustee
located in the City of New York, New York, which at the time of the execution
of this Trust Agreement is located at Four Albany Street, New York, New York
10006; Attention: Corporate Trust and Agency Group - Corporate Market Services,
and (b) with respect to the Delaware Trustee, the principal office of the
Delaware Trustee located at Montgomery Building, 1011 Centre Road, Suite 200,
Wilmington, Delaware, 19805-1266.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Junior
Subordinated Debentures to be redeemed under the Indenture, the date fixed for
redemption of such Junior Subordinated Debentures under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York banking
corporation and any successor, as trustee under the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from time to
time.
"Delaware Trustee" means the corporation identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Issuer Trust continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositary" means The Depository Trust Company or any successor
thereto.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Direct Action" has the meaning specified in Section 5.13(c).
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"Early Termination Event" has the meaning specified in Section 9.2.
5
<PAGE> 12
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default;
(b) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a period
of 30 days;
(c) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable;
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trust in this Trust
Agreement (other than a covenant or warranty a default in the performance of
which or the breach of which is dealt with in clause (b) or (c) above) and
continuation of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Issuer Trustees and the
Depositor by the Holders of at least 25% in aggregate Liquidation Amount of the
Outstanding Preferred 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
(e) the occurrence of any Bankruptcy Event with respect to the
Property Trustee or all or substantially all of its property if a successor
Property Trustee has not been appointed within a period of 90 days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto, in each case as amended from time
to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Extension Period" has the meaning specified in Section 4.1.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Firm Securities" means an aggregate Liquidation Amount of $15,000,000
of the Issuer Trust's ____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred Securities
Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and Bankers Trust Company, as guarantee trustee,
contemporaneously with the
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execution and delivery of this Trust Agreement, for the benefit of the Holders
of the Preferred Securities, as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities is registered in the Securities Register; any such Person shall be a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Indemnified Person" has the meaning specified in Section 8.6(c).
"Indenture" means the Junior Subordinated Indenture, dated as of
______ __, 1998, between the Depositor and the Debenture Trustee (as amended or
supplemented from time to time) relating to the issuance of the Junior
Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940, as
amended or any successor statute, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel, rendered by a law firm experienced in such matters, to the
effect that, as a result of the occurrence of a change in law or regulation or
a written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Preferred Securities.
"Issuer Trust" means ABI Capital Trust .
"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal amount
of the Depositor's ____% junior subordinated deferrable interest debentures,
due ______ __, 2028, which date may be shortened once at any time by the
Depositor to any date not earlier than ______ __, 2003, issued pursuant to the
Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that portion
of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and (b) with respect to a distribution of
Junior Subordinated Debentures to Holders of Trust Securities in connection
with a dissolution or liquidation of the Issuer Trust, Junior Subordinated
Debentures having a principal amount equal to the Liquidation
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Amount of the Trust Securities of the Holder to whom such Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures or the Liquidation Distributions are to be distributed to Holders of
Trust Securities in connection with a dissolution and liquidation of the Issuer
Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section
9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or
"Majority in Liquidation Amount of the Common Securities" means, except as
provided by the Trust Indenture Act, Preferred Securities or Common Securities,
as the case may be, representing more than 50% of the aggregate Liquidation
Amount of all then Outstanding Preferred Securities or Common Securities, as
the case may be.
"Officers' Certificate" means, a certificate signed by the Chairman of
the Board, Chief Executive Officer, President or a Vice President and by the
Chief Financial Officer, Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Secretary, or an Assistant Secretary, of the Depositor, and
delivered to the appropriate Issuer Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate
that such officer 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 such officer in rendering the Officers'
Certificate;
(c) a statement that 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
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
"Option Closing Date" shall have the meaning provided in the
Underwriting Agreement.
"Option Securities" means an aggregate Liquidation Amount of
$2,250,000 of the Issuer Trust's ____% Preferred Securities, issuable to the
Underwriter, at its option, exercisable within 30 days after the date of the
Prospectus, solely to cover over-allotments, if any.
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"Option Preferred Securities Certificate" means the certificate
evidencing ownership of Preferred Securities issued if the Underwriter
exercises its option described in Section 2.4, which certificate shall be
substantially in the form attached hereto as Exhibit D.
"Original Trust Agreement" has the meaning specified in the recitals
to this Trust Agreement.
"Outstanding," with respect to Trust Securities, means, as of the date
of determination, all Trust Securities theretofore executed and delivered under
this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee
or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or
any Paying Agent for the Holders of such Preferred Securities, provided that if
such Trust Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in
lieu of which other Trust Securities have been executed and delivered pursuant
to Sections 5.4, 5.5, and 5.6;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent, or waiver
hereunder, Preferred Securities owned by the Depositor, any Issuer Trustee, any
Administrator, or any Affiliate of the Depositor or any Issuer Trustee shall be
disregarded and deemed not to be Outstanding, except that (i) in determining
whether any Issuer Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Preferred
Securities that such Issuer Trustee or such Administrator, as the case may be,
knows to be so owned shall be so disregarded and (ii) the foregoing shall not
apply at any time when all of the outstanding Preferred Securities are owned by
the Depositor, one or more of the Issuer Trustees, one or more of the
Administrators and/or any such Affiliate. Preferred Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrators the pledgee's right so to
act with respect to such Preferred Securities and that the pledgee is not the
Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Global
Preferred Securities as reflected in the records of the Clearing Agency or, if
a Clearing Agency Participant is not the Owner, then as reflected in the
records of a Person maintaining an account with such Clearing Agency, directly
or indirectly, in accordance with the rules of such Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee in its trust department for
the benefit of the Holders in which
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all amounts paid in respect of the Junior Subordinated Debentures will be held
and from which the Property Trustee, through the Paying Agent, shall make
payments to the Holders in accordance with Sections 4.1 and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached hereto as
Exhibit D.
"Preferred Security" means a Firm Security or an Option Security, each
constituting a preferred undivided beneficial interest in the assets of the
Issuer Trust, having a Liquidation Amount of $10 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Property Trustee of the Issuer Trust continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"Prospectus" means the final prospectus covering the Preferred
Securities, Junior Subordinated Debentures and the Guarantee Agreement.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Junior Subordinated Debentures shall be a Redemption Date for a Like
Amount of Trust Securities, including but not limited to any date of redemption
pursuant to the occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any Trust
Security, the Liquidation Amount of such Trust Security, together with
accumulated but unpaid Distributions to but excluding the date fixed for
redemption, plus the related amount of the premium, if any, paid by the
Depositor upon the concurrent redemption of a Like Amount of Junior
Subordinated Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any
managing director, principal, vice president, assistant vice president,
assistant treasurer, assistant secretary or any other officer of the Property
Trustee customarily performing functions similar to those performed by any of
the above designated officers and having direct responsibility for the
administration of this Trust Agreement, and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
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"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment Event, or
Investment Company Event.
"Successor Preferred Securities Certificate" of any particular
Preferred Securities Certificate means every Preferred Securities Certificate
issued after, and evidencing all or a portion of the same beneficial interest
in the Issuer Trust as that evidenced by, such particular Preferred Securities
Certificate; and, for the purposes of this definition, any Preferred Securities
Certificate executed and delivered under Section 5.6 in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Preferred Securities Certificate
shall be deemed to evidence the same beneficial interest in the Issuer Trust as
the mutilated, destroyed, lost or stolen Preferred Securities Certificate.
"Successor Preferred Security" has the meaning specified in Section
9.5.
"Tax Event" means the receipt by the Issuer 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 or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or after
the date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (a) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States federal
income tax with respect to income received or accrued on the Junior
Subordinated Debentures, (b) interest payable by the Depositor on the Junior
Subordinated Debentures is not, or within 90 days of the delivery of such
Opinion of Counsel will not be, deductible by the Depositor, in whole or in
part, for United States federal income tax purposes, or (c) the Issuer Trust
is, or will be within 90 days of the delivery of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Time of Delivery" means 9:00 a.m. Eastern Time, either (a) with
respect to the Firm Securities or the Common Securities, on the fourth Business
Day (unless postponed in accordance with the provisions of Section __ of the
Underwriting Agreement) following the date of execution of the Underwriting
Agreement, or such other time not later than ten Business Days after such date
as shall be agreed upon by the Underwriter, the Issuer Trust and the Company,
or (b) with respect to the Option Securities, the Option Closing Date.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof,
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including (a) all Exhibits hereto, and (b) for all purposes of this Amended and
Restated Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Amended and Restated Trust Agreement and any modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, or any successor statute,
in each case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) any
cash on deposit in, or owing to, the Payment Account, and (c) all proceeds and
rights in respect of the foregoing and any other property and assets for the
time being held or deemed to be held by the Property Trustee pursuant to the
trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Underwriter" has the meaning specified in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
______ __, 1998, among the Issuer Trust, the Depositor and the Underwriter, as
the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
Section 2.1. Name.
The Issuer Trust continued hereby shall be known as "ABI Capital
Trust," as such name may be modified from time to time by the Administrators
following written notice to the Holders of Trust Securities and the Issuer
Trustees, in which name the Administrators and the Issuer Trustees may engage
in the transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
Section 2.2. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is
Bankers Trust (Delaware), Montgomery Building, 1011 Centre Road, Suite 200,
Wilmington, Delaware 19805-1266, Attention: Lisa Wilkins, or such other
address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Holders and the Depositor. The principal executive
office of the Issuer Trust is in care of American Bancshares, Inc., 4702 Cortez
Road West, Bradenton, Florida, 34210, Attention: Office of the Secretary.
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Section 2.3. Initial Contribution of Trust Property; Organizational
Expenses.
The Issuer Trustees acknowledge receipt in trust from the Depositor in
connection with this Trust Agreement of the sum of $10, which constitutes the
initial Trust Property. The Depositor shall pay all organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such reasonable expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.
Section 2.4. Issuance of the Preferred Securities.
On ______ __, 1998, the Depositor, both on its own behalf and on
behalf of the Issuer Trust pursuant to the Original Trust Agreement, executed
and delivered the Underwriting Agreement. Contemporaneously with the execution
and delivery of this Trust Agreement, an Administrator, on behalf of the Issuer
Trust, shall execute in accordance with Section 5.3 and the Property Trustee
shall authenticate in accordance with Section 5.3 and deliver to the
Underwriter, Firm Securities Certificates, registered in the names requested by
the Underwriter, in an aggregate amount of 1,500,000 Firm Securities having an
aggregate Liquidation Amount of $15,000,000, against receipt of the aggregate
purchase price of such Preferred Securities of $15,000,000, by the Property
Trustee.
At the option of the Underwriter, within 30 days of the date of the
Prospectus, and solely for the purpose of covering an over-allotment, if any,
an Administrator, on behalf of the Issuer Trust, shall execute in accordance
with Section 5.3 and the Property Trustee shall authenticate in accordance with
Section 5.3 and deliver to the Underwriter, Option Preferred Securities
Certificates, registered in the names requested by the Underwriter,
representing up to 225,000 Option Securities having an aggregate Liquidation
Amount of up to $2,250,000 against receipt of the aggregate purchase price of
such Option Securities of up to $2,250,000 by the Property Trustee.
Section 2.5. Issuance of the Common Securities; Subscription and Purchase
of Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrator, on behalf of the Issuer Trust, shall execute in
accordance with Section 5.3 and the Property Trustee shall authenticate in
accordance with Section 5.3 and deliver to the Depositor, Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of 46,392 Common Securities having an aggregate Liquidation Amount of $463,920
against receipt by the Property Trustee of the aggregate purchase price of such
Common Securities of $463,920 by the Property Trustee. In the event of any
exercise of an over-allottment option requiring issuance of Optional Preferred
Securities Certificates, as described in Section 2.4 above, a proportionate
number of additional Common Securities Certificates, with corresponding
aggregate Liquidation Amount, shall be delivered to the Depositor.
Contemporaneously with the executions, and deliveries of Common Securities
Certificates and any Preferred Securities Certificates, an Administrator, on
behalf of the Issuer Trust, shall subscribe for and purchase from the
Depositor, corresponding amounts of Junior Subordinated Debentures, registered
in the
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name of the Issuer Trust and having an aggregate principal amount equal to
$15,000,000, plus, in the event of any exercise of the over-allotment option (a)
a corresponding additional number of Junior Subordinated Debentures not
exceeding an aggregate principal amount of $2,250,000 and (b) a corresponding
number of Junior Subordinated Debentures not exceeding an aggregate principal
amount equal to the aggregate Liquidation Amount of Common Securities issued
pursuant to such exercise of an over-allotment option; and, in satisfaction of
the purchase price for such Junior Subordinated Debentures, the Property
Trustee, on behalf of the Issuer Trust, shall deliver to the Depositor the sum
of $15,000,000, plus any corresponding over-allotment option amount (being the
sum of the amounts delivered to the Property Trustee pursuant to (a) the second
sentence of Section 2.4 and (b) the first and second sentences of this Section
2.5) and receive the Junior Subordinated Debentures on behalf of the Issuer
Trust.
Section 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to (a)
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Junior Subordinated Debentures, and (b) engage in only those other
activities necessary, convenient, or incidental thereto. The Depositor hereby
appoints the Issuer Trustees as trustees of the Issuer Trust, to have all the
rights, powers and duties to the extent set forth herein, and the Issuer
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the
conditions set forth herein for the benefit of the Issuer Trust and the
Holders. The Depositor hereby appoints the Administrators (as agents of the
Issuer Trust), with such Administrators having all rights, powers, and duties
set forth herein with respect to accomplishing the purposes of the Issuer
Trust, and the Administrators hereby accept such appointment, provided,
however, that it is the intent of the parties hereto that such Administrators
shall not be trustees or, to the fullest extent permitted by law, fiduciaries
with respect to the Issuer Trust and this Trust Agreement shall be construed in
a manner consistent with such intent. The Property Trustee shall have the
right and power to perform those duties assigned to the Administrators. 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 Property
Trustee or the Administrators set forth herein. The Delaware Trustee shall be
one of the trustees of the Issuer Trust for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Delaware Business Trust Act
and for taking such actions as are required to be taken by a Delaware trustee
under the Delaware Business Trust Act.
Section 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the
affairs of the Issuer Trust in accordance with the terms of this Trust
Agreement. Subject to the limitations set forth in paragraph (b) of this
Section 2.7 and in accordance with the following provisions (i) and (ii), the
Issuer Trustees and the Administrators shall act as follows:
(i) Each Administrator shall have the power and authority
to act on behalf of the Issuer Trust with respect to the following:
(A) the issuance and sale of the Trust
Securities;
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(B) the compliance with the Underwriting
Agreement regarding the issuance and sale of the Trust
Securities;
(C) the compliance with the Securities Act,
applicable state securities or blue sky laws, and the Trust
Indenture Act;
(D) the listing of the Preferred Securities upon
such securities exchange or exchanges or upon the Nasdaq
National Market as shall be determined by the Depositor, with
the registration of the Preferred Securities under the
Exchange Act, if required, and the preparation and filing of
all periodic and other reports and other documents pursuant to
the foregoing;
(E) the application for a taxpayer
identification number for the Issuer Trust;
(F) the preparation of a registration statement
and a prospectus in relation to the Preferred Securities,
including any amendments thereto and the taking of any action
necessary or desirable to sell the Preferred Securities in a
transaction or series of transactions subject to the
registration requirements of the Securities Act; and
(G) any action incidental to the foregoing as the
Administrators may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement.
(ii) The Property Trustee shall have the power and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated
Debentures;
(C) the receipt and collection of interest,
principal and any other payments made in respect of the Junior
Subordinated Debentures in the Payment Account;
(D) the distribution of amounts owed to the
Holders in respect of the Trust Securities in accordance with
the terms of this Trust Agreement;
(E) the exercise of all of the rights, powers,
and privileges of a holder of the Junior Subordinated
Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Junior
Subordinated Debentures to the Holders in accordance with this
Trust Agreement;
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(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust
Agreement, the winding up of the affairs of and liquidation of
the Issuer Trust and the preparation, execution and filing of
the certificate of cancellation with the Secretary of State of
the State of Delaware; and
(I) after an Event of Default (other than under
paragraph (b), (c) or (d) of the definition of such term if
such Event of Default is by or with respect to the Property
Trustee), comply with the provisions of this Trust Agreement
and take any action to give effect to the terms of this Trust
Agreement and protect and conserve the Trust Property for the
benefit of the Holders (without consideration of the effect of
any such action on any particular Holder);
provided, however, that nothing in this Section 2.7(a)(ii) shall require the
Property Trustee to take any action that is not otherwise required in this
Trust Agreement.
(b) So long as this Trust Agreement remains in effect, the Issuer
Trust (or the Issuer Trustees or Administrators acting on behalf of the Issuer
Trust) shall not undertake any business, activities or transaction except as
expressly provided herein or contemplated hereby. In particular, neither the
Issuer Trustees nor the Administrators (in each case acting on behalf of the
Issuer Trust) shall (i) acquire any investments or engage in any activities not
authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off, or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would reasonably be expected to cause the Issuer
Trust to become taxable as a corporation for United States federal income tax
purposes, (iv) incur any indebtedness for borrowed money or issue any other
debt, or (v) take or consent to any action that would result in the placement
of a Lien on any of the Trust Property. The Property Trustee shall defend all
claims and demands of all Persons at any time claiming any Lien on any of the
Trust Property adverse to the interest of the Issuer Trust or the Holders in
their capacity as Holders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the power and authority to assist the
Issuer Trust with respect to, or effect on behalf of the Issuer Trust, the
following (and any actions taken by the Depositor in furtherance of the
following prior to the date of this Trust Agreement are hereby ratified and
confirmed in all respects):
(i) the preparation and filing by the Issuer Trust with
the Commission, and the execution and delivery on behalf of the Issuer
Trust, of a registration statement and a prospectus in relation to the
Preferred Securities, including any amendments thereto, and the taking
of any action necessary or desirable to sell the Preferred Securities
in a transaction or a series of transactions subject to the
registration requirements of the Securities Act;
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(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and the determination of any and all such acts,
other than actions that must be taken by or on behalf of the Issuer
Trust, and the advice to the Issuer Trustees of actions they must take
on behalf of the Issuer Trust, and the preparation for execution and
filing of any documents to be executed and filed by the Issuer Trust
or on behalf of the Issuer Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any such
states in connection with the offer and sale of the Preferred
Securities;
(iii) the negotiation of the terms of, and the execution
and delivery of, the Underwriting Agreement providing for the sale of
the Preferred Securities;
(iv) the preparation and filing by the Issuer Trust with
the Commission and the execution on behalf of the Issuer trust of a
registration statement on Form 8-A relating to the registration of
the Preferred Securities under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, including any amendments
thereto;
(v) compliance with the listing requirements of the
Preferred Securities upon such securities exchange or exchanges, or
upon the Nasdaq National Market, as shall be determined by the
Depositor, the registration of the Preferred Securities under the
Exchange Act, if required, and the preparation and filing of all
periodic and other reports and other documents pursuant to the
foregoing; and
(vi) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators and the Property Trustee are authorized and directed to conduct
the affairs of the Issuer Trust and to operate the Issuer Trust so that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act, and will not be taxable as a
corporation for the United States federal income tax purposes and so that the
Junior Subordinated Debentures will be treated as indebtedness of the Depositor
for United States federal income tax purposes. In this connection, the
Property Trustee, the Administrators, and the Holders of Common Securities are
authorized to take any action, not inconsistent with applicable law, the
Certificate of Trust, or this Trust Agreement, that the Property Trustee, the
Administrators, and Holders of Common Securities determine in their discretion
to be necessary or desirable for such purposes, as long as such action does not
adversely affect in any material respect the interests of the Holders of the
Outstanding Preferred Securities. In no event shall the Administrators or the
Issuer Trustees be liable to the Issuer Trust or the Holders for any failure to
comply with this section that results from a change in law or regulations or in
the interpretation thereof.
Section 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust
Property.
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Section 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Issuer Trust and shall be held and administered by the Property Trustee (in its
capacity as such) for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
Section 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the
Holders and for distribution as herein provided, including (and subject to) any
priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests
in the Trust Property, and Distributions (including Distributions of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including payments of Additional Interest, as defined in
the Indenture) are made on the Junior Subordinated Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be
cumulative and will accumulate whether or not there are funds of the
Issuer Trust available for the payment of Distributions.
Distributions shall accumulate from _______ __, 1998, and, except in
the event (and to the extent) that the Depositor exercises its right
to defer the payment of interest on the Junior Subordinated Debentures
pursuant to the Indenture, shall be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year,
commencing on _______ __, 1998. If any date on which a Distribution
is otherwise
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payable on the Trust Securities is not a Business Day, then the payment
of such Distribution shall be made on the next succeeding day that is a
Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next
succeeding calendar year, payment of such Distributions shall be made
on the immediately preceding Business Day, in either case with the same
force and effect as if made on the date on which such payment was
originally payable (each date on which distributions are payable in
accordance with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to
Distributions payable at a rate of ____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable
for any period less than a full Distribution period shall be computed
on the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed in a partial month in a period. Distributions
payable for each full Distribution period will be computed by dividing
the rate per annum by four. The amount of Distributions payable for
any period shall include any Additional Amounts in respect of such
period.
(iii) So long as no Debenture Event of Default has occurred
and is continuing, the Depositor has the right under the Indenture to
defer the payment of interest on the Junior Subordinated Debentures at
any time and from time to time for a period not exceeding 20
consecutive quarterly periods (an "Extension Period"), provided that
no Extension Period may extend beyond ____ __, 2028. As a consequence
of any such deferral, quarterly Distributions on the Trust Securities
by the Issuer 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 per annum
of ____% per annum, compounded quarterly) from the relevant payment
date for such Distributions, computed on the basis of a 360-day year
of twelve 30-day months and the actual days elapsed in a partial month
in such period. Additional Distributions payable for each full
Distribution period will be computed by dividing the rate per annum by
four. The term "Distributions" as used in Section 4.1 shall include
any such additional Distributions provided pursuant to this Section
4.1(a)(iii).
(iv) Distributions on the Trust Securities shall be made
by the Property Trustee from the Payment Account and shall be payable
on each Distribution Date only to the extent that the Issuer Trust has
funds then on hand and available in the Payment Account for the
payment of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date, which shall be at the close of business on the 15th day
of March, June, September or December (whether or not a Business Day).
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Section 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated maturity
of the Junior Subordinated Debentures, the Issuer Trust will be required to
redeem a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price
cannot be calculated prior to the time the notice is required to be
sent, the estimate of the Redemption Price provided pursuant to the
Indenture together with a statement that it is an estimate and that
the actual Redemption Price will be calculated on the third Business
Day prior to the Redemption Date (and if an estimate is provided, a
further notice shall be sent of the actual Redemption Price on the
date, or as soon as practicable thereafter, that notice of such actual
Redemption Price is received pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the Preferred
Securities affected;
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the total Liquidation Amount of
the particular Trust Securities to be redeemed;
(v) that, on the Redemption Date, the Redemption Price
will become due and payable upon each such Trust Security to be
redeemed and that Distributions thereon will cease to accumulate on
and after said date, except as provided in Section 4.2(d) below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP"
numbers, and the Property Trustee shall indicate the "CUSIP" numbers of the
Trust Securities in notices of redemption and related materials as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Trust Securities or as contained in any notice of redemption and related
material.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of Junior Subordinated Debentures. Redemptions of
the Trust Securities shall be made and the Redemption Price shall be payable on
each Redemption Date only to the extent that the Issuer Trust has funds then on
hand and available in the Payment Account for the payment of such Redemption
Price.
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(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York City time,
on the Redemption Date, subject to Section 4.2(c), the Property Trustee will,
with respect to Preferred Securities held in global form, irrevocably deposit
with the Clearing Agency for such Preferred Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Owners of the Preferred Securities. With respect to
Preferred Securities that are not held in global form, the Property Trustee,
subject to Section 4.2(c), will irrevocably deposit with the Paying Agent, to
the extent available therefor, funds sufficient to pay the applicable Redemption
Price and will give the Paying Agent irrevocable instructions and authority to
pay the Redemption Price to the Holders of the Preferred Securities upon
surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
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 Holders holding Trust
Securities so called for redemption will cease, except the right of such Holders
to receive the Redemption Price and any Distributions payable in respect of the
Trust Securities on or prior to the Redemption Date, but without interest, and
such Trust Securities will cease to be Outstanding. In the event that any date
on which any applicable Redemption Price is payable is not a Business Day, then
payment of the applicable 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 Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case, with the same force and effect
as if made on such date. In the event that payment of the Redemption Price in
respect of any Trust Securities called for redemption is improperly withheld or
refused and not paid either by the Issuer Trust or by the Depositor pursuant to
the Guarantee Agreement, Distributions on such Trust Securities will continue to
accumulate, as set forth in Section 4.1, from the Redemption Date originally
established by the Issuer Trust for such Trust Securities 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.
(e) Subject to Section 4.3(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the particular
Preferred Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Property Trustee from the Outstanding
Preferred Securities not previously called for redemption in such a manner as
the Property Trustee shall deem fair and appropriate.
Section 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, the Redemption Price of, and the Liquidation Distribution in
respect of, the Trust Securities, as applicable, shall be made, subject to
Section 4.2(e), pro rata among the Common Securities and the Preferred
Securities based on the Liquidation Amount of such Trust Securities; provided,
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however, that if on any Distribution Date or Redemption Date any Event of
Default resulting from a Debenture Event of Default in Section 5.1(a) or 5.1(b)
of the Indenture shall have occurred and be continuing, no payment of any
Distribution (including Additional Amounts, if applicable) on, or Redemption
Price of, or Liquidation Distribution in respect of, any Common Security, and
no other payment on account of the redemption, liquidation, or other
acquisition of Common Securities, shall be made unless payment in full in cash
of all accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or, in the case of payment of the
Redemption Price, the full amount of such Redemption Price on all Outstanding
Preferred Securities then called for redemption, or in the case of payment of
the Liquidation Distribution the full amount of such Liquidation Distribution
on all Outstanding Preferred Securities, shall have been made or provided for,
and all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of, or
Liquidation Distribution in respect of Preferred Securities then due and
payable. The existence of an Event of Default does not entitle the Holders of
Preferred Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default
resulting from any Debenture Event of Default, the Holder of the Common
Securities shall have no right to act with respect to any such Event of Default
under this Trust Agreement until the effects of all such Events of Default with
respect to the Preferred Securities have been cured, waived, or otherwise
eliminated. Until all such Events of Default under this Trust Agreement with
respect to the Preferred Securities have been so cured, waived, or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders of
the Preferred Securities and not on behalf of the Holder of the Common
Securities, and only the Holders of the Preferred Securities will have the right
to direct the Property Trustee to act on their behalf.
Section 4.4. Payment Procedures.
Payments of Distributions (including Additional Amounts, if
applicable) in respect of the Preferred Securities shall be made by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register or, if the Preferred Securities are held by a
Clearing Agency, such Distributions shall be made to the Clearing Agency in
immediately available funds, which will credit the relevant accounts on the
applicable Distribution Dates. Payments of Distributions to Holders of
$1,000,000 or more in aggregate Liquidation Amount of Preferred Securities may
be made by wire transfer of immediately available funds upon written request of
such Holder of Preferred Securities to the Securities Registrar not later than
15 calendar days prior to the date on which the Distribution is payable.
Payments in respect of the Common Securities shall be made in such manner as
shall be mutually agreed between the Property Trustee and the Holder of the
Common Securities.
Section 4.5. Tax Returns and Reports.
(a) The Administrators shall prepare and file (or cause to be
prepared and filed), at the Depositor's expense, all United States federal,
state, and local tax and information returns and reports required to be filed
by or in respect of the Issuer Trust. In this regard, the Administrators
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shall (i) prepare and file (or cause to be prepared and filed) all Internal
Revenue Service forms required to be filed in respect of the Issuer Trust in
each taxable year of the Issuer Trust and (ii) prepare and furnish (or cause to
be prepared and furnished) to each Holder all Internal Revenue Service forms
required to be provided by the Issuer Trust. The Administrators shall provide
the Depositor and the Property Trustee with a copy of all such returns and
reports promptly after such filing or furnishing. The Issuer Trustees and the
Administrators shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Holders under the Trust Securities.
(b) On or before December 15 of each year during which any
Preferred Securities are outstanding, the Administrators shall furnish to the
Paying Agent such information as may be reasonably requested by the Property
Trustee in order that the Property Trustee may prepare the information which it
is required to report for such year on Internal Revenue Service Forms 1096 and
1099 pursuant to Section 6049 of the Code. Such information shall include the
amount of original issue discount includible in income for each outstanding
Preferred Security during such year.
Section 4.6. Payment of Taxes; Duties, Etc. of the Issuer Trust.
Upon receipt under the Junior Subordinated Debentures of Additional
Sums, the Property Trustee, at the direction of an Administrator or the
Depositor, shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer Trust by
the United States or any other taxing authority.
Section 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder (or any
Owner related thereto) has directly received pursuant to Section 5.8 of the
Indenture or Section 5.13 of this Trust Agreement.
Section 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7(c) of the Indenture
regarding allocation of expenses.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1. Initial Ownership.
Until the issuance of the Trust Securities, and at any time during
which no Trust Securities are outstanding, the Depositor shall be the sole
beneficial owner of the Issuer Trust.
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Section 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be executed on behalf
of the Issuer Trust by manual or facsimile signature of at least one
Administrator. Trust Securities Certificates bearing the signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Issuer Trust, shall be validly issued and
entitled to the benefits of this Trust Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
delivery of such Trust Securities Certificates or did not hold such offices at
the date of delivery of such Trust Securities Certificates. A transferee of a
Trust Securities Certificate shall become a Holder, and shall be entitled to
the rights and subject to the obligations of a Holder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's name
pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities
Certificates shall be issued in the form of one or more fully registered Global
Preferred Securities Certificates which will be deposited with or on behalf of
Cede as the Depositary's nominee and registered in the name of Cede as the
Depositary's nominee. Unless and until it is exchangeable in whole or in part
for the Preferred Securities in definitive form, a global security may not be
transferred except 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 or by the Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
Section 5.3. Execution and Delivery of Trust Securities Certificates.
On the Closing Date, and on the Option Closing Date if applicable, an
Administrator shall cause Trust Securities Certificates, in an aggregate
Liquidation Amount as provided in Sections 2.4 and 2.5, as the case may be, to
be executed on behalf of the Issuer Trust and delivered to the Property Trustee
and upon such delivery the Property Trustee shall authenticate such Trust
Securities Certificates and deliver such Trust Securities Certificates upon the
written order of the Trust, executed by an Administrator thereof, without
further corporate action by the Trust, in authorized denominations.
Section 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust
Agreement shall be registered in the name of the nominee of the Clearing Agency
and delivered to such custodian therefor, and such Global Preferred Security
shall constitute a single Preferred Security for all purposes of this Trust
Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a
Global Preferred Security may not be exchanged in whole or in part for
Preferred Securities registered, and no transfer of the Global Preferred
Security in whole or in part may be registered, in the name of any Person other
than the Clearing Agency for such Global Preferred Security, Cede, or other
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nominee thereof unless (i) such Clearing Agency advises the Depositor and the
Issuer Trustees in writing that such Clearing Agency is no longer willing or
able to properly discharge its responsibilities as Clearing Agency with respect
to such Global Preferred Security, and the Depositor is unable to locate a
qualified successor within 90 days of receipt of such notice from the
Depositary, (ii) the Depositor at its option advises the Depositary in writing
that it elects to terminate the book-entry system through the Clearing Agency,
or (iii) there shall have occurred and be continuing an Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in part
for a beneficial interest in a Global Preferred Security, then either (i) such
Global Preferred Security shall be so surrendered for exchange as provided in
this Article V or (ii) the Liquidation Amount thereof shall be reduced or
increased by an amount equal to the portion thereof to be so exchanged, or
equal to the Liquidation Amount of such other Preferred Security to be so
exchanged for a beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Security Registrar, whereupon
the Property Trustee, in accordance with the Applicable Procedures, shall
instruct the Clearing Agency or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Preferred Security by the Clearing Agency, accompanied by
registration instructions, the Property Trustee shall, subject to Section
5.4(b) and as otherwise provided in this Article V, authenticate and deliver
and an Administrator shall execute any Preferred Securities issuable in
exchange for such Global Preferred Security (or any portion thereof) in
accordance with the instructions of the Clearing Agency. The Property Trustee
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Preferred Security registered, executed, authenticated,
and delivered upon registration of transfer of, or in exchange for or in lieu
of, a Global Preferred Security or any portion thereof, whether pursuant to
this Article V or Article IV or otherwise, shall be executed, authenticated and
delivered in the form of, and shall be, a Global Preferred Security, unless
such Global Preferred Security is registered in the name of a Person other than
the Clearing Agency for such Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of
a Global Preferred Security, shall be considered the Holder of the Preferred
Securities represented by such Global Preferred Security for all purposes under
this Trust Agreement and the Preferred Securities, and owners of beneficial
interests in such Global Preferred Security shall hold such interests pursuant
to the Applicable Procedures and, except as otherwise provided herein, shall
not be entitled to receive physical delivery of any such Preferred Securities
in definitive form and shall not be considered the Holders thereof under this
Trust Agreement. Accordingly, any such Owner's beneficial interest in the
Global Preferred Security shall be shown only on, and the transfer of such
interest shall be effected only through, records maintained by the Clearing
Agency or its nominee. Neither the Property Trustee, the Securities Registrar
nor the Depositor shall have any liability in respect of any transfers effected
by the Clearing Agency.
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(f) The rights of Owners of beneficial interests in a Global
Preferred Security shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements between such Owners
and the Clearing Agency.
Section 5.5. Registration of Transfer and Exchange Generally; Certain
Transfers and Exchanges; Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its
Corporate Trust Office a register or registers for the purpose of registering
Trust Securities Certificates and transfers and exchanges of Preferred
Securities Certificates in which the registrar and transfer agent with respect
to the Preferred Securities (the "Securities Registrar"), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Preferred Securities Certificates and Common Securities Certificates
(subject to Section 5.11 in the case of Common Securities Certificates) and
registration of transfers and exchanges of Preferred Securities Certificates as
herein provided. Such register is herein sometimes referred to as the
"Securities Register." The Property Trustee is hereby appointed "Securities
Registrar" for the purpose of registering Preferred Securities and transfers of
Preferred Securities as herein provided.
Upon surrender for registration of transfer of any Preferred Security
at the offices or agencies of the Property Trustee designated for that purpose,
an Administrator shall execute and the Property Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Preferred Securities of the same series of any authorized denominations of
like tenor and aggregate Liquidation Amount and bearing such legends as may be
required by this Trust Agreement.
At the option of the Holder, Preferred Securities may be exchanged for
other Preferred Securities of any authorized denominations, of like tenor and
aggregate Liquidation Amount and bearing such legends as may be required by
this Trust Agreement, upon surrender of the Preferred Securities to be
exchanged at such office or agency. Whenever any Preferred Securities are so
surrendered for exchange, an Administrator shall execute and the Property
Trustee shall authenticate and deliver the Preferred Securities that the Holder
making the exchange is entitled to receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the Issuer Trust,
evidencing the same interest, and entitled to the same benefits under this
Trust Agreement, as the Preferred Securities surrendered upon such transfer or
exchange.
Every Preferred Security presented or surrendered for transfer or
exchange shall (if so required by the Property Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee and the Securities Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Preferred Securities, but the Property Trustee may require payment
of a sum sufficient to cover any tax or
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other governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities.
Neither the Issuer Trust nor the Property Trustee shall be required,
pursuant to the provisions of this Section, (i) to issue, register the transfer
of, or exchange any Preferred Security during a period beginning at the opening
of business 15 days before the day of selection for redemption of Preferred
Securities pursuant to Article IV and ending at the close of business on the
day of mailing of the notice of redemption, or (ii) to register the transfer of
or exchange any Preferred Security so selected for redemption in whole or in
part, except, in the case of any such Preferred Security to be redeemed in
part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust 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
Trust Security not made in accordance with this Trust Agreement shall be null
and void.
(i) Non-Global Security to Non-Global Security. A Trust
Security that is not a Global Preferred Security may be transferred,
in whole or in part, to a Person who takes delivery in the
form of another Trust Security that is not a Global Preferred Security
as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5,
Preferred Securities shall be freely transferable.
(iii) Exchanges Between Global Preferred Security and
Non-Global Preferred Security. A beneficial interest in a Global
Preferred Security may be exchanged for a Preferred Security that is
not a Global Preferred Security as provided in Section 5.4.
Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss, or theft of any Trust
Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrators such security or indemnity as may be required
by them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser
or a protected purchaser, the Administrators, or any one of them, on behalf of
the Issuer Trust shall execute and make available for delivery, and the
Property Trustee shall authenticate, in exchange for or in lieu of any such
mutilated, destroyed, lost, or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection
with the issuance of any new Trust Securities Certificate under this Section,
the Administrators or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Securities Certificate issued
pursuant to this Section shall constitute conclusive evidence of an undivided
beneficial interest in the assets of the Issuer Trust corresponding to that
evidenced by the lost, stolen or destroyed Trust
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Securities Certificate, as if originally issued, whether or not the lost, stolen
or destroyed Trust Securities Certificate shall be found at any time.
Section 5.7. Persons Deemed Holders.
The Issuer Trustees, the Administrators, the Securities Registrar, or
the Depositor shall treat the Person in whose name any Trust Securities are
registered in the Securities Register as the owner of such Trust Securities for
the purpose of receiving Distributions and for all other purposes whatsoever,
and none of the Issuer Trustees, the Administrators, the Securities Registrar
nor the Depositor shall be bound by any notice to the contrary.
Section 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor, the Property Trustee, or the Administrators accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates its
Corporate Trust Office for such purposes. The Property Trustee shall give
prompt written notice to the Depositor, the Administrators and the Holders of
any change in the location of the Securities Register or any such office or
agency.
Section 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrators. Any Paying Agent shall have the revocable
power to withdraw funds from the Payment Account solely for the purpose of
making the Distributions referred to above. The Property Trustee may revoke
such power and remove any Paying Agent in its sole discretion. The Paying
Agent shall initially be the Property Trustee. Any Person acting as Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Administrators and the Property Trustee. In the event that the Property
Trustee shall no longer be the Paying Agent or a successor Paying Agent shall
resign or its authority to act be revoked, the Property Trustee shall appoint a
successor (which shall be a bank or trust company) that is reasonably
acceptable to the Administrators to act as Paying Agent. Such successor Paying
Agent appointed by the Property Trustee, or any additional Paying Agent
appointed by the Administrators, shall execute and deliver to the Issuer
Trustees an instrument in which such successor Paying Agent or additional
Paying Agent shall agree with the Issuer Trustees that as Paying Agent, such
successor Paying Agent or additional Paying Agent will hold all sums, if any,
held by it for payment to the Holders in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such
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Holders. The Paying Agent shall return all unclaimed funds to the Property
Trustee and upon removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of Sections
8.1, 8.3 and 8.6 herein shall apply to the Bank also in its role as Paying
Agent, for so long as the Bank shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in
this Trust Agreement to the Paying Agent shall include any co-paying agent
chosen by the Property Trustee unless the context requires otherwise.
Section 5.11. Ownership of Common Securities by Depositor.
On the Closing Date, and on the Option Closing Date if applicable, the
Depositor shall acquire and retain beneficial and record ownership of the
Common Securities except (a) in connection with a consolidation or merger of
the Depositor into another corporation or any conveyance, transfer or lease by
the Depositor of its properties and assets substantially as an entirety to any
Person, pursuant to Section 8.1 of the Indenture, or (b) a transfer to an
Affiliate of the Depositor in compliance with applicable law (including the
Securities Act and applicable state securities and blue sky laws). To the
fullest extent permitted by law, any other attempted transfer of the Common
Securities shall be void. The Administrators shall cause each Common
Securities Certificate issued to the Depositor to contain a legend stating
"THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR IN INTEREST TO THE
DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW
AND SECTION 5.11 OF THE TRUST AGREEMENT."
Section 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Administrators
and the Property Trustee shall give all such notices and communications
specified herein to be given to the Clearing Agency, and shall have no
obligations to the Owners.
Section 5.13. Rights of Holders.
(a) The legal title to all Trust Property shall be vested at all
times in the Issuer Trust and shall be held and administered by the Property
Trustee (in its capacity as such) in accordance with Section 2.9, and the
Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division
of property, profits, or rights of the Issuer Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Holders against payment of the purchase price therefor will be
fully paid and nonassessable by the Issuer Trust. Subject to Section 4.8
hereof, the Holders of the Trust Securities, in their capacities as such, 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.
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(b) For so long as any Preferred Securities remain Outstanding,
if, upon a Debenture Event of Default, the Debenture Trustee fails, or the
holders of not less than 25% in principal amount of the outstanding Junior
Subordinated Debentures fail, to declare the principal of all of the Junior
Subordinated Debentures to be immediately due and payable, the Holders of at
least 25% in Liquidation Amount of the Preferred Securities then Outstanding
shall have such right to make such declaration by a notice in writing to the
Property Trustee, the Depositor and the Debenture Trustee.
At any time after such a declaration of acceleration with respect to
the Junior Subordinated Debentures has been made and before a judgment or
decree for payment of the money due has been obtained by the Debenture Trustee
as provided in the Indenture, the Holders of a Majority in Liquidation Amount
of the Preferred Securities, by written notice to the Property Trustee, the
Depositor, and the Debenture Trustee, may rescind and annul such declaration
and its consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay:
(A) all overdue installments of interest on all
of the Junior Subordinated Debentures,
(B) any accrued Additional Interest on all of the
Junior Subordinated Debentures,
(C) the principal of (and premium, if any, on)
any Junior Subordinated Debentures which have become due
otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne by
the Junior Subordinated Debentures, and
(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture Trustee
and the Property Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Junior
Subordinated Debentures, other than the non-payment of the principal
of the Junior Subordinated Debentures which has become due solely by
such acceleration, have been cured or waived as provided in Section
5.13 of the Indenture.
The Holders of at least a Majority in Liquidation Amount of the
Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under the Indenture, except a default in the
payment of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee)
or a default in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Junior Subordinated Debentures affected thereby. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
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Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of the
Preferred Securities all or part of which is represented by Global Preferred
Securities, a record date shall be established for determining Holders of
Outstanding Preferred Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Property Trustee receives
such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date; provided,
that, unless such declaration of acceleration, or rescission and annulment, as
the case may be, shall have become effective by virtue of the requisite
percentage having joined in such notice prior to the day which is 90 days after
such record date, such notice of declaration of acceleration, or rescission and
annulment, as the case may be, shall automatically and without further action
by any Holder be canceled and of no further effect. Nothing in this paragraph
shall prevent a Holder, or a proxy of a Holder, from giving, after expiration
of such 90-day period, a new written notice of declaration of acceleration, or
rescission and annulment thereof, as the case may be, that is identical to a
written notice which has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant to the
provisions of this Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding, to
the fullest extent permitted by law and subject to the terms of this Trust
Agreement and the Indenture, upon a Debenture Event of Default specified in
Section 5.1(a) or 5.1(b) of the Indenture, any Holder of Preferred Securities
shall have the right to institute a proceeding directly against the Depositor,
pursuant to Section 5.8 of the Indenture, for enforcement of payment to such
Holder of the principal amount of or interest on Junior Subordinated Debentures
having an aggregate principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities of such Holder (a "Direct Action"). Except as set
forth in Sections 5.13(b) and 5.13(c) of this Trust Agreement, the Holders of
Preferred Securities shall have no right to exercise directly any right or
remedy available to the holders of, or in respect of, the Junior Subordinated
Debentures.
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
Section 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Preferred Securities
shall have any right to vote or in any manner otherwise control the
administration, operation, and management of the Issuer Trust or the
obligations of the parties hereto, nor shall anything herein set forth or
contained in the terms of the Trust Securities Certificates be construed so as
to constitute the Holders from time to time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee on behalf of the Issuer Trust, the Property Trustee shall not
(i) direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee, or executing any
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trust or power conferred on the Debenture Trustee with respect to such Junior
Subordinated Debentures, (ii) waive any past default that may be waived under
Section 5.13 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable, or (iv) consent to any amendment, modification, or
termination of the Indenture or the Junior Subordinated Debentures, where such
consent shall be required, without, in each case, obtaining the prior approval
of the Holders of at least a Majority in Liquidation Amount of the Preferred
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 written consent of each Holder of Preferred Securities. The Property
Trustee shall not revoke any action previously authorized or approved by
a vote of the Holders of Preferred Securities, except by a subsequent vote of
the Holders of Preferred Securities. The Property Trustee shall notify all
Holders of the Preferred Securities of any notice of default received with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Property Trustees shall, at the expense of
the Depositor, obtain an Opinion of Counsel experienced in such matters to the
effect that such action will not cause the Issuer Trust to be taxable as a
corporation for United States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for,
or the Issuer Trust otherwise proposes to effect, (i) any action that would
adversely affect in any material respect the interests, powers, preferences, or
special rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution of the Issuer Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision of
this Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Issuer Trust to be taxable as a
corporation for United States federal income tax purposes.
Section 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place, and
purpose of the meeting, shall be given by the Property Trustee pursuant to
Section 10.8 to each Holder of record, at his registered address, at least 15
days and not more than 90 days before the meeting. At any such meeting, any
business properly before the meeting may be so considered whether or not stated
in the notice of the meeting. Any adjourned meeting may be held as adjourned
without further notice.
Section 6.3. Meetings of Holders.
(a) No annual meeting of Holders is required to be held. The
Property Trustee, however, shall call a meeting of Holders to vote on any
matter upon the written request of the Holders of record of 25% of the
aggregate Liquidation Amount of the Preferred Securities and
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the Administrators or the Property Trustee may, at any time in their discretion,
call a meeting of Holders of Preferred Securities to vote on any matters as to
which Holders are entitled to vote.
(b) Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, present in person or represented by proxy, shall
constitute a quorum at any meeting of Holders of Preferred Securities.
(c) If a quorum is present at a meeting, an affirmative vote by
the Holders of record present, in person or by proxy, holding Preferred
Securities representing at least a Majority in Liquidation Amount of the
Preferred Securities held by the Holders present, either in person or by proxy,
at such meeting shall constitute the action of the Holders of Preferred
Securities, unless this Trust Agreement requires a greater number of
affirmative votes.
Section 6.4. Voting Rights.
Holders shall be entitled to one vote for each $10 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.
Section 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may
vote by proxy, provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Property Trustee, or with such other
officer or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to
a resolution of the Property Trustee, proxies may be solicited in the name of
the Property Trustee or one or more officers of the Property Trustee. Only
Holders of record shall be entitled to vote. When Trust Securities are held
jointly by several persons, any one of them may vote at any meeting in person
or by proxy in respect of such Trust Securities, but if more than one of them
shall be present at such meeting in person or by proxy, and such joint owners
or their proxies so present disagree as to any vote to be cast, such vote shall
not be received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Holder shall be deemed valid unless challenged at
or prior to its exercise, and the burden of proving invalidity shall rest on
the challenger. No proxy shall be valid more than three years after its date
of execution.
Section 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Trust Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
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Section 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
Distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators (or the Property Trustee if the Administrators are
unable or unwilling to act) may from time to time fix a date, not more than 90
days prior to the date of any meeting of Holders or the payment of a
Distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.
Section 6.8. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Trust Agreement
to be given, made, or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as otherwise
expressly provided herein, such action shall become effective when such
instrument or instruments are delivered to the Property Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Trust Agreement and (subject to Section 8.1) conclusive in favor of the
Issuer Trustees, if made in the manner provided in this Section 6.8.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Issuer Trustee or Administrator receiving the
same deems sufficient.
(c) The ownership of Trust Securities shall be proved by the
Securities Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver, or other Act of the Holder of any Trust Security shall bind
every future Holder of the same Trust Security and the Holder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted, or suffered
to be done by the Issuer Trustees, the Administrators, or the Issuer Trust in
reliance thereon, whether or not notation of such action is made upon such
Trust Security.
(e) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do
so with regard to all or any part of
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the Liquidation Amount of such Trust Security or by one or more duly appointed
agents each of which may do so pursuant to such appointment with regard to all
or any part of such Liquidation Amount.
(f) If any dispute shall arise among the Holders, the
Administrators or the Issuer Trustees with respect to the authenticity,
validity or binding nature of any request, demand, authorization, direction,
consent, waiver or other Act of such Holder or Issuer Trustee under this
Article VI, then the determination of such matter by the Property Trustee shall
be conclusive with respect to such matter.
Section 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property Trustee,
the records of the Issuer Trust shall be open to inspection by Holders during
normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee.
The Property Trustee and the Delaware Trustee (and any successors
thereto at the time of their appointment), each severally on behalf of and as
to itself, hereby represents and warrants for the benefit of the Depositor and
the Holders that:
(a) The Property Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of New York, 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 Property
Trustee of this Trust Agreement has been duly authorized by all necessary
corporate action on the part of the Property Trustee; and 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 certificate of incorporation or by-laws of the Property Trustee.
(d) At the Time of Delivery, the Property Trustee has not
knowingly created any Liens or encumbrances on the Trust Securities.
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(e) 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.
(f) 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, the Trust Agreement.
(g) 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; and 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' right 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).
(h) The execution, delivery and performance of this Trust
Agreement by the Delaware Trustee does not conflict with or constitute a breach
of the certificate of incorporation or by-laws of the Delaware Trustee.
(i) No consent, approval or authorization of, or registration with
or notice to any state or Federal banking authority is required for the
execution, delivery, or performance by the Delaware Trustee, of this Trust
Agreement.
(j) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
Section 7.2. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued at the Time of
Delivery on behalf of the Issuer Trust have been duly authorized and will have
been duly and validly executed, and, subject to payment therefor, issued and
delivered by the Issuer Trustees pursuant to the terms and provisions of, and
in accordance with the requirements of, this Trust Agreement, and the Holders
will be, as of each such date, entitled to the benefits of this Trust
Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust)
under the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement.
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ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
Section 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require the Issuer
Trustees or the Administrators to expend or risk their own funds or otherwise
incur any financial liability in the performance of any of their duties
hereunder, or in the exercise of any of their rights or powers, if they shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it or
them. Whether or not therein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Issuer Trustees or the Administrators shall be
subject to the provisions of this Section. Nothing in this Trust Agreement
shall be construed to release an Administrator from liability for his or her
own grossly negligent action, his or her own grossly negligent failure to act,
or his or her own willful misconduct. To the extent that, at law or in equity,
an Issuer Trustee or Administrator has duties and liabilities relating to the
Issuer Trust or to the Holders, such Issuer Trustee or Administrator shall not
be liable to the Issuer Trust or to any Holder for such Issuer Trustee's or
Administrator's 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 the Issuer Trustees and Administrators otherwise
existing at law or in equity, are agreed by the Depositor and the Holders to
replace such other duties and liabilities of the Issuer Trustees and
Administrators.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the Property
Trustee or a Paying Agent to make payments in accordance with the terms hereof.
Each Holder, by his or its acceptance of a Trust Security, agrees that he or it
will look solely to the revenue and proceeds from the Trust Property to the
extent legally available for distribution to it or him as herein provided and
that neither the Issuer Trustees nor the Administrators are personally liable
to it or him for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 8.1(b)
does not limit the liability of the Issuer Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) 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 (including pursuant to Section 10.10), and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
If an Event of Default has occurred (that has not been cured or waived pursuant
to Section 5.13 of the Indenture), the Property Trustee shall enforce this
Trust Agreement for the benefit of the Holders and shall exercise such of the
rights and powers vested in it by this Trust Agreement,
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and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) 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 any 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 (including pursuant to Section 10.10),
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 (including pursuant to
Section 10.10); 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; but in the case of
any such certificates or opinions that by any provision hereof
or of the Trust Indenture Act 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 an authorized officer of the
Property Trustee, 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 at least a Majority in
Liquidation Amount of the Preferred 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) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Junior
Subordinated Debentures and the Payment 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;
(v) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation
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to the Payment Account maintained by the Property Trustee pursuant to
Section 3.1 and except to the extent otherwise required by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Depositor with
their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for the default or misconduct of any other
Issuer Trustee, the Administrators or the Depositor; and
(vii) 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 the
Property Trustee 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 adequate indemnity against
such risk or liability is not reasonably assured to it.
(e) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.
Section 8.2. Certain Notices.
(a) Within five Business Days after the occurrence of any Event of
Default actually known to a Responsible Officer of the Property Trustee, the
Property Trustee shall transmit, in the manner and to the extent provided in
Section 10.8, notice of such Event of Default to the Holders and the
Administrators, unless such Event of Default shall have been cured or waived.
(b) Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Junior Subordinated Debentures pursuant to the Indenture, the Property Trustee
shall transmit, in the manner and to the extent provided in Section 10.8,
notice of such exercise to the Holders and the Administrators, unless such
exercise shall have been revoked.
(c) In the event the Property Trustee receives notice of the
Depositor's exercise of its right to shorten the stated maturity of the Junior
Subordinated Debentures as provided in Section 3.16 of the Indenture, the
Property Trustee shall give notice of such shortening of the stated maturity to
the Holders at least 30 but not more than 60 days before the effective date
thereof.
Section 8.3 Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement,
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instrument, opinion, report, notice, request, consent, order, appraisal, bond,
debenture, note, other evidence of indebtedness 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 direction or act of the Depositor contemplated by this
Trust Agreement shall be sufficiently evidenced by an Officers' Certificate;
(c) 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
re-recording, refiling or re-registration thereof;
(d) the Property Trustee may consult with counsel of its own
choosing (which counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees) and the advice of such
counsel 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
reliance thereon and in accordance with such advice; 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;
(e) 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 of the Holders pursuant to this Trust Agreement, unless
such Holders shall have offered to the Property Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided that,
nothing contained in this Section 8.3(e) 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;
(f) 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, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other
paper or document, unless requested in writing to do so by one or more Holders,
but the Property Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(g) the Property Trustee may execute any of the trusts or powers
hereunder or perform any of its duties hereunder either directly or by or
through its agents or attorneys, provided that 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;
(h) 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 Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action), (ii) may refrain from
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enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions; and
(i) 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.
No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on any Issuer Trustee or Administrator 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 any Issuer Trustee
or Administrator shall be construed to be a duty.
Section 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees
and the Administrators do not assume any responsibility for their correctness.
The Issuer Trustees and the Administrators shall not be accountable for the use
or application by the Depositor of the proceeds of the Junior Subordinated
Debentures.
Section 8.5. May Hold Securities.
Except as provided in the definition of the term "Outstanding" in
Article I, the Administrators, any Issuer Trustee or any other agent of any
Issuer Trustee or the Issuer Trust, in its individual or any other capacity,
may become the owner or pledgee of Trust Securities and, subject to Sections
8.8 and 8.13, may otherwise deal with the Issuer Trust with the same rights it
would have if it were not an Administrator, Issuer Trustee or such other agent.
Section 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Issuer Trustees and the Administrators upon
request for all reasonable expenses, disbursements, and advances incurred or
made by the Issuer Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation, expenses and disbursements of
its agents and counsel), except any such expense, disbursement, or advance as
may be attributable to the Issuer Trustee's bad faith, negligence or willful
misconduct (or, in the case of the Administrators, any such expense,
disbursement, or advance as may be attributable to his or her gross negligence,
bad faith or willful misconduct); and
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(c) to the fullest extent permitted by applicable law, to
indemnify and hold harmless (i) each Issuer Trustee, (ii) each Administrator,
(iii) any Affiliate of any Issuer Trustee, (iv) any officer, director,
shareholder, employee, representative or agent of any Issuer Trustee, and (v)
any employee or agent of the Issuer Trust, (referred to herein as an
"Indemnified Person") from and against any loss, damage, liability, tax
(excluding income taxes, other than taxes referred to in Sections 4.5 and 4.6
hereunder), penalty, expense or claim of any kind or nature whatsoever incurred
by such Indemnified Person arising out of or in connection with the creation,
operation, or dissolution of the Issuer Trust or any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Issuer
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by this Trust
Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of bad faith, negligence or willful misconduct
with respect to such acts or omissions, except that, in the case of the
Administrators, such indemnification shall be so limited only by reason of
gross negligence, gad faith or willful misconduct).
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust Property
as a result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer 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
Issuer Trust, and the Issuer Trust and the Holders of Trust Securities 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 Issuer Trust, shall
not be deemed wrongful or improper. Neither the Depositor, any Administrator,
nor any Issuer Trustee shall be obligated to present any particular investment
or other opportunity to the Issuer Trust even if such opportunity is of a
character that, if presented to the Issuer Trust, could be taken by the Issuer
Trust, and the Depositor, any Administrator or any Issuer 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 Issuer Trustee may engage or be interested in any financial
or other transaction with the Depositor or any Affiliate of the Depositor, or
may act as depository for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the Depositor or its
Affiliates.
Section 8.7. Corporate Property Trustee Required; Eligibility of Trustees
and Administrators.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that
is a national or state chartered bank and eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Person shall be deemed to be
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its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Property Trustee with respect to the
Trust Securities shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII. At the time of appointment, the
Property Trustee must have securities rated in one of the three highest rating
categories by a nationally recognized statistical rating organization.
(b) There shall at all times be one or more Administrators
hereunder. Each Administrator 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 persons
authorized to bind that entity. An employee, officer, or Affiliate of the
Depositor may serve as an Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years of age
and a resident of the State of Delaware or (ii) a legal entity with its
principal place of business in the State of Delaware and that otherwise meets
the requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
Section 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Trust Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to
be specifically described in this Trust Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture
Act.
Section 8.9. Co-Trustees and Separate Trustee.
(a) 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 Property may at the time be located, the Property Trustee
shall have power to appoint, and upon the written request of the Property
Trustee, the Depositor and the Administrators shall for such purpose join with
the Property Trustee in the execution, delivery, and performance of all
instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Property Trustee either to act as co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to the extent
required by law 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 the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions
of this Section 8.9. Any co-trustee or separate trustee appointed pursuant to
this Section 8.9 shall either be (i) a natural person who is at least 21 years
of age and a resident of the United States or (ii) a legal entity with its
principal place of business in the United States that shall act through one or
more persons authorized to bind such entity.
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(b) Should any written instrument from the Depositor be required
by any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right, or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Depositor.
(c) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(i) The Trust Securities shall be executed by one or more
Administrators, and the Trust Securities shall be executed and delivered and
all rights, powers, duties, and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be
deposited or pledged with, the Property Trustees specified hereunder, shall be
exercised, solely by the Property Trustee and not by such co-trustee or
separate trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties, and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor, may
accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, in case a Debenture Event of Default has
occurred and is continuing, the Property Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee without the
concurrence of the Depositor. Upon the written request of the Property
Trustee, the Depositor shall join with the Property Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. A successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner provided
in this Section 8.9.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property Trustee or
any other trustee hereunder.
(v) The Property Trustee shall not be liable by reason of
any act of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and separate
trustee.
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Section 8.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article VIII shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.
(b) Subject to Section 8.10(a), a Relevant Trustee may resign at
any time by giving written notice thereof to the Holders. The Relevant Trustee
shall appoint a successor by requesting from at least three Persons meeting the
eligibility requirements its expenses and charges to serve as the successor
Issuer Trustee on a form provided by the Administrators, and selecting the
Person who agrees to the lowest expenses and charges, subject to the prior
consent of the Depositor which consent shall not be unreasonably withheld. If
the instrument of acceptance by the successor Issuer Trustee required by
Section 8.11 shall not have been delivered to the Relevant Trustee within 60
days after the giving of such notice of resignation, the Relevant Trustee may
petition, at the expense of the Issuer Trust, any court of competent
jurisdiction for the appointment of a successor Issuer Trustee.
(c) The Property Trustee or the Delaware Trustee may be removed at
any time by Act of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Issuer Trust) (i) for cause, or (ii) if a
Debenture Event of Default shall have occurred and be continuing at any time.
(d) If a resigning Relevant Trustee shall fail to appoint a
successor, or if a Relevant Trustee shall be removed or become incapable of
acting as Issuer Trustee, or if any vacancy shall occur in the office of any
Issuer Trustee for any cause, the Holders of the Preferred Securities, by Act
of the Holders of record of not less than 25% aggregate Liquidation Amount of
the Preferred Securities then Outstanding delivered to such Relevant Trustee,
shall promptly appoint a successor Issuer Trustee or Trustees, and such
successor Issuer Trustee shall comply with the applicable requirements of
Section 8.11. If no successor Issuer Trustee shall have been so appointed by
the Holders of the Preferred Securities and accepted appointment in the manner
required by Section 8.11, any Holder, on behalf of himself and all others
similarly situated, or any other Issuer Trustee, may petition any court in the
State of Delaware for the appointment of a successor Issuer Trustee.
(e) The Property Trustee shall give notice of each resignation and
each removal of a Relevant Trustee and each appointment of a successor Issuer
Trustee to all Holders in the manner provided in Section 10.8 and shall give
notice to the Depositor and to the Administrators. Each notice shall include
the name of the Relevant Trustee and the address of its Corporate Trust Office
if it is the Property Trustee.
(f) Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Delaware Trustee who is a natural person dies
or becomes, in the opinion of the Holders of the Common Securities, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by the Property Trustee following the
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procedures regarding expenses and charges set forth above (with the successor in
each case being a Person who satisfies the eligibility requirement for Delaware
Trustee set forth in Section 8.7).
Section 8.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Issuer
Trustee, the retiring Relevant Trustee and each such successor Issuer Trustee
with respect to the Trust Securities shall execute, acknowledge and deliver an
instrument wherein each successor Issuer Trustee shall accept such appointment
and which shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Issuer Trustee all the
rights, powers, trusts and duties of the retiring Relevant Trustee with respect
to the Trust Securities and the Issuer Trust, and upon the execution and
delivery of such instrument the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Issuer Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the Relevant
Trustee; but, on request of the Issuer Trust or any successor Issuer Trustee
such Relevant Trustee shall duly assign, transfer and deliver to such successor
Issuer Trustee all Trust Property, all proceeds thereof and money held by such
Relevant Trustee hereunder with respect to the Trust Securities and the Issuer
Trust.
(b) Upon request of any such successor Issuer Trustee, the Issuer
Trust shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Issuer Trustee all such rights,
powers and trusts referred to in the first or second preceding paragraph, as
the case may be.
(c) No successor Issuer Trustee shall accept its appointment
unless at the time of such acceptance such successor Issuer Trustee shall be
qualified and eligible under this Article VIII.
Section 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee 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 Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor
of such Relevant Trustee hereunder, provided that such Person shall be
otherwise qualified and eligible under this Article VIII, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
Section 8.13. Preferential Collection of Claims Against Depositor or Issuer
Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor (or any other obligor upon Junior Subordinated Debentures or the
Trust Securities), the Property Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the
Depositor or the Issuer Trust (or any such other obligor) as is required by the
Trust Indenture Act.
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Section 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition, or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable and irrespective of whether the
Property Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Property Trustee and, in the event the Property Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Property Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its agents and
counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 8.15. Reports by Property Trustee.
(a) Within 60 days of January 31 of each year commencing with
January 31, 1999, the Property Trustee shall transmit to all Holders in
accordance with Section 10.8, and to the Depositor, a brief report dated as of
the immediately preceding January 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu
thereof, if to the best of its knowledge it has continued to be
eligible under said Section, a written statement to such effect; and
(ii) any change in the property and funds in its
possession as Property Trustee since the date of its last report and
any action taken by the Property Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Trust Securities.
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(b) In addition, the Property Trustee shall transmit to Holders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto as set forth in Section 10.10 of
this Trust Agreement.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with the Depositor.
Section 8.16. Reports to the Property Trustee.
The Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee such documents, reports and information
as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act, as set forth in Section 10.10 of this Trust Agreement. The Depositor and
the Administrators shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all the terms and
covenants applicable to such Person hereunder.
Section 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrators on behalf of the Issuer
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Trust Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act as set forth in Section 10.10 of this Trust Agreement. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) of the
Trust Indenture Act shall be given in the form of an Officers' Certificate.
Section 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The Property
Trustee and the Delaware Trustee may be the same Person, in which event the
number of Issuer Trustees shall be one.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to dissolve, terminate or annul the Issuer Trust or terminate this
Trust Agreement.
Section 8.19. Delegation of Power.
(a) Any Administrator 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
2.7(a) or making any governmental filing.
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(b) The Administrators shall have power to delegate from time to
time to such of their number the doing of such things and the execution of such
instruments either in the name of the Issuer Trust or the names of the
Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement.
Section 8.20. Appointment of Administrators.
(a) The Administrators (other than the initial Administrators)
shall be appointed by the Holders of a Majority in Liquidation Amount of the
Common Securities and all Administrators (including the initial Administrators)
may be removed by the Holders of a Majority in Liquidation Amount of the Common
Securities or may resign at any time. Each Administrator shall sign an
agreement agreeing to comply with the terms of this Trust Agreement. If at any
time there is no Administrator, the Property Trustee or any Holder who has been
a Holder of Trust Securities for at least six months may petition any court of
competent jurisdiction for the appointment of one or more Administrators.
(b) Whenever a vacancy in the number of Administrators shall
occur, until such vacancy is filled by the appointment of an Administrator in
accordance with this Section 8.20, the Administrators in office, regardless
of their number (and notwithstanding any other provision of this Trust
Agreement), shall have all the powers granted to the Administrators and shall
discharge all the duties imposed upon the Administrators by this Trust
Agreement.
(c) Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrator or a Delaware Trustee who is a
natural person dies or becomes, in the opinion of the Holders of a Majority in
Liquidation Amount of the Common Securities, incompetent, or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
remaining Administrators, if there were at least two of them prior to such
vacancy and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or Delaware
Trustee, as the case may be, set forth in Section 8.7).
(d) Except as otherwise provided in this Trust Agreement or by
applicable law, any one Administrator may execute any document or otherwise
take any action which the Administrators are authorized to take under this
Trust Agreement.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
Section 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically
dissolve on ______ __, 20__ (the "Expiration Date").
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Section 9.2. Early Dissolution.
The first to occur of any of the following events is an "Early
Termination Event," upon the occurrence of which the Issuer Trust shall
dissolve:
(a) the occurrence of any Bankruptcy Event with respect to the
Depositor, unless the Depositor shall transfer the Common Securities as
provided by Section 5.11, in which case this provision shall refer instead to
any Bankruptcy Event with respect to the successor Holder of the Common
Securities;
(b) delivery of the written direction to the Property Trustee from
the Holder of the Common Securities at any time to dissolve the Issuer Trust
and, after satisfaction of liabilities to creditors of the Issuer Trust as
provided by applicable law, to distribute the Junior Subordinated Debentures to
Holders in exchange for the Preferred Securities (which direction, subject to
Section 9.4(a), is optional and wholly within the discretion of the Holder of
the Common Securities);
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all the Junior Subordinated Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.
Section 9.3. Termination.
The respective obligations and responsibilities of the Issuer
Trustees, the Administrators and the Issuer Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the
distribution by the Property Trustee to Holders of all amounts required to be
distributed hereunder upon the liquidation of the Issuer Trust pursuant to
Section 9.4, or upon the redemption of all of the Trust Securities pursuant to
Section 4.2, (b) the payment of any expenses owed by the Issuer Trust, (c) the
discharge of all administrative duties of the Administrators, including the
performance of any tax reporting obligations with respect to the Issuer Trust
or the Holders, and (d) the filing of a certificate of cancellation with the
Delaware Secretary of State pursuant to Section 3810 of the Delaware Business
Trust Act.
Section 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or
(d) of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall
be liquidated by the Property Trustee as expeditiously as the Property Trustee
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Junior Subordinated Debentures, subject to Section 9.4(d).
Notice of liquidation shall be given by the Property Trustee by first-class
mail, postage prepaid, mailed not later than 15 nor more than 45 days prior to
the Liquidation Date to each Holder of Trust
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<PAGE> 57
Securities at such Holder's address appearing in the Securities Register. All
notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any
Trust Securities Certificates not surrendered for exchange will be
deemed to represent a Like Amount of Junior Subordinated Debentures;
and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities Certificates
for Junior Subordinated Debentures, or if Section 9.4(d) applies
receive a Liquidation Distribution, as the Administrators or the
Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to
effect the liquidation of the Issuer Trust and distribution of the Junior
Subordinated Debentures to Holders, the Property Trustee shall establish a
record date for such distribution (which shall be not more than 30 days prior
to the Liquidation Date) and, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish such procedures
as it shall deem appropriate to effect the distribution of Junior Subordinated
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) the Clearing Agency for the Preferred Securities or its
nominee, as the registered Holder of the Global Preferred Securities
Certificate, shall receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by the Clearing Agency
or its nominee, and (iii) any Trust Securities Certificates not held by the
Clearing Agency for the Preferred Securities or its nominee as specified in
clause (ii) above will be deemed to represent Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the Trust
Securities represented thereby 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 Securities Registrar
for transfer or reissuance.
(d) If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Junior Subordinated Debentures is
not practical, or if any Early Termination Event specified in clause (c) of
Section 9.2 occurs, the Trust Property shall be liquidated, and the Issuer Trust
shall be liquidated by the Property Trustee in such manner as the Property
Trustee determines. In such event, on the date of the dissolution of the Issuer
Trust, Holders will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, an amount equal to
the aggregate of the Liquidation Amount per Trust Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution").
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If, upon any such dissolution, the Liquidation Distribution can be paid only in
part because the Issuer Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Issuer Trust on the Trust Securities shall
be paid on a pro rata basis (based upon Liquidation Amounts). The Holders of
the Common Securities will be entitled to receive Liquidation Distributions upon
any such liquidation pro rata (determined as aforesaid) with Holders of
Preferred Securities, except that, if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities as provided in Section 4.3.
(e) Following the dissolution of the Issuer Trust and after the
completion of the winding up of the affairs of the Issuer Trust, one of the
Issuer Trustees shall file a certificate of cancellation with the Delaware
Secretary of State.
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of the
Issuer Trust.
The Issuer 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 entity, except pursuant to this Section
9.5 and Section 9.4. At the request of the Holders of the Common Securities,
and with the consent of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities but without the consent of the Delaware
Trustee or the Property Trustee, the Issuer Trust may merge with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any state; provided, however, that (a) such successor entity
either (i) expressly assumes all of the obligations of the Issuer Trust with
respect to the Preferred Securities or (ii) substitutes for the Preferred
Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Preferred Securities") so long as the
Successor Preferred Securities have the same priority as the Preferred
Securities with respect to distributions and payments upon liquidation,
redemption and otherwise, (b) a trustee of such successor entity possessing the
same powers and duties as the Property Trustee is appointed to hold the Junior
Subordinated Debentures, (c) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Preferred Securities) to be downgraded by
any nationally recognized statistical rating organization if the Preferred
Securities were rated by any nationally recognized statistical rating
organization immediately prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, (d) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Preferred Securities) in any material
respect, (e) such successor entity has a purpose substantially identical to
that of the Issuer Trust, (f) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Issuer Trustee
has received an Opinion of Counsel from independent counsel experienced in such
matters to the effect that (i) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights
preferences and privileges of the holders of the Preferred Securities
(including any Successor Preferred Securities) in any material respect, and
(ii) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Issuer Trust nor such successor
entity will be required to register as an "investment company" under the
Investment
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<PAGE> 59
Company Act, and (g) the Depositor or any permitted transferee to whom it has
transferred the Common Securities hereunder owns all of the common securities of
such successor entity and guarantees the obligations of such successor entity
under the Successor Preferred Securities at least to the extent provided by the
Guarantee Agreement. Notwithstanding the foregoing, the Issuer Trust shall not,
except with the consent of Holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Issuer Trust or the successor entity to be taxable as a corporation for United
States federal income tax purposes. Any merger or similar agreement shall be
executed by the Administrators on behalf of the Issuer Trust.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the bankruptcy, dissolution,
termination, death or incapacity of any Person having an interest, beneficial
or otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement or dissolve, terminate or annul the Issuer Trust, nor entitle the
legal representatives or heirs of such Person or any Holder for such Person, to
claim an accounting, take any action or bring any proceeding in any court for a
partition or winding-up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.
Section 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrators or the Holders of a Majority in
Liquidation Amount of the Common Securities, without the consent of any Holder
of the Preferred Securities, (i) to cure any ambiguity, correct or supplement
any provision herein which may be inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Trust Agreement; provided, however, that such amendment shall not
adversely affect in any material respect the interests of any Holder or (ii) to
modify, eliminate, or add to any provisions of this Trust Agreement to such
extent as shall be necessary to ensure that the Issuer Trust will not be
taxable as a corporation for United States federal income tax purposes at any
time that any Trust Securities are Outstanding or to ensure that the Issuer
Trust will not be required to register as an "investment company" under the
Investment Company Act.
(b) Except as provided in Section 6.1(c) or Section 10.2(c), any
provision of this Trust Agreement may be amended by the Property Trustee, the
Administrators, and the Holders of a Majority in Liquidation Amount of the
Common Securities with (i) the consent of Holders of at least a Majority in
Liquidation Amount of the Preferred Securities and (ii) receipt by the Issuer
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of
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<PAGE> 60
any power granted to the Issuer Trustees in accordance with such amendment will
not cause the Issuer Trust to be taxable as a corporation for United States
federal income tax purposes or affect the Issuer Trust's exemption from status
of an "investment company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this 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 to institute suit
for the enforcement of any such payment on or after such date. Notwithstanding
any other provision herein, without the unanimous consent of the Holders (such
consent being obtained in accordance with Section 6.3 or 6.6), this Section
10.2(c) may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement,
no Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Issuer Trust to fail or cease to qualify for
the exemption from status as an "investment company" under the Investment
Company Act or be taxable as a corporation for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Administrators, this
Trust Agreement may not be amended in a manner which imposes any additional
obligation on the Depositor or the Administrators.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrators or the Property Trustee shall promptly provide to the
Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
(h) Any amendments to this Trust Agreement shall become effective
when notice of such amendment is given to the Holders of the Trust Securities.
Section 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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Section 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES, AND THE
ADMINISTRATORS WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.2(d)), except that, if such Business Day is in
the next succeeding calendar year, payment on any Trust Security shall be made
on the immediately preceding Business Day, in each case, with the same force
and effect as though made on the date fixed for such payment, and no
Distributions shall accumulate on such unpaid amount for the period after such
date.
Section 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust, the
Administrators, and any Issuer Trustee, including any successor by operation of
law. Except in connection with a consolidation, merger or sale involving the
Depositor that is permitted under Article VIII of the Indenture and pursuant to
which the assignee agrees in writing to perform the Depositor's obligations
hereunder, the Depositor shall not assign its obligations hereunder.
Section 10.7. Headings.
The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.
Section 10.8. Reports, Notices and Demands.
(a) Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon any Holder or the Depositor may be given or served in writing
by deposit thereof, first class postage prepaid, in the United States mail,
hand delivery or facsimile transmission, in each case, addressed, (i) in the
case of a Holder of Preferred Securities, to such Holder as such Holder's name
and address may appear on the Securities Register; and (ii) in the case of the
Holder of Common Securities or the Depositor, to American Bancshares, Inc.,
4702 Cortez Road West, Bradenton, Florida, 34210 Attention: Office of the
Secretary, facsimile no.: (941) 795-6933 or to such other address as may be
specified in a written notice by the Depositor to the Property Trustee. Such
notice, demand or other communication to or upon a Holder shall be deemed to
have been sufficiently given or made, for all purposes, upon hand delivery,
mailing or transmission. Such notice,
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<PAGE> 62
demand or other communication to or upon the Depositor shall be deemed to have
been sufficiently given or made only upon actual receipt of the writing by the
Depositor.
(b) Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon the Property Trustee, the Delaware Trustee, the
Administrators, or the Issuer Trust shall be given in writing addressed (until
another address is published by the Issuer Trust) as follows: (i) with respect
to the Property Trustee to Bankers Trust Company, Four Albany Street, 4th Floor,
New York, NY 10006, Attention: Corporate Trust and Agency Group Corporate Market
Services; (ii) with respect to the Delaware Trustee to Bankers Trust (Delaware),
Montgomery Building, 1011 Centre Road, Suite 200, Wilmington, Delaware
19801-1266, Attention: Lisa Wilkins, (iii) with respect to the Administrators,
to them at the address above for notices to the Depositor, marked "Attention:
Office of the Secretary," and (iv) with respect to the Issuer Trust, to the
Administrators and the Property Trustee at their respective addresses listed
above. Such notice, demand or other communication to or upon the Issuer Trust
or the Property Trustee shall be deemed to have been sufficiently given or made
only upon actual receipt of the writing by the Issuer Trust, the Property
Trustee, or such Administrator.
Section 10.9. Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the Depositor
agree for the benefit of the Holders that, until at least one year and one day
after the Issuer Trust has been terminated in accordance with Article IX, they
shall not file, or join in the filing of, a petition against the Issuer Trust
under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Issuer Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Holders, that at the expense of the Depositor, it
shall file an answer with the bankruptcy court or otherwise properly contest
the filing of such petition by the Depositor against the Issuer Trust or the
commencement of such action and raise the defense that the Depositor has agreed
in writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as counsel for the Issuer Trustee or
the Issuer Trust may assert. If any Issuer Trustee or Administrator takes
action in violation of this Section 10.9, the Depositor agrees, for the benefit
of the Holders, that at the expense of the Depositor, it shall file an answer
with the bankruptcy court or otherwise properly contest the filing of such
petition by such Person against the Depositor or the commencement of such
action and raise the defense that such Person has agreed in writing not to take
such action and should be estopped and precluded therefrom and such other
defenses, if any, as counsel for the Depositor or the Issuer Trust may assert.
The provisions of this Section 10.9 shall survive the termination of this Trust
Agreement.
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement is
subject to the provisions of the Trust Indenture Act that are required to be a
part of this Trust Agreement and shall, to the extent applicable, be governed
by such provisions; (ii) if and to the extent that any
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<PAGE> 63
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; (iii) for purposes of this Trust Agreement, the
Property Trustee, to the extent permitted by applicable law and/or the rules and
regulations of the Commission, shall be the only Issuer Trustee which is a
trustee for the purposes of the Trust Indenture Act; and (iv) the application of
the Trust Indenture Act to this Trust Agreement shall not affect the nature of
the Preferred Securities and the Common Securities as equity securities
representing undivided beneficial interests in the assets of the Issuer Trust.
(b) Lists of Holders of Preferred Securities. (i) Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide
the Property Trustee with such information as is required under Section 312(a)
of the Trust Indenture Act at the times and in the manner provided in Section
312(a) and (ii) the Property Trustee shall comply with its obligations under
Sections 310(b), 311 and 312(b) of the Trust Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after January
31 of each year, the Property Trustee shall provide to the Holders of the Trust
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form, in the manner and at the times 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.
(d) Periodic Reports to Property Trustee. Each of the Depositor
and the Administrators on behalf of the Issuer Trust shall provide to the
Property Trustee, the Commission and the Holders of the Trust Securities, as
applicable, such documents, reports and information as required by Section
314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by Section 314(a)(4) and (c) of the Trust Indenture Act
(provided that any certificate to be provided pursuant to Section 314(a)(4) of
the Trust Indenture Act shall be provided within 120 days of the end of each
fiscal year of the Issuer Trust).
(e) Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement which 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 pursuant to Section 314(c) shall comply with
Section 314(e) of the Trust Indenture Act.
(f) Disclosure of Information. The disclosure of information as
to the names and addresses of the Holders of Trust Securities in accordance
with Section 312 of the Trust Indenture Act, regardless of the source from
which such information was derived, shall not be deemed to be a violation of
any existing law or any law hereafter enacted which does not specifically refer
to Section 312 of the Trust Indenture Act, nor shall the Property Trustee be
held accountable by reason of mailing any material pursuant to a request made
under Section 312(b) of the Trust Indenture Act.
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Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE
AGREEMENT AND THE INDENTURE, AND THE AGREEMENT TO THE SUBORDINATION PROVISIONS
AND OTHER TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT
THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE
AND EFFECTIVE AS BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
58
<PAGE> 65
IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Trust Agreement to be duly executed as of the day and year first above written.
AMERICAN BANCSHARES, INC.
as Depositor
By:_______________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:_______________________________________
Name:
Title:
BANKERS TRUST (DELAWARE),
as Delaware Trustee and not
in its individual capacity
By:_______________________________________
Name:
Title:
Subscribed to and Accepted by,
as the Initial Administrators:
__________________________________
__________________________________
59
<PAGE> 66
EXHIBIT A
[INSERT CERTIFICATE OF TRUST FILED WITH DELAWARE SECRETARY OF STATE]
<PAGE> 67
EXHIBIT B
[INSERT FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
<PAGE> 68
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A
SUCCESSOR IN INTEREST TO THE DEPOSITOR OR AN AFFILIATE
OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW
AND SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__
Certificate Evidencing Common Securities
of
ABI Capital Trust
____% Common Securities
(liquidation amount $10 per Common Security)
ABI Capital Trust, a statutory business trust created under the laws
of the State of Delaware (the "Issuer Trust"), hereby certifies that American
Bancshares, Inc. (the "Holder") is the registered owner of _________ common
securities of the Issuer Trust representing undivided beneficial interests in
the assets of the Issuer Trust and designated the ABI Capital Trust ____%
Common Securities (liquidation amount $10 per Common Security) (the "Common
Securities"). Except in accordance with Section 5.11 of the Trust Agreement
(as defined below) the Common Securities are not transferable and any attempted
transfer hereof other than in accordance therewith shall be void. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities are set forth in, and this certificate and
the Common Securities represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Amended and Restated Trust
Agreement of the Issuer Trust, dated as of _____ __, 1998, as the same may be
amended from time to time (the "Trust Agreement") among American Bancshares,
Inc., as Depositor, Bankers Trust Company, as Property Trustee, Bankers Trust
(Delaware), as Delaware Trustee, and the Holders of Trust Securities, including
the designation of the terms of the Common Securities as set forth therein.
The Issuer Trust will furnish a copy of the Trust Agreement to the Holder
without charge upon written request to the Issuer 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.
Terms used but not defined herein have the meanings set forth in the
Trust Agreement.
<PAGE> 69
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this ___ day of ______________, 1998.
ABI CAPITAL TRUST
By: ___________________________________
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By: _________________________________
Name:
Signatory Officer
2
<PAGE> 70
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL PREFERRED
SECURITIES CERTIFICATE, INSERT - This Preferred Securities Certificate is a
Global Preferred Securities Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Preferred Securities Certificate is
exchangeable for Preferred Securities Certificates registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement and may not be transferred
except 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, except in the limited circumstances described in the Trust
Agreement.
Unless this Preferred Securities Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to ABI Capital Trust or its agent for registration of
transfer, exchange or payment, and any Preferred Securities Certificate issued
is registered in the name of such nominee as is requested by an authorized
representative of DTC (and any payment is made to such entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO A PERSON IS WRONGFUL inasmuch as the
registered owner hereof, has an interest herein.]
<PAGE> 71
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
ABI CAPITAL TRUST
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
ABI Capital Trust, a statutory business trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that ______________
(the "Holder") is the registered owner of ___________ ( ) preferred securities
of the Issuer Trust representing a preferred undivided beneficial interest in
the assets of the Issuer Trust and designated the ABI Capital Trust ____%
Preferred Securities (liquidation amount $10 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are transferable on the books
and records of the Issuer Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
as provided in Section 5.5 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Issuer Trust, dated as of _______ __, 1998, as the same
may be amended from time to time (the "Trust Agreement"), among American
Bancshares, Inc. as Depositor, Bankers Trust Company, as Property Trustee,
Bankers Trust (Delaware), as Delaware Trustee, and the Holders of Trust
Securities, including the designation of the terms of the Preferred Securities
as set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement entered into by American Bancshares, Inc., a Florida corporation, and
Bankers Trust Company, as guarantee trustee, dated as of _______ __, 1998 (the
"Guarantee Agreement"), to the extent provided therein. The Issuer Trust will
furnish a copy of the Trust Agreement and the Guarantee Agreement to the Holder
without charge upon written request to the Issuer 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.
<PAGE> 72
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this _______ day of ____________, 1998.
ABI CAPITAL TRUST
By:_____________________________________
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By:____________________________________
Name:
Authorized Signatory
<PAGE> 73
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Securities 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 Preferred Securities Certificate on the books of the
Issuer 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 Preferred Securities
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE> 1
EXHIBIT 4.6
DRAFT
MAY 28, 1998
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GUARANTEE AGREEMENT
Between
AMERICAN BANCSHARES, INC.
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Guarantee Trustee)
dated as of
_____ __, 1998
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<PAGE> 2
ABI CAPITAL TRUST
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Guarantee Agreement
Act Section Section
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Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8, 4.1(c)
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.5, 3.2
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.6, 5.4
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Guarantee Agreement.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C> <C> <C>
ARTICLE I. DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application . . . . . . . . . . . . . . . 5
Section 2.2. List of Holders . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3. Reports by the Guarantee Trustee . . . . . . . . . . . . . . . 6
Section 2.4. Periodic Reports to Guarantee
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.5. Evidence of Compliance with
Conditions Precedent . . . . . . . . . . . . . . . . . . . . 6
Section 2.6. Events of Default; Waiver . . . . . . . . . . . . . . . . . . . 6
Section 2.7. Event of Default; Notice . . . . . . . . . . . . . . . . . . . 6
Section 2.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE
Section 3.1. Powers and Duties of the Guarantee
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2. Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . 9
Section 3.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.4. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . 11
Section 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee . . . . . . . . . . . . . . . . . . 11
ARTICLE V. GUARANTEE
Section 5.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.2. Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . 12
Section 5.3. Obligations Not Affected . . . . . . . . . . . . . . . . . . . 12
Section 5.4. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.5. Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . 14
Section 5.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.7. Independent Obligations . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.2. Pari Passu Guarantees . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII. TERMINATION
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<TABLE>
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ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 15
Section 8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.5. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
ii
<PAGE> 5
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT, dated as of _______ __, 1998 (this
"Guarantee Agreement"), is executed and delivered by AMERICAN BANCSHARES, INC.,
a Florida corporation (the "Guarantor"), having its principal office at 4702
Cortez Road West, Bradenton, Florida, 34210 and BANKERS TRUST COMPANY, a New
York banking corporation, as trustee, for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of ABI Capital Trust, a Delaware statutory business trust (the "Issuer
Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of _______ __, 1998, among American Bancshares,
Inc., as Depositor, Bankers Trust Company, as Property Trustee (the "Property
Trustee"), Bankers Trust (Delaware), as Delaware Trustee (the "Delaware
Trustee") (collectively, the "Issuer Trustees") and the Holders from time to
time of preferred undivided beneficial ownership interests in the assets of the
Issuer Trust, the Issuer Trust is issuing $_________ aggregate Liquidation
Amount (as defined herein) of its ____% Preferred Securities, Liquidation
Amount $10 per preferred security (the "Preferred Securities"), representing
preferred undivided beneficial ownership interests in the assets of the Issuer
Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer Trust
and the proceeds thereof, together with the proceeds from the issuance of the
Issuer Trust's Common Securities (as defined herein), will be used to purchase
the Junior Subordinated Debentures due ______ __, 2028 (as defined in the Trust
Agreement) (the "Junior Subordinated Debentures") of the Guarantor which will
be deposited with Bankers Trust Company, as Property Trustee under the Trust
Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of Preferred
Securities by each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, and intending to be legally bound hereby, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders from time to time of the Preferred Securities.
<PAGE> 6
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Trust Agreement as in effect on the date hereof.
"Additional Amount" has the meaning specified in the Trust Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Delaware Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Distributions" means preferential cumulative cash distributions
accumulating from _______ __, 1998 and payable quarterly in arrears on March
31, June 30, September 30, and December 31 of each year, commencing _______ __,
1998 at the annual rate of ____% of the Liquidation Amount.
"Event of Default" means (a) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (b) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30
days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by or on behalf of the Issuer Trust: (a) any accrued and
unpaid Distributions (as defined in the Trust Agreement) required to be paid on
the Preferred Securities, to the extent the Issuer Trust shall have funds on
hand available therefor at such time, (b) the Redemption Price, with respect to
the Preferred Securities called for redemption by the Issuer Trust to the
extent that the Issuer Trust shall have funds on hand available therefor at
such time, and (c) upon a voluntary or involuntary termination, winding-up or
liquidation of the Issuer Trust, unless Junior Subordinated
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Debentures are distributed to the Holders, the lesser of (i) the aggregate of
the Liquidation Amount and all accumulated and unpaid Distributions to the date
of payment to the extent the Issuer Trust shall have funds on hand available to
make such payment at such time and (ii) the amount of assets of the Issuer Trust
remaining available for distribution to Holders in liquidation of the Issuer
Trust (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the preamble of this
Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of
the Issuer Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor, the Guarantee Trustee, or any
Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
_______ __, 1998, between American Bancshares, Inc. and Bankers Trust Company,
as trustee, as may be modified, amended or supplemented from time to time.
"Issuer Trust" shall have the meaning specified in the preamble of
this Guarantee Agreement.
"Issuer Trustees" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Junior Subordinated Debentures" shall have the meaning specified in
the first recital of this Guarantee Agreement.
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which will be used
to pay the Redemption Price of such Preferred Securities, (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Preferred
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities of the Holder to whom such Junior
Subordinated Debentures are distributed, and (c) with respect to any
distribution of an Additional Amount to Holders of Preferred Securities, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities in respect of which such distribution is
made.
"Liquidation Amount" means the stated amount of $10 per Preferred
Security.
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"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Preferred Securities
representing more than 50% of the aggregate Liquidation Amount of all then
outstanding Preferred Securities issued by the Issuer Trust.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Chief Executive Officer,
President or a Vice President, and by the Chief Financial Officer, Treasurer,
an Associate Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person, and delivered to the Guarantee Trustee. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer 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 such officer in rendering the
Officers' Certificate;
(c) a statement that 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 such
officer, such condition or covenant has been complied with.
"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.
"Preferred Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Property Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date (as
such term is defined in the Indenture) and the stated maturity of the Junior
Subordinated Debentures shall be a Redemption Date for a Like Amount of
Preferred Securities.
"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, principal, vice president, assistant vice president,
assistant treasurer, assistant secretary or any other officer of
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the Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Guarantee Agreement, and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" shall have the meaning specified in the Recitals to
this Guarantee Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, or any successor statute, in
each case as amended from time to time.
ARTICLE II
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required to be a part of and
govern this Guarantee Agreement, the provision of the Trust Indenture Act shall
control. If any provision of this Guarantee Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Guarantee Agreement as so
modified or excluded, as the case may be.
Section 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the
Guarantee Trustee:
(i) quarterly, not more than 15 days after March 15, June
15, September 15 and December 15 in each year, a list, in such form as
the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders as of such date; and
(ii) at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor
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.
(b) The Guarantee Trustee shall comply with the requirements of
Section 312(b) of the Trust Indenture Act.
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Section 2.3. Reports by the Guarantee Trustee.
Within 60 days of January 31 of each year commencing January 31, 1999,
the Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the
manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee and the Holders
such documents, reports and information, if any, as required by Section 314 of
the Trust Indenture Act 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.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee 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) may be given in the form of
an Officers' Certificate.
Section 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.
Section 2.7. Event of Default; Notice.
(a) The Guarantee 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 Events of Default known to the
Guarantee Trustee, unless such Events of Default have been cured before the
giving of such notice; provided that, except in the case of a default in the
payment of a Guarantee Payment, the Guarantee 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
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless (i) a Responsible Officer charged with the
administration of this Guarantee
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Agreement shall have received written notice of such Event of Default, or (ii) a
Responsible Officer of the Guarantee Trustee charged with administration of the
Trust Agreement shall have obtained actual knowledge thereof.
Section 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except to a Holder exercising
his or her rights pursuant to Section 5.4(d) or to a Successor Guarantee
Trustee on acceptance by such Successor Guarantee Trustee of its appointment to
act as Successor Guarantee Trustee hereunder. The right, title and interest of
the Guarantee Trustee, as such, hereunder shall automatically vest in any
Successor Guarantee Trustee, upon acceptance by such Successor Guarantee
Trustee of its appointment hereunder, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall be obligated to perform only such duties as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee Agreement, and use the
same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
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(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own bad faith or willful misconduct, except
that:
(i) prior to the occurrence of any 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 Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement (including pursuant to Section
2.1), and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement (including
pursuant to Section 2.1); and
(B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee 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 Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case
of any such certificates or opinions that by any provision
hereof or of the Trust Indenture Act are specifically required
to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Guarantee 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 Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement;
and
(iv) no provision of this Guarantee Agreement shall
require the Guarantee 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 the
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
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Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee 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 reasonably
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 Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein;
(iii) whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee 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 from the Guarantee Trustee, shall
be promptly delivered by the Guarantor;
(iv) the Guarantee Trustee may consult with legal counsel,
and the written advice or opinion of such legal counsel with respect
to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice
or opinion. Such legal counsel may be legal counsel to the Guarantor
or any of its Affiliates and may be one of its employees. The
Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(v) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such security and
indemnity as would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including attorneys'
fees and expenses) 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 Guarantee Trustee; provided,
however, that nothing herein shall relieve the Guarantee Trustee of
its obligations upon the occurrence of an Event of Default that has
not been cured or waived to exercise the rights and powers vested in
the Guarantee Trustee by this Guarantee, and to use the same degree of
care and skill in exercising such rights and powers as a reasonably
prudent person would use under the circumstances in the conduct of his
own affairs.
(vi) the Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion,
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<PAGE> 14
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document,
but the Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
(vii) the Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through its agents or attorneys, and the Guarantee Trustee shall
not be responsible for any negligence or willful misconduct on the
part of any such agent or attorney appointed with due care by it
hereunder. Nothing herein shall be construed as limiting or
restricting the right of the Guarantor to bring any action directly
against any agent or attorney appointed by the Guarantee Trustee for
any negligence or willful misconduct on the part of such agent or
attorney; and
(viii) whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received and (C) shall be fully protected in acting in accordance
with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee 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 Guarantee
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 Guarantee
Trustee shall be construed to be a duty to act in accordance with such power
and authority.
Section 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee, its
directors, officers, employees and agents for, and to hold them harmless
against, any loss, liability or expense incurred without negligence, willful
misconduct or bad faith on the part of the Guarantee Trustee, its directors,
officers, employees and agents, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the
reasonable costs and expenses of defending against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
Section 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee
for its reasonable expenses and costs (including reasonable attorneys' or
agents' fees) incurred in connection with the performance of its duties
hereunder.
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<PAGE> 15
ARTICLE IV
GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, 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 Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) No resignation or removal of the Guarantee Trustee and no
appointment of a Successor Guarantee Trustee pursuant to this Article IV shall
become effective until the acceptance of appointment by the Successor Guarantee
Trustee by written instrument executed by the Successor Guarantee Trustee and
delivered to the Holders and the Guarantee Trustee.
(b) Subject to Section 4.2(a), a Guarantee Trustee may resign at
any time by giving written notice thereof to the Holders. The Guarantee
Trustee shall appoint a successor by requesting from at least three Persons
meeting the eligibility requirements such Person's expenses and charges to
serve as the Guarantee Trustee, and selecting the Person who agrees to the
lowest expenses and charges. If the instrument of acceptance by the Successor
Guarantee Trustee shall not have been delivered to the Guarantee Trustee within
60 days after the giving of such notice of resignation, the Guarantee Trustee
may petition, at the expense of the Guarantor, any court of competent
jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any time by
Act (within the meaning of Section 6.8 of the Trust Agreement) of the Holders
of at least a Majority in Liquidation Amount of the Preferred Securities,
delivered to the Guarantee Trustee.
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<PAGE> 16
(d) If a resigning Guarantee Trustee shall fail to appoint a
successor, or if a Guarantee Trustee shall be removed or become incapable of
acting as Guarantee Trustee, or if any vacancy shall occur in the office of any
Guarantee Trustee for any cause, the Holders of the Preferred Securities, by
Act of the Holders of record of not less than 25% in aggregate Liquidation
Amount of the Preferred Securities then outstanding delivered to such Guarantee
Trustee, shall promptly appoint a successor Guarantee Trustee. If no Successor
Guarantee Trustee shall have been so appointed by the Holders of the Preferred
Securities and such appointment accepted by the Successor Guarantee Trustee,
any Holder, on behalf of himself and all others similarly situated, may
petition any court of competent jurisdiction for the appointment of a Successor
Guarantee Trustee.
ARTICLE V
GUARANTEE
Section 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on
a subordinated basis as set forth in Section 6.1 hereof to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer Trust may have or assert, except
the defense of payment. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer Trust to pay such amounts to the Holders.
The Guarantor shall give prompt written notice to the Guarantee Trustee in the
event it makes any direct payment hereunder.
Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.
Section 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Issuer Trust;
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<PAGE> 17
(b) the extension of time for the payment by the Issuer Trust of
all or any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Junior Subordinated Debentures as so provided in the
Indenture), Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the extension of time
for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer Trust granting indulgence
or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation), it being the intent of this Section 5.3
that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of
the foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (a) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (c) the Holders of a Majority in
Liquidation Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (d) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other Person.
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Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Issuer Trust) or upon the distribution of Junior Subordinated
Debentures to Holders as provided in the Trust Agreement.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer Trust in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
Section 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
Section 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
Senior Indebtedness of the Guarantor to the extent and in the manner set forth
in the Indenture with respect to the Junior Subordinated Debentures, and the
provisions of Article XIII of the Indenture will apply, mutatis mutandis, to
the obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with any similar guarantee agreements issued by the Guarantor
on behalf of the holders of preferred or capital securities issued by the
Issuer Trust and with any other security, guarantee or
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<PAGE> 19
other obligation that is expressly stated to rank pari passu with the
obligations of the Guarantor under this Guarantee Agreement.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force
and effect upon (a) full payment of the Redemption Price of all Preferred
Securities, (b) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Preferred Securities or (c) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect
to the Preferred Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
Section 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
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<PAGE> 20
(a) if given to the Guarantor, to the address or telecopy number
set forth below or such other address or telecopy number or to the attention of
such other Person as the Guarantor may give notice to the Holders:
American Bancshares, Inc.
4702 Cortez Road West
Bradenton, Florida 34210
Facsimile No.: (941) 798-3712
Attention: Office of the Secretary
(b) if given to the Issuer Trust, in care of the Guarantee
Trustee, at the Issuer Trust's (and the Guarantee Trustee's) address set forth
below or such other address or telecopy number or to the attention of such
other Person as the Guarantee Trustee on behalf of the Issuer Trust may give
notice to the Holders:
ABI Capital Trust
American Bancshares, Inc.
4702 Cortez Road West
Bradenton, Florida 34210
Facsimile No.: (941) 798-3712
Attention: Office of the Secretary
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on the books
and records of the Issuer Trust.
All notices hereunder 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
16
<PAGE> 21
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 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
Section 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
Section 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
Section 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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<PAGE> 22
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
18
<PAGE> 23
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
AMERICAN BANCSHARES, INC.
as Guarantor
By:_____________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Guarantee Trustee
and not in its individual capacity
By:_____________________________________
Name:
Title:
19
<PAGE> 1
EXHIBIT 5.1
[CARLTON FIELDS LETTERHEAD]
June 4, 1998
American Bancshares, Inc.
4502 Cortez Road West
Bradenton, FL 34210
Attention: Board of Directors
ABI Capital Trust
c/o American Bancshares, Inc.
4502 Cortez Road West
Bradenton, FL 34210
Attention: Administrators
RE: ABI CAPITAL TRUST
$17,250,000 LIQUIDATION AMOUNT
OF PREFERRED SECURITIES
Ladies and Gentlemen:
We have acted as counsel to American Bancshares, Inc., a Florida
corporation (the "Company"), in connection with the preparation and filing by
the Company and ABI Capital Trust, a Delaware statutory business trust (the
"Trust"), of a registration statement on Form S-1 (the "Registration
Statement"), with the United States Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), with respect to the offer and
sale of certain of the Trust's Preferred Securities (liquidation amount $10 per
Preferred Security) (the "Preferred Securities") and certain of the Company's
Junior Subordinated Debentures (the "Debentures") and the related Guarantee
Agreement (the "Guarantee") by and between the Company and the Bankers Trust
Company, as trustee (the "Trustee"). In connection therewith, you have requested
our opinion as to certain matters referred to below.
In our capacity as such counsel, we have familiarized ourselves with
the actions taken by the Company in connection with the registration of the
Debentures and the Guarantee. We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such records, agreements,
certificates or comparable documents of public officials and others, and such
other documents as we have deemed relevant and necessary as a basis for the
opinions hereinafter expressed, including, without limitation, (i) the Articles
of Incorporation and Bylaws of the Company, (ii) the form of Preferred
Securities, (iii) the form of Debenture and Guarantee, (iv) the form of the
Junior Subordinated Debenture Indenture (the "Indenture") between the Company
and the Trustee, as trustee, and (v) the Registration Statement.
<PAGE> 2
American Bancshares, Inc.
ABI Capital Trust
June 4, 1998
Page 2
In our examination, we have assumed legal capacity of all natural
persons, the genuineness of all signatures on original documents, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all copies submitted to us as conformed or photostatic
copies, the authenticity of the originals of such latter documents, and the
accuracy and completeness of all corporate records made available to us by the
Company and the Trust. We also have assumed the authority of such persons
signing on behalf of parties thereto other than the Company or the Trust, and
the due authorization, execution, and delivery of all documents by the parties
thereto other than the Company or the Trust.
Based upon and subject to the foregoing, we are of the opinion that the
Debentures and the Guarantee have been duly authorized, and when executed and
delivered (with respect to the Guarantee), or issued (with respect to the
Debentures), subject to (i) the effectiveness of the Registration Statement by
order of the Securities and Exchange Commission, (ii) compliance with the terms
of the Indenture, and (iii) compliance with applicable state securities laws,
the Debentures and the Guarantee will be validly issued and binding obligations
of the Company, except as may be limited by bankruptcy, insolvency, moratorium,
reorganization, or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of bank holding
companies, the accounts of whose subsidiaries are insured by the Federal Deposit
Insurance Corporation, or by general equity principles, regardless of whether
such obligation is considered in a proceeding in equity or at law.
The opinion set forth above is subject to the exception that we express
no opinion as to the present or future value of any Debentures or the Guarantee
issued or delivered as described above or in the Registration Statement.
We are attorneys admitted to practice in the State of Florida and,
accordingly, we express no opinion with respect to matters governed by the laws
of any jurisdiction other than the federal laws of the United States or the
internal laws of the State of Florida and we assume no responsibility as to the
applicability of the laws of any other jurisdiction to the subject matter hereof
or to the effects of such laws thereon.
This opinion is rendered to you and for your benefit solely in
connection with the registration of the Debentures and the execution and
delivery of the Guarantee. This opinion may not be relied upon by you for any
other purpose and may not be relied upon by, nor may copies thereof be provided
to, any other person, firm, corporation or entity for any purposes whatsoever
without our prior written consent. We hereby consent to be named in the
Registration Statement and in the Prospectus as the attorneys who passed upon
the legality of the Debentures and the Guarantee, and to the filing of a copy
of this opinion as an exhibit to the Registration Statement. Unless the prior
<PAGE> 3
American Bancshares, Inc.
ABI Capital Trust
June 4, 1998
Page 3
written consent of our firm is obtained, this opinion is not to be quoted or
otherwise referred to in any written report, proxy statement or other
registration statement, nor is it to be filed with or furnished to any other
governmental agency or other person, except as otherwise required by law.
Very truly yours,
CARLTON, FIELDS, WARD, EMMANUEL,
SMITH & CUTLER, P.A.
By: /s/ Richard A. Denmon
-------------------------------
Richard A. Denmon
<PAGE> 1
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger]
June 4, 1998
ABI Capital Trust
c/o American Bancshares, Inc.
4702 Cortez Road West
Bradenton, Florida 34210
Re: ABI Capital Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel for American Bancshares,
Inc., a Florida corporation (the "Company"), and ABI Capital Trust, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of May 20,
1998 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on May 21, 1998;
(b) The Trust Agreement of the Trust, dated as of May 20, 1998,
among the Company, as depositor, and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on
Form S-1, including a preliminary prospectus (the "Prospectus"), relating to
the __% Preferred Securities of the Trust representing preferred undivided
beneficial interests in the assets of the Trust (each, a "Preferred Security"
and collectively, the "Preferred Securities"), as proposed to be filed by the
Company and the Trust with the Securities and Exchange Commission on or about
June 4, 1998;
(d) A form of Amended and Restated Trust Agreement of the Trust,
to be entered into among the Company, as depositor, the trustees of the Trust
named therein, the Administrators named therein and the holders, from time to
time, of undivided beneficial
<PAGE> 2
ABI Capital Trust
June 4, 1998
Page 2
interests in the assets of the Trust (including Exhibits A, C and D thereto)
(the "Trust Agreement"), attached as an exhibit to the Registration Statement;
and
(e) A Certificate of Good Standing for the Trust, dated June 4,
1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in
paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent
with the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Preferred Security is to be issued by the
Trust (collectively, the "Preferred Security Holders") of a Preferred
Securities Certificate for such Preferred Security and the payment for the
Preferred Security acquired by it, in accordance with the Trust Agreement and
the Registration Statement, and (vii) that the Preferred Securities are issued
and sold to the Preferred Security Holders in accordance with the Trust
Agreement and the Registration Statement. We have not participated in the
preparation of the Registration Statement and assume no responsibility for its
contents.
<PAGE> 3
ABI Capital Trust
June 4, 1998
Page 3
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our
opinions are rendered only with respect to Delaware laws and rules, regulations
and orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Validity of
Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Except as stated above, without our prior written consent, this opinion may not
be furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ RICHARDS, LAYTON & FINGER, P.A.
BJK/BJ
<PAGE> 1
EXHIBIT 8.1
[CARLTON FIELDS LETTERHEAD]
June 4, 1998
American Bancshares, Inc.
4502 Cortez Road West
Bradenton, FL 34210
ABI Capital Trust
c/o American Bancshares, Inc.
4502 Cortez Road West
Bradenton, FL 34210
Ladies and Gentlemen:
We have acted as counsel to American Bancshares, Inc., a Florida
corporation (the "Company"), and to ABI Capital Trust, a Delaware statutory
business trust (the "Trust"), in connection with the registration statement of
the Company and the Trust on Form S-1 (the "Registration Statement"), of which a
prospectus ("Prospectus") is a part, filed by the Company and the Trust with the
United States Securities and Exchange Commission under the Securities Act of
1933, as amended. This opinion is furnished pursuant to the requirements of Item
601(b)(8) of Regulation S-K.
For the purposes of rendering this opinion, we have reviewed and relied
upon the Registration Statement and such other documents and instruments as we
deemed necessary for the rendering of this opinion. In our examination of
relevant documents, we have assumed the legal capacity of all natural persons,
genuineness of all signatures on original documents, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as copies, the authenticity of such copies, and
the accuracy and completeness of all corporate records made available to us by
the Company and the Trust. We also have assumed the authority of such persons
signing on behalf of the parties thereto other than the Company or the Trust,
and the due authorization, execution, and delivery of all documents by parties
thereto other than the Company or the Trust.
Based solely on (a) the foregoing and (b) our review of such documents
and upon such information as the Company has provided to us (which we have not
attempted to verify in any respect), and in reliance upon such documents and
information, subject to the qualifications hereinafter expressed, we are of the
opinion that the statements contained in the Prospectus under the caption
"Certain Federal Income Tax Consequences" describing certain federal income tax
consequences to holders of the Preferred Securities, as qualified therein,
constitute an accurate description in general terms of the indicated United
States federal tax consequences to such holders.
Our opinion is limited to the federal income tax matters described
above and does not address any other federal income tax considerations or any
state, local, foreign, or other tax considerations. If any of the information on
which we have relied is incorrect, or if changes in the relevant facts
<PAGE> 2
American Bancshares, Inc.
June 4, 1998
Page 2
occur after the date hereof, our opinion could be affected thereby. Moreover,
our opinion is based on the Internal Revenue Code of 1986, as amended,
applicable Treasury regulations promulgated thereunder, and Internal Revenue
Service rulings, procedures, and other pronouncements published by the United
States Internal Revenue Service. These authorities are all subject to change,
and such change may be made with retroactive effect. We can give no assurance
that, after such change, our opinion would not be different. We undertake no
responsibility to update or supplement our opinion. This opinion is not binding
on the Internal Revenue Service, and there can be no assurance, and none is
hereby given, that the Internal Revenue Services will not take a position
contrary to one or more of the positions reflected in the foregoing opinion, or
that our opinion will be upheld by the courts if challenged by the Internal
Revenue Service.
We are attorneys admitted to practice in the State of Florida and,
accordingly, we express no opinion with respect to matters governed by the laws
of any jurisdiction other than the federal laws of the United States or the
internal laws of the State of Florida, and we assume no responsibility as to the
applicability of the laws of any other jurisdiction to the subject matter hereof
or to the effects of such laws thereon.
This opinion is rendered to you and for your benefit solely in
connection with the filing of the Registration Statement. This opinion may not
be relied upon by you for any other purpose and may not be relied upon by, nor
may copies thereof be provided to, any other person, firm, corporation or entity
for any purpose whatsoever without our prior written consent. We hereby consent
to the filing of this opinion as an exhibit to the Registration Statement. We
also consent to the use of our name in the Prospectus under the caption "Certain
Federal Income Tax Consequences". Unless prior written consent of our firm is
obtained, this opinion is not to be quoted or otherwise referred to in any
report, proxy statement or other registration statement, nor is it to be filed
with or furnished to any other governmental agency or any person, except as
otherwise required by law.
Sincerely,
CARLTON, FIELDS, WARD, EMMANUEL,
SMITH & CUTLER, P.A.
By: /s/ David P. Burke
------------------------------
David P. Burke
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1
(Registration Statement No. 333- ) of our report dated February 13, 1998,
except for Note 24, as to which the date is March 23, 1998, on our audits of
the consolidated financial statements of American Bancshares, Inc. We also
consent to the reference to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Tampa, Florida
June 3, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion in this registration statement on Form S-1 of ABI
Capital Trust of our report dated February 27, 1998, on our audit of the
financial statements of Murdock Florida Bank at December 31, 1997 and 1996 and
for each of the years in the three year period ended December 31, 1997. We also
consent to the reference to our firm under the caption "Experts."
/s/ HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
June 4, 1998
<PAGE> 1
EXHIBIT 25.1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
AMERICAN BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
FLORIDA 65-0624640
(State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.)
4502 CORTEZ ROAD WEST
BRADENTON, FLORIDA 34210-2801
(Address, including zip code of
Principal executive offices)
__% Preferred Securities of ABI Capital Trust
__% Junior Subordinated Debentures of American
Bancshares, Inc.
American Bancshares, Inc. Guarantee with respect to the Preferred Securities
(Title of the securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
ITEM 3.-15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 - Incorporated
herein by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated June 19, 1997, copy
attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise corporate
trust powers Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement, Registration
No. 33-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as amended
on November 18, 1997. Copy attached.
-2-
<PAGE> 3
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust
Company dated as of March 31, 1998. Copy attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 1st day
of June, 1998.
BANKERS TRUST COMPANY
By: /s/ SUSAN JOHNSON
-------------------------------
Susan Johnson
Assistant Vice President
-4-
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 1st day
of June, 1998.
BANKERS TRUST COMPANY
By: /s/ Susan Johnson
----------------------------
Susan Johnson
Assistant Vice President
-5-
<PAGE> 6
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the
City of New York,
this 27TH day of June in the Year of our Lord one
thousand nine hundred and NINETY-SEVEN.
/s/ Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE> 8
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
/s/ James T. Byrne, Jr.
-----------------------------
James T. Byrne, Jr.
Managing Director
/s/ Lea Lahtinen
-----------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
/s/ Lea Lahtinen
----------------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
/s/ Sandra L. West
- ---------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE> 9
BY-LAWS
NOVEMBER 18, 1997
BANKERS TRUST COMPANY
NEW YORK
<PAGE> 10
BY-LAWS
OF
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
<PAGE> 11
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE> 12
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
<PAGE> 13
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit
<PAGE> 14
program and the adequacy of the system of internal controls of the Company which
he deems advisable or which the Audit Committee may request. Additionally, the
General Auditor shall have the duty of reporting independently of all officers
of the Company to the Audit Committee at least quarterly on any matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company that should be brought to the attention of the directors
except those matters responsibility for which has been vested in the General
Credit Auditor. Should the General Auditor deem any matter to be of special
immediate importance, he shall report thereon forthwith to the Audit Committee.
The General Auditor shall report to the Chief Financial Officer only for
administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE> 15
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer or the
<PAGE> 16
President, and (ii) only if and to the extent that, after making such efforts as
the Chairman of the Board, the Chief Executive Officer or the President shall
deem adequate in the circumstances, such person shall be unable to obtain
indemnification from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
<PAGE> 17
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE> 18
I, Susan Johnson, Assistant Vice President of Bankers Trust Company, New York,
New York, hereby certify that the foregoing is a complete, true and correct copy
of the By-Laws of Bankers Trust Company, and that the same are in full force and
effect at this date.
/s/ Susan Johnson
--------------------------------------
ASSISTANT VICE PRESIDENT
DATED: May 14, 1998
<PAGE> 19
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
-----------------
C400
---------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////
a. Noninterest-bearing balances and currency and coin (1) ............................... 0081 1,458,000 1.a.
b. Interest-bearing balances (2) ........................................................ 0071 2,253,000 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) ........................... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 6,444,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell................... 1350 30,836,000 3.
4. Loans and lease financing receivables: //////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 19,993,000 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses.....................RCFD 3123 647,000 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ........................RCFD 3128 0 ////////////////// 4.c.
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) .................................. 2125 19,346,000 4.d.
5. Trading Assets (from schedule RC-D) ..................................................... 3545 45,690,000 5.
6. Premises and fixed assets (including capitalized leases) ................................ 2145 791,000 6.
7. Other real estate owned (from Schedule RC-M) ............................................ 2150 184,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 104,000 8.
9. Customers' liability to this bank on acceptances outstanding ............................ 2155 542,000 9.
10. Intangible assets (from Schedule RC-M) .................................................. 2143 81,000 10.
11. Other assets (from Schedule RC-F) ....................................................... 2160 5,339,000 11.
12. Total assets (sum of items 1 through 11) ................................................ 2170 113,068,000 12.
---------------------------
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC--CONTINUED
------------------------------------
Dollar Amounts in Thousands //////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES ////////////////////////
13. Deposits: ///////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) RCON 2200 26,465,000 13.a.
(1) Noninterest-bearing(1) .......................RCON 6631 3,005,000........ /////////////////////// 13.a.(1)
(2) Interest-bearing .............................RCON 6636 23,460,000........ /////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E ///////////////////////
part II) RCFN 2200 21,993,000 13.b.
(1) Noninterest-bearing ..........................RCFN 6631 1,712,000 ....... /////////////////////// 13.b.(1)
(2) Interest-bearing .............................RCFN 6636 20,281,000 ....... /////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 12,125,000 14.
15. a. Demand notes issued to the U.S. Treasury ....................................... RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)........................................ RCFD 3548 25,701,000 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases): ////////////////////// /
a. With a remaining maturity of one year or less .................................. RCFD 2332 6,773,000 16.a.
b. With a remaining maturity of more than one year through three years............. A547 3,754,000 16.b.
c. With a remaining maturity of more than three years.............................. A548 2,212,000 16.c
17. Not Applicable. /////////////////////// 17.
18. Bank's liability on acceptances executed and outstanding .......................... RCFD 2920 542,000 18.
19. Subordinated notes and debentures (2).............................................. RCFD 3200 1,308,000 19.
20. Other liabilities (from Schedule RC-G) ............................................ RCFD 2930 6,135,000 20.
21. Total liabilities (sum of items 13 through 20) .................................... RCFD 2948 107,008,000 21.
22. Not Applicable ///////////////////////
///////////////////////// 22.
EQUITY CAPITAL ///////////////////////
23. Perpetual preferred stock and related surplus ..................................... RCFD 3838 1,000,000 23.
24. Common stock ...................................................................... RCFD 3230 1,352,000 24.
25. Surplus (exclude all surplus related to preferred stock) .......................... RCFD 3839 544,000 25.
26. a. Undivided profits and capital reserves ......................................... RCFD 3632 3,583,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ......... RCFD 8434 (41,000) 26.b.
27. Cumulative foreign currency translation adjustments ............................... RCFD 3284 (378,000) 27.
28. Total equity capital (sum of items 23 through 27) ................................. RCFD 3210 6,060,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28)...................... RCFD 3300 113,068,000 29
----------------------------------
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<S> <C> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that Number
best describes the most comprehensive level of auditing work performed ----------------------------------
for the bank by independent external auditors as of any date during 1997.............. RCFD 6724 1 M.1
----------------------------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
(2) Includes limited-life preferred stock and related surplus.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA FROM THE COMPANY'S GENERAL LEDGER
AND BOARD OF DIRECTORS FINANCIAL REPORT PACKAGE AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH.
</LEGEND>
<CIK> 0001004528
<NAME> AMERICAN BANCSHARES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> DEC-31-1997
<CASH> 9,549
<INT-BEARING-DEPOSITS> 3,727
<FED-FUNDS-SOLD> 5,120
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,664
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 255,303
<ALLOWANCE> (2,311)
<TOTAL-ASSETS> 353,901
<DEPOSITS> 302,746
<SHORT-TERM> 5,000
<LIABILITIES-OTHER> 20,076
<LONG-TERM> 0
0
0
<COMMON> 5,869
<OTHER-SE> 20,210
<TOTAL-LIABILITIES-AND-EQUITY> 353,901
<INTEREST-LOAN> 20,101
<INTEREST-INVEST> 3,996
<INTEREST-OTHER> 535
<INTEREST-TOTAL> 24,632
<INTEREST-DEPOSIT> 11,905
<INTEREST-EXPENSE> 12,918
<INTEREST-INCOME-NET> 11,714
<LOAN-LOSSES> 921
<SECURITIES-GAINS> 140
<EXPENSE-OTHER> 11,912
<INCOME-PRETAX> 3,037
<INCOME-PRE-EXTRAORDINARY> 1,920
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,920
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
<YIELD-ACTUAL> 8.36
<LOANS-NON> 986
<LOANS-PAST> 687
<LOANS-TROUBLED> 22
<LOANS-PROBLEM> 4,325
<ALLOWANCE-OPEN> 1,761
<CHARGE-OFFS> 471
<RECOVERIES> 100
<ALLOWANCE-CLOSE> 2,311
<ALLOWANCE-DOMESTIC> 2,311
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Murdock Florida Bank
Murdock, Florida:
We have audited the balance sheets of Murdock Florida Bank (the "Bank")
at December 31, 1997, and 1996, and the related statements of operations,
stockholders' equity and cash flows for each of the years in the three
year period ended December 31, 1997. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Bank at
December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three year period ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
February 27, 1998
