<PAGE>
As filed with the Securities and Exchange Commission on August 17, 1998.
Registration No. 333-__________
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
WINTRUST FINANCIAL CORPORATION WINTRUST CAPITAL TRUST I
(Exact Name of Registrant and Co-Registrant as Specified in Charters)
<S> <C> <C> <C>
Illinois 36-3873352 Delaware
(State or Other Jurisdiction of (I.R.S. Employer (State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.) Incorporation or Organization) Identification No.)
727 North Bank Lane 727 North Bank Lane
Lake Forest, Illinois 60045-1951 Lake Forest, Illinois 60045-1951
(847) 615-4096 (847) 615-4096
(Address(es), including zip code(s), and telephone number(s), including area code(s),
of registrant's and co-registrant's principal executive offices)
David A. Dykstra
Executive Vice President and Chief Financial Officer
727 North Bank Lane
Lake Forest, Illinois 60045
(847) 615-4096
(Name(s), address(es), including zip code(s), and telephone number(s),
including area code(s), of agent(s) for service)
Copies to:
Jennifer R. Evans, Esq. Edwin S. del Hierro, Esq.
Vedder, Price, Kaufman & Kammholz Barack Ferrazzano Kirschbaum Perlman & Nagelberg
222 North LaSalle Street 333 West Wacker Drive
Chicago, Illinois 60601-1003 Chicago, Illinois 60606
(312) 609-7500 (312) 984-3100
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effectiveness of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvest 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 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 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Maximum
Title of Each Class of Amount to be Offering Price Per Proposed Maximum Amount of
Securities to be Registered Registered/(1)/ Unit Aggregate Offering Price/(1)/ Registration Fee/(2)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Preferred Securities of
Wintrust Capital Trust I......... 1,242,000 $25.00 $31,050,000 $9,159
- ------------------------------------------------------------------------------------------------------------------------------------
Subordinated Debentures/(3)/ of
Wintrust Financial Corporation... /(3)/ -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantee of Trust Preferred
Securities/(4)/.................. /(4)/ -- -- --
====================================================================================================================================
</TABLE>
(1) Includes 162,000 Trust Preferred Securities which may be sold by Wintrust
Capital Trust I to cover over-allotments.
(2) The registration fee is calculated in accordance with Rule 457(i) and (n).
(3) The Subordinated Debentures will be purchased by Wintrust Capital Trust I
with the proceeds of the sale of the Trust Preferred Securities. Such
securities may later be distributed for no additional consideration to the
holders of the Trust Preferred Securities of Wintrust Capital Trust I upon
its dissolution and the distribution of its assets.
(4) This Registration Statement is deemed to cover the Subordinated Debentures
of Wintrust Financial Corporation, the rights of holders of Subordinated
Debentures of Wintrust Financial Corporation under the Indenture, and the
rights of holders of the Trust Preferred Securities under the Trust
Agreement, the Guarantee and the Expense Agreement entered into by Wintrust
Financial Corporation. No separate consideration will be received for the
Guarantee.
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.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 17, 1998
PROSPECTUS , 1998
- --------------------------------------------------------------------------------
1,080,000 Trust Preferred Securities
WINTRUST CAPITAL TRUST I
% Cumulative Trust Preferred Securities
(Liquidation Amount $25 per Trust Preferred Security)
Fully and Unconditionally Guaranteed, as Described Herein, by
WINTRUST FINANCIAL CORPORATION [LOGO]
--------------------
The ___% Cumulative Trust Preferred Securities (the "Trust Preferred
Securities") offered hereby represent preferred undivided beneficial interests
in the assets of Wintrust Capital Trust I, a statutory business trust created
under the laws of the State of Delaware ("Capital Trust"). Wintrust Financial
Corporation, an Illinois corporation (the "Company"), will own all of the common
securities (the "Common Securities" and, together with the Trust Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of Capital Trust. Wilmington Trust Company is the Property Trustee
(as defined herein) of Capital Trust. Capital Trust exists for the exclusive
purposes of issuing the Trust Securities, investing the proceeds thereof in an
equivalent amount of % Subordinated Debentures (the "Subordinated Debentures")
of the Company, and engaging in only those other activities necessary, advisable
or incidental thereto. The Subordinated Debentures will mature on ________ __,
2028, which date may be (i) shortened to a date not earlier than September 30,
2003, or (ii) extended to a date not later than
(continued on next page)
The Company has made application seeking approval of the Trust Preferred
Securities for quotation on the Nasdaq National Market/SM/ under the symbol
"WTFCP."
--------------------
See "Risk Factors" beginning on page 17 for a discussion of certain factors
that should be considered by prospective purchasers of the Trust Preferred
Securities offered hereby.
--------------------
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT ACCOUNTS,
ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR NON BANKING AFFILIATE
OF THE COMPANY (EXCEPT TO THE EXTENT THAT TRUST PREFERRED SECURITIES ARE
GUARANTEED BY THE COMPANY AS DESCRIBED HEREIN), ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EX-
CHANGE 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.
<TABLE>
<CAPTION>
========================================================================================
Price to Underwriting Proceeds to
Public Commissions/(1)/ Capital Trust/(2)(3)/
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Trust Preferred Security $ 25.00 (2) $
- ----------------------------------------------------------------------------------------
Total/(4)/ $27,000,000 (2) $
========================================================================================
</TABLE>
(1) Capital Trust and the Company have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(2) In view of the fact that all of the proceeds from the sale of the Trust
Preferred Securities will be used to purchase the Subordinated Debentures,
the Company has agreed to pay the Underwriters as compensation for
arranging the investment therein of such proceeds, $0.90 per Trust
Preferred Security, or $972,000 in the aggregate ($1,117,800 if the
Underwriters' over-allotment option is exercised in full). See
"Underwriting."
(3) Before deducting offering expenses payable by the Company, estimated at
$ .
(4) Capital Trust and the Company have granted to the Underwriters an option,
exercisable within 30 days from the date of this Prospectus, to purchase up
to an aggregate of 162,000 additional Trust Preferred Securities on the
same terms and conditions set forth above to cover over-allotments, if any.
If the Underwriters exercise such option in full, the total price to public
and proceeds to Capital Trust will be $ and $ , respectively. See
"Underwriting."
--------------------
The Trust Preferred Securities are offered by the Underwriters named
herein, subject to prior sale, when, as and if issued by Capital Trust and
delivered to and accepted by the Underwriters and subject to certain prior
conditions including the right of the Underwriters to reject any order in whole
or in part. It is expected that delivery of the Trust Preferred Securities will
be through the facilities of The Depository Trust Company, New York, New York,
on or about __________, 1998.
EVEREN Securities, Inc.
ABN AMRO Incorporated
Piper Jaffray Inc.
<PAGE>
(continued from previous page)
_____ __, 2047, in each case if certain conditions are met (including, in the
case of shortening the Stated Maturity (as defined herein), the Company having
received prior approval of the Board of Governors of the Federal Reserve System
("Federal Reserve") to do so if then required under applicable capital
guidelines, policies or regulations of the Federal Reserve). The Trust Preferred
Securities will have a preference under certain circumstances with respect to
cash distributions and amounts payable on liquidation, redemption or otherwise
over the Common Securities. See "Description of the Trust Preferred Securities--
Subordination of Common Securities" and "Risk Factors--Shortening or Extension
of Stated Maturity of Subordinated Debentures."
Holders of Trust Preferred Securities are entitled to receive preferential
cumulative cash distributions, at the annual rate of % of the liquidation
amount of $25 per Trust Preferred Security (the "Liquidation Amount"),
accumulating from the date of original issuance and payable quarterly in arrears
on the last day of March, June, September and December of each year, commencing
December 31, 1998 (the "Distributions"). The Company has the right, so long as
no Debenture Event of Default (as defined herein) has occurred and is
continuing, to defer payment of interest on the Subordinated Debentures at any
time or from time to time for a period not to exceed 20 consecutive quarters
with respect to each deferral period (each, an "Extended Interest Payment
Period"); provided that no Extended Interest Payment Period may extend beyond
the Stated Maturity of the Subordinated Debentures or end on a date other than
an Interest Payment Date (as defined herein). Upon the termination of any such
Extended Interest Payment Period and the payment of all amounts then due, the
Company may elect to begin a new Extended Interest Payment Period subject to the
requirements set forth herein. If interest payments on the Subordinated
Debentures are so deferred, Distributions on the Trust 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 its capital stock or debt securities that rank pari passu with or
junior to the Subordinated Debentures. During an Extended Interest Payment
Period, interest on the Subordinated Debentures will continue to accrue (and the
amount of Distributions to which holders of the Trust Preferred Securities are
entitled will continue to accumulate) at the rate of % per annum, compounded
quarterly, and holders of the Trust Preferred Securities will be required to
include accrued interest income in their gross income for United States federal
income tax purposes in advance of receipt of the cash distributions with respect
to such deferred interest payments. A holder of Trust Preferred Securities that
disposes of its Trust Preferred Securities between record dates for payments of
Distributions (and consequently does not receive a Distribution from Capital
Trust for the period prior to such disposition) will nevertheless be required to
include accrued but unpaid interest on the Subordinated Debentures through the
date of disposition in income as ordinary income and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Subordinated
Debentures deemed disposed of. See "Description of the Subordinated Debentures--
Option to Extend Interest Payment Period," "Certain Federal Income Tax
Consequences--Potential Extension of Interest Payment Period and Original Issue
Discount," "Certain Federal Income Tax Consequences--Dispositions of Trust
Preferred Securities" and "Risk Factors--Option to Extend Interest Payment
Period; Tax Consequences of a Deferral of Interest Payments; Market Price
Consequences."
The Company and Capital Trust believe that, taken together, the obligations
of the Company under the Guarantee, the Trust Agreement, the Subordinated
Debentures, the Indenture and the Expense Agreement (each as defined herein),
provide, in the aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of Capital Trust under the Trust
Preferred Securities. See "Relationship Among the Trust Preferred Securities,
the Subordinated Debentures and the Guarantee--Full and Unconditional
Guarantee." Under the Guarantee, the Company guarantees the payment of
Distributions and payments upon liquidation or redemption of the Trust Preferred
Securities, but only in each case to the extent of funds held by Capital Trust,
as described herein. See "Description of the Guarantee--General," "Risk
Factors--Rights Under the Guarantee" and "--Subordination of Obligations under
the Guarantee and the Subordinated Debentures." If the Company does not make
interest payments on the Subordinated Debentures held by Capital Trust, Capital
Trust will have insufficient funds to pay Distributions on the Trust Preferred
Securities. The Guarantee does not cover payments of Distributions when Capital
Trust does not have sufficient funds to pay such Distributions. In such event, a
holder of Trust Preferred Securities may institute a legal proceeding directly
against the Company pursuant to the terms of the Indenture to enforce payments
of amounts equal to such Distributions to such holder. See "Description of the
Subordinated Debentures--Enforcement of Certain Rights by Holders of the Trust
Preferred Securities." The obligations of the Company under the Guarantee and
the Trust Preferred Securities are subordinate and junior in right of payment to
all Senior Debt, Subordinated Debt and Additional Senior Obligations (each
2
<PAGE>
(continued from previous page)
as defined herein) of the Company. The Subordinated Debentures are unsecured
obligations of the Company and are subordinated to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company. The obligations of the
Company under the Guarantee, the Subordinated Debentures and other documents
described herein will rank pari passu with the Company's future obligations
under debt securities (and guarantees in respect of those debt securities)
initially issued to any trust, or a trustee of a trust, partnership or other
entity affiliated with the Company that is, directly or indirectly, a financing
vehicle of the Company in connection with the issuance by that entity of
preferred securities or other securities which are intended to qualify for Tier
1 capital treatment.
The Trust Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Subordinated Debentures at maturity or
their earlier redemption. Subject to Federal Reserve approval, if then required
under applicable capital guidelines, policies or regulations of the Federal
Reserve, the Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after September 30, 2003, in whole at any time
or in part from time to time, or (ii) at any time, in whole (but not in part),
within 180 days following the occurrence of a Tax Event, an Investment Company
Event or a Capital Treatment Event (each as defined herein), in each case at a
redemption price equal to the accrued and unpaid interest on the Subordinated
Debentures so redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof. See "Description of the Trust Preferred Securities--
Redemption or Exchange" and "Risk Factors--Tax Event, Investment Company Event
or Capital Treatment Event; Redemption."
The Company has the right at any time to dissolve, wind-up or terminate
Capital Trust subject to the Company having received prior approval of the
Federal Reserve to do so if then required under applicable capital guidelines or
policies of the Federal Reserve. In the event of the voluntary or involuntary
dissolution, winding up or termination of Capital Trust, after satisfaction of
liabilities to creditors of Capital Trust as required by applicable law, the
holders of Trust Preferred Securities will be entitled to receive a Liquidation
Amount of $25 per Trust Preferred Security, plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount of Subordinated Debentures having an aggregate
principal amount equal to the Liquidation Amount of such Trust Preferred
Securities (and carrying with it accumulated interest in an amount equal to the
accumulated and unpaid Distributions then due on such Trust Preferred
Securities), subject to certain exceptions. See "Description of the Trust
Preferred Securities--Redemption or Exchange," "--Liquidation Distribution Upon
Termination" and "Risk Factors--Redemption; Exchange of Trust Preferred
Securities for Subordinated Debentures."
The Trust Preferred Securities will be represented by one or more global
certificates ("Global Trust Preferred Securities") registered in the name of The
Depository Trust Company ("DTC") or its nominee. Beneficial interests in the
Trust Preferred Securities will be shown on, and transfers thereof will be
effected only through, records maintained by participants in DTC. Except as
described herein, Trust Preferred Securities in definitive form will not be
issued in exchange for Global Trust Preferred Securities. See "Book-Entry
Issuance."
---------------------
The Company will make available to the holders of the Trust Preferred
Securities quarterly reports containing unaudited financial information and
annual reports containing financial statements audited by the Company's
independent auditors to the same extent provided to holders of the Company's
common stock. The Company will also furnish annual reports on Form 10-K and
quarterly reports on Form 10-Q free of charge to holders of the Trust Preferred
Securities who so request in writing addressed to the Secretary of the Company.
---------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE TRUST PREFERRED
SECURITIES OFFERED HEREBY. SUCH TRANSACTIONS MAY INCLUDE OVER-ALLOTMENT,
STABILIZING AND THE PURCHASE OF TRUST PREFERRED SECURITIES TO COVER SHORT
POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
3
<PAGE>
Wintrust Financial Corporation
[Map of greater Chicago metropolitan area
depicting locations of
Company's banking facilities]
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information incorporated herein by reference or appearing elsewhere in this
Prospectus. This Prospectus contains forward-looking statements that involve
risks and uncertainties. Actual results could differ materially from those
addressed in the forward-looking statements as a result of certain factors,
including those described under "Risk Factors" and elsewhere in this Prospectus.
The Company
Wintrust Financial Corporation, an Illinois corporation (the "Company"), is
a financial services holding company headquartered in Lake Forest, Illinois,
with total assets of approximately $1.2 billion at June 30, 1998. The Company
engages in the community banking and the specialty finance businesses through
its operating subsidiaries: Lake Forest Bank and Trust Company ("Lake Forest
Bank"); Hinsdale Bank and Trust Company ("Hinsdale Bank"); North Shore Community
Bank and Trust Company ("North Shore Bank"); Libertyville Bank and Trust Company
("Libertyville Bank"); Barrington Bank and Trust Company, N.A. ("Barrington
Bank"); Crystal Lake Bank and Trust Company, N.A. ("Crystal Lake Bank"); First
Insurance Funding Corporation (formerly First Premium Services, Inc.) ("FIFC"),
a commercial insurance premium finance company; and Wintrust Asset Management
Company ("WAMC"), a trust company subsidiary in organization and pending
regulatory approval. In September 1996, each of the banking subsidiaries then
existing and FIFC, which were previously affiliated but separately owned, became
subsidiaries of the Company as a result of a transaction which joined their
respective holding companies under one parent company.
Each of the Company's banking subsidiaries (collectively, the "Banks") was
founded as a de novo banking organization (i.e., started new) within the last
seven years. The organizational efforts began in 1991, when a group of
experienced bankers and local business people identified an unfilled niche in
the Chicago metropolitan area community banking market. As large banks acquired
smaller ones and personal service was subjected to consolidation strategies,
opportunities arose in affluent suburbs for locally owned and operated banks
emphasizing personal service. In pursuit of this strategic opportunity, the
group founded Lake Forest Bank in December 1991 to service the Lake Forest and
Lake Bluff communities. Thereafter, as desirable locations were procured in
other attractive communities where management successfully recruited locally
known, experienced bank officers, the other Banks were organized with the
participation of local residents and business leaders of those communities.
Today, the Company provides community-oriented, personal and commercial banking
services primarily to individuals and small to mid-size businesses through 19
banking facilities. The table below provides information regarding each of the
Banks and their respective markets.
<TABLE>
<CAPTION>
Total Assets Chicago-Area Average
at June 30, 1998 Communities Number of Household
Bank Date Opened (in thousands) Served Facilities Income/(1)/
- ------------------- -------------- ----------------- -------------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Lake Forest Bank December 1991 $390,154 Lake Forest 4 $142,688
Lake Bluff 1 105,999
Hinsdale Bank October 1993 245,131 Hinsdale 2 106,288
Clarendon Hills/(2)/ 1 63,927
Western Springs/(3)/ 1 78,364
Burr Ridge 120,071
North Shore Bank September 1994 289,558 Wilmette 3 105,095
Kenilworth 215,611
Glencoe 2 164,254
Winnetka 1 174,957
Libertyville Bank October 1995 147,108 Libertyville 2 72,815
Mundelein 50,466
Vernon Hills 53,722
Barrington Bank December 1996 98,956 Barrington 1 81,125
Barrington Hills 178,096
Lake Barrington 114,979
North Barrington 151,677
South Barrington 170,271
Inverness 147,962
Crystal Lake Bank December 1997 27,805 Crystal Lake 1 50,977
Cary 54,395
</TABLE>
5
<PAGE>
- ----------------
(1) Provided by Northeastern Illinois Planning Commission derived from 1989
information reported in 1990 U.S. Census Data.
(2) Operates in this community as Clarendon Hills Bank, a branch of Hinsdale
Bank.
(3) Operates in this community as Community Bank of Western Springs, a branch of
Hinsdale Bank.
Through FIFC, the Company originates commercial insurance premium finance
loans on a national basis. Currently, all of these loans are being purchased by
the Banks in order to increase their loan-to-deposit ratios. The loans
originated by FIFC provide the Banks with attractive yielding assets as a
supplement to their lending activities. FIFC, which commenced operations
approximately eight years ago, is headquartered in Deerfield, Illinois. Based on
limited industry data available and FIFC management's experience in the
industry, management estimates that FIFC is one of the largest premium finance
companies operating in the United States. FIFC's loan volume exceeded $425
million for the 12 months ended June 30, 1998. Loans are originated by FIFC's
own sales force, working with medium and large insurance agents and brokers
throughout the United States. Insurance premiums are financed primarily for
commercial customers' purchases of liability, property and casualty and other
commercial insurance.
Currently, the Company conducts trust operations at Lake Forest Bank. In
1998, the Company commenced the organization of WAMC as a separate subsidiary to
expand the Company's trust services in the communities served by the Banks. WAMC
has applied for a trust company charter with the Office of the Comptroller of
the Currency and expects receipt of all requisite regulatory approvals within
the next few months. Beginning in the fourth quarter of 1998 or early 1999, the
Company will add experienced trust personnel and begin to offer trust services
at other Banks, first at North Shore Bank, followed quickly at Hinsdale Bank.
The Company plans to offer on-site trust services through WAMC at each of the
remaining Banks within the next few years.
The historical financial performance of the Company has been affected by
the high costs associated with growing market share in deposits and loans,
opening new banking facilities and building an experienced management team. The
Company's financial performance over the past five years reflects the improving
financial performance of the Banks as they mature, adjusted for the significant
costs of opening new banks and branch offices. The Company's experience has been
that it generally takes from 13 to 24 months for new banking facilities to first
achieve operational profitability. Similarly, management currently expects a
start-up phase for WAMC of approximately two years before the trust operations
become profitable.
In order to minimize the time lags typically experienced by de novo banks
in redeploying deposits into assets that provide attractive yields, and because
management believes that the Banks, like many community banks, are not likely
over time to generate loans to local customers for more than about half of their
respective lending capacities, since its formation the Company has focused on
the development of specialized earning asset niches. These niches allow the
Company to generate large volumes of homogenous assets that can be retained for
investment, or sold into the secondary market or securitized to generate fee
income or for liquidity management purposes. To date, the Company has identified
and finances loans in several such asset niches to enhance its loan-to-deposit
ratio, including premium finance loans originated by FIFC, indirect auto loans,
mortgage warehouse lending and, more recently, medical and municipal equipment
leasing.
While committed to a continuing growth strategy, management's current focus
is to balance further asset growth with earnings growth. To this end, the
Company is seeking to more fully leverage the existing capacity of its operating
subsidiaries to support internal growth. Additionally, the Company is
continuing to pursue specialized earning-asset niches to shift the mix of
earning assets to higher-yielding loans. The Company is also focusing on
controlling costs of funds as the maturing Banks achieve more established
customer bases.
Operational Strategy
Since the first Bank was opened in 1991, the Company has continued to
follow its operational strategy, the key elements of which are:
6
<PAGE>
. Maintaining decision-making authority locally within each of the Banks
and providing a high level of personal and professional service. The Company's
community banking philosophy is driven by its emphasis on local independence
intended to maintain decision-making authority within each of the Banks. While
senior management of the Company provides expertise to each of the subsidiaries
in the areas of capital planning, long-term strategic planning, marketing and
advertising, financial management, investment and asset/liability management,
and technology, the separate management teams of each of the Banks, FIFC and
WAMC have full managerial responsibilities with respect to customer service and
the ongoing day-to-day operations of their respective organizations. Management
believes that local authority and management allow the Banks to make highly
responsive and personalized attention to customer service their top priority.
This creates the competitive advantages of being able to tailor products and
services to meet the needs of the communities that they serve, to make decisions
affecting customers quickly, and to enjoy the benefits of investing and
participating in their communities. In addition, to ensure a high level of
personal and professional service to commercial and retail customers of the
Banks, the Company emphasizes the recruitment and training of competent and
highly motivated employees at all levels of the organization, seeking to
minimize employee turnover.
. Employing fewer, but more highly qualified and productive individuals at
relatively high compensation rates and focusing on low net overhead ratios. Key
to the Company's growth and profitability is management's extensive experience
in providing community banking services. The Banks' presidents and chief
executive officers were selected not only for their years of banking experience
but also for their business development skills and their strong ties to the
communities they serve. Management believes its organizational structure and a
strong commitment to cost control throughout the organization will allow the
Company to continue to improve and maintain favorable net overhead ratios as the
Banks, FIFC and WAMC mature. The Company's practices of employing fewer, but
more highly qualified and productive individuals at all levels of the
organization is key to the maintenance of its decentralized management
structure, and are designed to promote and support local autonomy at the
Company's operating subsidiaries while at the same time enhancing overall
Company performance.
. Marketing innovative deposit and loan products. Each of the Banks has
developed a niche within the communities that it serves through the utilization
of innovative community-oriented marketing programs. The Company expects to
continue to exploit this community banking approach as it pursues expansion into
new communities, whether through branching, additional de novo bank formations
or selective acquisitions. The Banks have offered local residents highly
competitive retail products designed to attract customers and to provide the
Banks the opportunity to introduce their full range of personalized banking
services. To be more responsive to the needs of consumers in their specific
markets, the Banks have introduced a variety of innovative deposit and loan
products to appeal to the unique needs of different types of Bank customers,
such as different age groups and other special segments of the target markets.
The Banks market their products aggressively through creative newspaper and
other advertising, special promotions and frequently sponsored community events.
In addition, each of the Banks has a large board of directors comprised of
influential business persons and prominent individuals within the respective
communities who assist the banking officers with business development for the
Banks.
Growth Strategy
Key elements of the Company's growth strategy are:
. Internal growth. Due to the relative start-up nature of its operations,
the Company believes it has not yet realized the full deposit and asset
generation potential in the communities now served by its existing banking
facilities and believes the Banks' existing infrastructures can support
significant additional business while maintaining a high level of personalized
customer service and responsiveness. As the rapid pace of consolidation in the
financial services industry persists, management expects that more individuals
and small businesses will become disenchanted with the perceived lower level of
service offered by the larger institutions, providing continuing market share
opportunity for the Company.
. Expanding into attractive markets with limited local banking competition.
The Company may seek to expand operations of the existing Banks by opening
branch facilities in nearby communities where management believes targeted
customers would be attracted to a community banking alternative. The Company
also plans to continue its geographic expansion, possibly through the formation
of additional de novo banks in and around the Chicago area, where the Company
believes it can leverage its experience. Management has identified several
attractive markets as possibilities for new banks, although future bank
locations have yet to be fully evaluated. In addition, the Company intends to
7
<PAGE>
explore and will consider potential acquisitions of other community-oriented
financial institutions that are already operating in desirable markets.
Management believes there are a number of recently organized banks in and around
the Chicago area that may not have adequate capital and managerial resources to
continue their growth, that may be attracted to the Company's commitment to
local autonomy and that may desire the liquidity for their investors offered by
the Company's publicly traded stock.
. Augmenting the loan portfolio with specialized asset niches which allow
the Banks to more fully utilize their lending capacity. Currently, the Banks
invest in premium finance loans generated by FIFC, indirect auto loans, mortgage
warehouse loans, and, since completion of the Company's recent acquisition of a
small business engaged in medical and municipal equipment leasing, equipment
leases. In order to expand the Company's opportunities to invest in specialized
earning asset niches, the Company may pursue acquisitions or development of
specialty finance businesses engaged in asset generation suitable for bank
investment and/or secondary market sales. While the Company has not yet targeted
additional potential acquisitions of specialty finance businesses, management
has and will continue to explore various commercial and consumer finance
activities.
. Growth of trust services provided to small and mid-size businesses and
affluent individuals. The Company has for several years been providing
investment management and trust services to small businesses and individuals
residing in Lake Forest Bank's target market area through the trust department
of that Bank. With the formation of WAMC, the Company plans to market its trust
services more aggressively to customers in all the Banks' communities in an
effort to expand its market share and increase the Company's fee income. The
Company intends to introduce on-site trust services in the other Bank locations
over the next few years as the Company identifies qualified, experienced trust
personnel who have the potential to attract new trust accounts and asset
management business to WAMC. Management believes WAMC can successfully compete
for trust business by targeting newly affluent customers and customers whose
trust needs command the personalized attention offered by the Company's service-
oriented Banks.
The Company's principal executive offices are located at 727 North Bank
Lane, Lake Forest, Illinois, 60045, and its telephone number is (847) 615-4096.
Capital Trust
Capital Trust is a statutory business trust formed under Delaware law
pursuant to (i) a trust agreement, dated as of August 14, 1998, executed by the
Company, as depositor, and the trustees of Capital Trust (together with the
Property Trustee, the "Trustees"), and (ii) a certificate of trust filed with
the Secretary of State of the State of Delaware on August 14, 1998. The initial
trust agreement will be amended and restated in its entirety (as so amended and
restated, the "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Trust
Preferred Securities, the purchasers thereof will own all of the Trust Preferred
Securities. The Company will acquire all of the Common Securities which will
represent an aggregate liquidation amount equal to at least 3.0% of the total
capital of Capital Trust. The Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Trust Preferred Securities,
except that upon the occurrence and during the continuance of an Event of
Default (as defined herein) under the Trust Agreement resulting from a Debenture
Event of Default, the rights of the Company as holder of the Common Securities
to payment in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. See "Description of the Trust Preferred Securities--
Subordination of Common Securities." Capital Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of Capital Trust, (ii) investing the gross proceeds of
the Trust Securities in the Subordinated Debentures issued by the Company, and
(iii) engaging in only those other activities necessary, advisable, or
incidental thereto. The Subordinated Debentures will be the only assets of
Capital Trust and payments under the Subordinated Debentures will be the only
revenue of Capital Trust. Capital Trust has a term of 55 years, but may
terminate earlier as provided in the Trust Agreement. The principal executive
office of Capital Trust is 727 North Bank Lane, Lake Forest, Illinois 60045 and
its telephone number is (847) 615-4096.
The number of the Trustees will, pursuant to the Trust Agreement, initially
be five. Three of the Trustees (the "Administrative Trustees") will be persons
who are employees or officers of, or who are affiliated with, the Company. The
fourth trustee will be a financial institution that is unaffiliated with the
Company, which trustee will serve as
8
<PAGE>
institutional trustee under the Trust Agreement and as indenture trustee for the
purposes of compliance with the provisions of the Trust Indenture Act (the
"Property Trustee"). Wilmington Trust Company, a Delaware banking corporation,
will be the Property Trustee until removed or replaced by the Company, as holder
of the Common Securities. For purposes of compliance with the provisions of the
Trust Indenture Act, Wilmington Trust Company will also act as trustee (the
"Guarantee Trustee") under the Guarantee and as Debenture Trustee (as defined
herein) under the Indenture. The fifth trustee will be an entity that maintains
its principal place of business in the State of Delaware (the "Delaware
Trustee"). Wilmington Trust Company, a Delaware banking corporation, will act as
Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the holders of the Trust Securities and in such capacity will have
the power to exercise all rights, powers and privileges under the Indenture. The
Property Trustee will also maintain exclusive control of a segregated non-
interest-bearing bank account (the "Property Account") to hold all payments made
in respect of the Subordinated Debentures for the benefit of the holders of the
Trust Securities. The Property Trustee will make payments of Distributions and
payments upon liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Guarantee Trustee will
hold the Guarantee for the benefit of the holders of the Trust Preferred
Securities. The Company, as the holder of all the Common Securities, will have
the right to appoint, remove or replace any Trustee and to increase or decrease
the number of the Trustees. The Company will pay all fees and expenses related
to Capital Trust and the offering of the Trust Preferred Securities.
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Trust Agreement, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Trust Preferred Securities."
The Offering
<TABLE>
<CAPTION>
Trust Preferred Securities Issuer...... Wintrust Capital Trust I
<S> <C>
Securities Offered..................... 1,080,000 Trust Preferred Securities
having a Liquidation Amount of $25 per
Trust Preferred Security. The Trust
Preferred Securities represent preferred
undivided beneficial interests in the
assets of Capital Trust, which will
consist solely of the Subordinated
Debentures and rights to payments
thereunder. Capital Trust and the
Company have granted the Underwriters an
option, exercisable within 30 days after
the date of this Prospectus, to purchase
up to an additional 162,000 Trust
Preferred Securities at the initial
offering price, solely to cover over-
allotments, if any. See "Underwriting."
Offering Price......................... $25 per Trust Preferred Security
Book-Entry Only Registration........... The Trust Preferred Securities will be
represented by one fully registered
global certificate. The global
certificate will be deposited with, or
on behalf of, DTC and registered in its
name or in the name of Cede & Co., its
nominee. No person acquiring a
beneficial ownership interest in the
Trust Preferred Securities will be
entitled to receive a Trust Preferred
Security in definitive form representing
such person's interest in Capital Trust,
except in the limited circumstances
described in "Book-Entry Issuance."
Payment of Distributions............... The Distributions payable on each Trust
Preferred Security will be fixed at a
rate per annum of ___% of the
Liquidation Amount of $25 per Trust
Preferred Security, will be cumulative,
will accumulate from _____ __, 1998, the
date of issuance of the Trust Preferred
Securities, and will be payable
quarterly in arrears, on March 31, June
30, September 30 and December 31
</TABLE>
9
<PAGE>
of each year, commencing December 31,
1998. See "Description of the Trust
Preferred Securities--Distributions--
Payment of Distributions."
Extension of Interest Payment Period... 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 the Subordinated
Debentures for a period not exceeding 20
consecutive quarters; provided, that no
Extended Interest Payment Period may
extend beyond the Stated Maturity of the
Subordinated Debentures or end on a date
other than an Interest Payment Date (as
defined herein). As a consequence of the
extension by the Company of the interest
payment period, quarterly Distributions
on the Trust Preferred Securities will
be deferred (though such Distributions
will continue to accumulate interest
thereon compounded quarterly, since
interest will continue to accrue and
compound on the Subordinated
Debentures). During any such Extended
Interest Payment 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
Subordinated Debentures. Upon the
termination of any Extended Interest
Payment Period and the payment of all
amounts then due, the Company may
commence a new Extended Interest Payment
Period, subject to the foregoing
requirements. See "Description of the
Trust Preferred Securities--
Distributions--Extended Interest Payment
Period" and "Description of the
Subordinated Debentures--Option to
Extend Interest Payment Period."
Should an Extended Interest Payment
Period occur, holders of Trust Preferred
Securities will be required to include
accrued interest income in their gross
income 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
--Potential Extension of Interest
Payment Period and Original Issue
Discount," and "Risk Factors--Option to
Extend Interest Payment Period; Tax
Consequences of a Deferral of Interest
Payments; Market Price Consequences."
Maturity............................... The Subordinated Debentures will mature
on _________ __, 2028, which date may be
(i) shortened to a date not earlier than
September 30, 2003, or (ii) extended to
a date not later than __________ ___,
2047, in each case if certain conditions
are met (including in the case of
shortening the Stated Maturity (as
defined herein), the Company having
received prior approval of the Federal
Reserve to do so if then required under
applicable capital guidelines, policies
or regulations of the Federal Reserve).
Redemption............................. The Trust Preferred Securities are
subject to mandatory redemption, in
whole or in part, upon repayment of the
Subordinated Debentures at maturity or
their earlier redemption. Subject to
Federal Reserve approval, if then
required under applicable capital
guidelines, policies or regulations of
the
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Federal Reserve, the Subordinated
Debentures are redeemable prior to
maturity at the option of the Company
(i) on or after September 30, 2003, in
whole at any time or in part from time
to time, or (ii) at any time, in whole
(but not in part), within 180 days
following the occurrence of a Tax Event,
an Investment Company Event or a Capital
Treatment Event, in each case at the
redemption price equal to 100% of the
principal amount of the Subordinated
Debentures, together with any accrued
but unpaid interest to the date fixed
for redemption. See "Description of the
Subordinated Debentures--Redemption or
Exchange."
Distribution of Subordinated
Debentures............................ The Company has the right at any time
to terminate Capital Trust and cause
the Subordinated Debentures to be
distributed to holders of Trust
Preferred Securities in liquidation
of Capital Trust, subject to the
Company having received prior
approval of the Federal Reserve to do
so if then required under applicable
capital guidelines, policies or
regulations of the Federal Reserve.
See "Description of the Trust
Preferred Securities--Redemption or
Exchange" and "--Liquidation
Distribution Upon Termination."
Guarantee.............................. The Company has guaranteed the
payment of Distributions and payments
upon liquidation or redemption of the
Trust Preferred Securities, but only
in each case to the extent of funds
held by Capital Trust, as described
herein. The Company and Capital
Trust believe that, taken together,
the obligations of the Company under
the Guarantee, the Trust Agreement,
the Subordinated Debentures, the
Indenture and the Expense Agreement
provide, in the aggregate, a full,
irrevocable and unconditional
guarantee, on a subordinated basis, of
all of the obligations of Capital Trust
under the Trust Preferred Securities. If
the Company does not make principal or
interest payments on the Subordinated
Debentures, Capital Trust will not have
sufficient funds to make Distributions
on the Trust Preferred Securities; in
which event, the Guarantee will not
apply to such Distributions until
Capital Trust has sufficient funds
available therefor. See "Description of
the Guarantee."
Ranking................................ The Trust Preferred Securities will
rank pari passu, and payments thereon
will be made pro rata, with the Common
Securities of Capital Trust held by the
Company, except as described under
"Description of the Trust Preferred
Securities--Subordination of Common
Securities." The obligations of the
Company under the Guarantee and the
Subordinated Debentures are unsecured
and rank subordinate and junior in right
of payment to all current and future
Senior Debt, Subordinated Debt and
Additional Senior Obligations of the
Company, if any, and will rank pari
passu with any trust preferred
securities issued in future which are
intended to qualify for Tier 1 capital
treatment. At June 30, 1998, Senior
Debt, Subordinated Debt and Additional
Senior Obligations of the Company were
approximately $26.6 million. The Company
may cause additional trust preferred
securities to be issued in the future,
and there is no limit on the
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
amount of Senior Debt, Subordinated
Debt, Additional Senior Obligations or
trust preferred securities that may be
issued in the future. In addition,
because the Company is a holding
company, all obligations of the Company
relating to the securities described
herein will be effectively subordinated
to all existing and future liabilities
of the Company's subsidiaries, including
the Banks.
Voting Rights.......................... The holders of the Trust Preferred
Securities will have no voting rights
except in limited circumstances. See
"Description of the Trust Preferred
Securities--Voting Rights; Amendment of
Trust Agreement."
Use of Proceeds........................ The proceeds from the sale of the
Trust Preferred Securities offered
hereby will be used by Capital Trust to
purchase Subordinated Debentures
issued by the Company. The Company
intends to apply the net proceeds from
the sale of the Subordinated Debentures
to repay borrowings outstanding under
the Company's revolving line of credit.
Following such repayment, subject to the
terms and maturity thereof, additional
funds (which amounts may be used by the
Company from time to time for general
corporate purposes) will be available to
the Company for borrowing under such
facility. See "Use of Proceeds."
Proposed Nasdaq National Market(SM)
Symbol................................ The Company has made application
seeking approval of the Trust Preferred
Securities for quotation on the Nasdaq
National Market(SM) under the symbol
"WTFCP."
ERISA Considerations................... Prospective purchasers should carefully
consider the restrictions on purchase
set forth in "ERISA Considerations."
Absence of Prior Market for Trust
Preferred Securities.................. The Trust Preferred Securities will be a
new issue of securities for which no
market currently exists. Although each
Underwriter has informed the Company and
Capital Trust that it currently
intends to act as a market maker in the
Trust Preferred Securities, they are not
obligated to do so, and any such market-
making may be discontinued at any time
without notice. Accordingly, there can
be no assurance as to the development or
liquidity of any market for the Trust
Preferred Securities. See
"Underwriting."
Rating................................. The Trust Preferred Securities will
not be rated by a nationally recognized
statistical rating organization and are
not anticipated to be rated in the
future. See "Risk Factors--Absence of
Rating for Trust Preferred Securities."
Risk Factors........................... An investment in the Trust Preferred
Securities involves substantial risks
that should be considered by prospective
purchasers. In addition, because holders
of the Trust Preferred Securities may
receive Subordinated Debentures on
dissolution of Capital Trust, and
because payments on the Subordinated
Debentures are the sole source of
Distributions on, and redemptions of,
the Trust Preferred Securities,
prospective purchasers of the Trust
Preferred Securities are also making an
investment decision with regard to the
Subordinated Debentures and should
carefully review all of the information
relating to the
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Subordinated Debentures contained in
this Prospectus. See "Risk Factors" and
"Description of the Subordinated
Debentures."
</TABLE>
13
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial and other data presented herein have
been derived from the audited consolidated financial statements of the Company
(or its predecessors) as of and for each of the years in the five-year period
ended December 31, 1997, and the unaudited consolidated financial statements of
the Company as of and for the six-month periods ended June 30, 1998 and June 30,
1997, and should be read in conjunction with the consolidated financial
statements and the notes thereto incorporated herein by reference. Results for
the six-month periods are unaudited, but in the opinion of management reflect
all necessary adjustments for a fair presentation of results as of the dates and
for the periods covered. Results for interim periods are not necessarily
indicative of results to be expected during the remainder of the year or for any
future period. Results shown for periods prior to September 1, 1996, the date of
the Company's reorganization transaction which was accounted for using the
pooling-of-interests method of accounting, reflect the consolidated historical
results of the Company and its predecessors.
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
---------------- -------------------------------------------------
1998 1997 1997 1996 1995/(1)/ 1994/(1)/ 1993/(1)/
------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited)
(dollars in thousands except per share data)
Statement of Operations Data:
Interest income........................ $41,347 $28,459 $65,111 $39,037 $25,472 $17,744 $ 8,239
Interest expense....................... 24,433 16,418 38,339 24,155 15,772 9,871 3,884
------- ------- ------- ------- ------- ------- -------
Net interest income.................. 16,914 12,041 26,772 14,882 9,700 7,873 4,355
Provision for possible loan
losses................................ 2,340 1,554 3,404 1,935 1,430 607 1,127
------- ------- ------- ------- ------- ------- -------
Net interest income after
provision for possible loan
losses.............................. 14,574 10,487 23,368 12,947 8,270 7,266 3,228
------- ------- ------- ------- ------- ------- -------
Non-interest income:
Gain on sale of premium finance loans.. -- -- -- 3,078 4,421 -- --
Loan servicing fees.................... 71 186 248 1,442 1,101 -- --
Fees on mortgage loans sold............ 2,579 985 2,341 1,393 850 399 551
Trust fees............................. 368 309 626 522 399 202 92
Service charges on deposit accounts.... 454 326 724 468 196 112 92
Securities gains, net.................. -- -- 111 18 -- 21 23
Other.................................. 200 714 894 611 1,577 752 386
------- ------- ------- ------- ------- ------- -------
Total non-interest income............ 3,672 2,520 4,944 7,532 8,544 1,486 1,144
------- ------- ------- ------- ------- ------- -------
Non-interest expense:
Salaries and employee benefits/(2)/.... 9,788 6,869 14,204 11,551 8,011 5,319 3,536
Occupancy expense, net................. 1,176 937 1,896 1,649 951 1,165 790
Data processing........................ 794 643 1,337 1,014 624 335 177
Advertising and marketing.............. 756 572 1,309 1,102 682 288 150
Nonrecurring merger related expenses... -- -- -- 891 -- -- --
Amortization of deferred financing
fee................................... -- 25 248 542 768 641 511
Other non-interest expenses/(2)/....... 4,885 3,732 8,260 6,013 4,776 3,004 2,354
------- ------- ------- ------- ------- ------- -------
Total non-interest expense/(2)/........ 17,399 12,778 27,254 22,762 15,812 10,752 7,518
------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations before income taxes........ 847 229 1,058 (2,283) 1,002 (2,000) (3,146)
Income tax benefit..................... (1,158) (1,626) (3,788) (1,310) (512) -- --
------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations.......................... 2,005 1,855 4,846 (973) 1,514 (2,000) (3,146)
Income (loss) from operations and
sale of discontinued operations....... -- -- -- -- (17) (236) (193)
------- ------- ------- ------- ------- ------- -------
Net income (loss)(2)................. $ 2,005 $ 1,855 $ 4,846 $ (973) $ 1,497 $(2,236) $(3,339)
======= ======= ======= ======= ======= ======= =======
Common Share Data:
Net income (loss) per common share
Basic(2)............................. $ 0.25 $ 0.25 $ 0.62 $ (0.16) $ 0.27 $ (0.56) $ (1.14)
======= ======= ======= ======= ======= ======= =======
Diluted(2)............................ $ 0.24 $ 0.24 $ 0.60 $ (0.16) $ 0.24 $ (0.56) $ (1.14)
======= ======= ======= ======= ======= ======= =======
Cash dividends per common share........ $ -- $ -- $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= ======= ======= =======
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
------------------------ -------------------------------------------------------------------
1998 1997 1997 1996 1995(1) 1994(1) 1993(1)
---------- -------- ---------- -------- ---------- ---------- ---------
(unaudited) (dollars in thousands)
Selected Financial Condition Data
(at end of period):
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets.................... $1,176,546 $856,945 $1,053,400 $706,037 $ 470,890 $ 354,158 $188,590
Total deposits.................. 1,063,590 772,174 917,701 618,029 405,658 221,985 98,264
Total loans..................... 852,241 650,085 712,631 492,548 258,231 193,982 109,276
Notes payable and subordinated
debt.......................... 26,603 11,253 20,402 22,057 10,758 6,905 4,837
Total shareholders' equity...... 70,983 64,964 68,790 42,620 40,487 25,366 17,227
(footnotes on following page)
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
------------------------ -------------------------------------------------------------------
1998 1997 1997 1996 1995(1) 1994(1) 1993(1)
---------- -------- ---------- -------- ---------- ---------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Financial Ratios
and Other Data:
Performance Ratios:
Net interest margin/(3)(4)/..... 3.38% 3.49% 3.41% 2.91% 2.96% 3.35% 3.83%
Net interest spread/(3)(5)/..... 2.94 3.01 2.92 2.40 2.41 3.07 3.30
Non-interest income to average
assets/(3)/................... 0.67 0.66 0.58 1.34 2.36 0.57 0.89
Non-interest expense to average
average assets/(2)(3)(6)/....... 3.15 3.35 3.18 4.05 4.37 4.14 5.84
Net overhead ratio/(2)(3)(7)/.... 2.49 2.69 2.60 2.71 2.01 3.57 4.95
Return on average
assets/(2)(3)(6)(8)/............ 0.36 0.49 0.56 (0.17) 0.40 (0.88) (2.60)
Return on average
equity/(2)(3)(6)(9)/............ 5.70 6.62 7.88 (2.33) 4.66 (12.20) (25.40)
Average loan-to-average
deposit ratio................... 77.57 82.17 80.06 69.83 61.31 100.00 124.70
Average interest-earning
assets to average interest-
bearing liabilities............. 109.06 110.22 109.93 110.73 111.37 106.61 115.42
Asset Quality Ratios:
Non-performing loans to
total loans..................... 0.90% 0.28% 0.59% 0.36% 0.74% 0.01% 0.00%
Allowance for possible loan
losses to:
Total loans................... 0.69 0.68 0.72 0.74 1.07 0.88 1.24
Non-performing loans.......... 76.53 243.78 121.64 204.15 143.91 N/M N/M
Net charge-offs to average
loans/(3)/...................... 0.42 0.27 0.31 0.31 0.20 0.18 0.92
Non-performing assets to
total assets.................... 0.65 0.21 0.40 0.25 0.41 0.01 0.00
Ratio of earnings to fixed charges:
Including deposit interest...... 1.03x 1.01x 1.03x (a) 1.06x (a) (a)
Excluding deposit interest...... 2.02x 1.49x 2.10x (a) 1.60x (a) (a)
Other Data at end of period:
Number of:
Bank subsidiaries............. 6 5 6 5 4 3 2
Banking facilities............ 19 15 17 14 11 5 3
</TABLE>
- ----------
(a) Earnings were inadequate to cover fixed charges in the years ended December
31, 1996, 1994 and 1993 by $2.3 million, $2.0 million and $3.1 million,
respectively.
(1) Reflects results of those Banks then in operation or in organization,
results of finance and leasing subsidiary operations (some of which have
since been curtailed) and results of discontinued operations.
(2) In 1998 the Company recorded a nonrecurring $1.0 million pretax charge
related to severance amounts due to the Company's former chairman and chief
executive officer under the terms of his employment contract and related
legal expenses. Excluding this charge, net income for six months ended June
30, 1998 would have been $2.6 million, or $0.32 per basic common share and
$0.31 per diluted common share. The return on average assets and return on
average equity would have been 0.47% and 7.45%, respectively, and the non-
interest expense to average assets and net overhead ratios would have been
2.97% and 2.30%, respectively.
(3) Certain financial ratios for interim periods have been annualized.
(4) Net interest income divided by average interest-earning assets.
(5) Yield on average interest-earning assets less rate on average interest-
bearing liabilities.
(6) For the year ended December 31, 1996, the Company recorded nonrecurring
merger-related expenses of $891,000.
(7) Non-interest expense less non-interest income divided by average total
assets.
(8) Net income less preferred dividends divided by average total assets.
(9) Net income less preferred dividends divided by average common equity.
16
<PAGE>
RISK FACTORS
Prospective investors should carefully consider, together with the other
information contained and incorporated by reference in this Prospectus, the
following risk factors before purchasing the Trust Preferred Securities offered
hereby. These risk factors are not intended to represent a complete list of the
general or specific risks that may affect the Trust Preferred Securities, the
Subordinated Debentures or the Company and Capital Trust. It should be
recognized that other risks including general economic factors and expansion
strategies may be significant, presently or in the future, and the risks set
forth below may affect the Company and Capital Trust to a greater extent than
indicated.
Risk Factors Relating to the Trust Preferred Securities
Subordination of Obligations Under the Guarantee and the Subordinated Debentures
The obligations of the Company under the Guarantee issued for the benefit
of the holders of Trust Preferred Securities and under the Subordinated
Debentures are unsecured and rank subordinate and junior in right of payment to
all Senior Debt, Subordinated Debt and Additional Senior Obligations of the
Company. At June 30, 1998, the consolidated outstanding Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company was
approximately $26.6 million. The right of the Company to participate in any
distribution of assets of any of its subsidiaries upon such subsidiary's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Trust Preferred Securities to benefit indirectly from such distribution) is
subject to the prior claims of creditors of that subsidiary, except to the
extent that the Company may itself be recognized as a creditor of that
subsidiary. The Subordinated Debentures, therefore, will be effectively
subordinated to all existing and future liabilities of the subsidiaries, and
holders of Subordinated Debentures and Trust Preferred Securities should look
only to the assets of the Company for payments on the Subordinated Debentures.
Neither the Indenture, the Guarantee nor the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior Debt,
Subordinated Debt and Additional Senior Obligations, that may be incurred by the
Company. See "Description of the Guarantee--Status of the Guarantee" and
"Description of the Subordinated Debentures--Subordination."
Sources of Funds for Payment of Distributions; Holding Company Structure
The ability of Capital Trust to pay amounts due on the Trust Preferred
Securities is solely dependent upon the Company making payments on the
Subordinated Debentures as and when required. The Company presently anticipates
that the Company's principal source of funds for payments of interest on the
Subordinated Debentures (which is the sole source of funds for the payment of
Distributions) will be other borrowings, including future borrowings from time
to time under a revolving credit facility and dividends, if any, received from
its subsidiaries. Prospective investors should be aware that the Company's
existing revolving credit facility is short-term in nature, currently subject to
annual renewals, and there can be no assurance that the line will be renewed or
that amounts will be available under the credit facility for the payment of
interest on the Subordinated Debentures. As a holding company without
significant assets other than its equity interest in its subsidiaries, absent
the availability of funds under the revolving credit facility, the Company's
ability to pay interest on the Subordinated Debentures to Capital Trust (and
consequently Capital Trust's ability to pay Distributions on the Trust Preferred
Securities) and its obligations under the Guarantee depends primarily upon the
cash dividends from subsidiaries. Furthermore, none of the Banks has to date
paid a dividend to the Company, and each of the Banks is subject to regulatory
restrictions which currently limit the payment of dividends. See "--Regulatory
Restrictions on Bank Dividends."
Option to Extend Interest Payment Period; Tax Consequences of a Deferral of
Interest Payments; Market Price Consequences
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The Company has the right under the Indenture, so long as no Debenture
Event of Default has occurred and is continuing, to defer the payment of
interest on the Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extended
Interest Payment Period; provided that no Extended Interest Payment Period may
extend beyond the Stated Maturity of the Subordinated Debentures or end on a
date other than an Interest Payment Date. As a consequence of any such deferral,
quarterly Distributions on the Trust Preferred Securities by Capital Trust will
be deferred (and the amount of Distributions to which holders of the Trust
Preferred Securities are entitled will accumulate additional Distributions
thereon at the rate of _____% per annum, compounded quarterly from the relevant
Distribution Date (as defined herein)) during any such Extended Interest Payment
Period. During any such Extended Interest Payment 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 (other than the reclassification of any class of the Company's
capital stock into another class of capital stock), (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (iii)
redeem, purchase or acquire less than all of the outstanding Subordinated
Debentures or any of the Trust Preferred Securities. Prior to the termination of
any such Extended Interest Payment Period, provided no Debenture Event of
Default shall have occurred and be continuing, the Company may further defer the
payment of interest; provided that no Extended Interest Payment Period may
exceed 20 consecutive quarters, extend beyond the Stated Maturity of the
Subordinated Debentures or end on a date other than an Interest Payment Date.
Upon the termination of any Extended Interest Payment 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, and Additional Interest (as defined herein), if any is then required), the
Company may elect to begin a new Extended Interest Payment Period, subject to
the above requirements. Subject to the foregoing, there is no limitation on the
number of times that the Company may elect to begin an Extended Interest Payment
Period. See "Description of the Trust Preferred Securities--Distributions--
Extended Interest Payment Period" and "Description of the Subordinated
Debentures--Option to Extend Interest Payment Period."
Each holder of Trust Preferred Securities will be required to accrue and
recognize income (in the form of original issue discount) in respect of its pro
rata share of the interest accruing on the Subordinated Debentures held by
Capital Trust for United States federal income tax purposes. Should an Extended
Interest Payment Period occur, a holder of Trust Preferred Securities must, as a
result, include such income 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 Capital Trust if the holder disposes of the Trust
Preferred Securities prior to the record date for the payment of the related
Distributions. See "Certain Federal Income Tax Consequences--Potential Extension
of Interest Payment Period 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
Subordinated Debentures. However, the Company has not previously paid regular
quarterly dividends on its shares of common stock. While it is anticipated that
the Company may in the future commence payment of dividends out of funds legally
available therefor (provided the payment of dividends is not then restricted
under certain financial covenants in the Company's revolving line of credit),
until such time as the Company commences the payment of regular common stock
dividends, investors cannot rely on dividend payment history to be an effective
deterrent to the possible deferral of payments of interest on the Subordinated
Debentures.
Should the Company elect to exercise such right in the future, the market
price of the Trust Preferred Securities is likely to be adversely affected. A
holder that disposes of its Trust Preferred Securities during an Extended
Interest Payment Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Trust Preferred Securities. As
a result of the existence of the Company's right to defer interest payments, the
market price of the Trust Preferred Securities may be more volatile than the
market prices of other securities on which original issue discount accrues that
are not subject to such optional deferrals.
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Tax Event, Investment Company Event or Capital Treatment Event; Redemption
The Company has the right to redeem the Subordinated Debentures in whole
(but not in part) within 180 days following the occurrence of a Tax Event,
Investment Company Event or Capital Treatment Event (whether occurring before or
after September 30, 2003), for 100% of the principal amount together with
accrued but unpaid interest to the date fixed for redemption and, therefore, to
cause a mandatory redemption of the Trust Preferred Securities. The exercise of
such right is subject to the Company having received prior approval of the
Federal Reserve to do so if then required under applicable capital guidelines,
policies or regulations of the Federal Reserve.
"Tax Event" means the receipt by the Company and Capital Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of issuance of
the Trust Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) Capital Trust is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Subordinated Debentures, (ii) interest
payable by the Company on the Subordinated Debentures is not, or, within 90 days
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes, or (iii) Capital Trust is, or
will be within 90 days of the date of the opinion, subject to more than a de
minimis amount of other taxes, duties, assessments or other governmental
charges. Capital Trust or the Company must request and receive an opinion with
regard to such matters within a reasonable period of time after the Company or
Capital Trust becomes aware of the possible occurrence of any of the events
described in clauses (i) through (iii) above.
"Investment Company Event" means the receipt by the Company and Capital
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, Capital 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 becomes effective on or after the date of original issuance of the Trust
Preferred Securities. Capital Trust or the Company must request and receive an
opinion of counsel with regard to such matters within a reasonable period of
time after Capital Trust or the Company shall have become aware of the possible
occurrence of any such event.
"Capital Treatment Event" means the receipt by the Company and Capital
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 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, in each case occurring on or after the date
of issuance of the Trust Preferred Securities, there is more than an
insubstantial risk of impairment of the Company's ability to treat the Trust
Preferred Securities (or any substantial portion thereof) as Tier 1 capital (or
the then equivalent thereof) for purposes of the capital adequacy guidelines of
the Federal Reserve, as then in effect and applicable to the Company. Capital
Trust or the Company must request and receive an opinion of counsel with regard
to such matters within a reasonable period of time after the Company shall have
become aware of the possible occurrence of any such event.
Shortening or Extension of Stated Maturity of Subordinated Debentures
The Company has the right, at any time, to shorten the maturity of the
Subordinated Debentures to a date not earlier than September 30, 2003. The
exercise of such right is subject to the Company having received prior approval
of the Federal Reserve if then required under applicable capital guidelines,
policies or regulations of the Federal Reserve. The Company also has the right
to extend the maturity of the Subordinated Debentures (whether or not Capital
Trust is terminated and the Subordinated Debentures are distributed to holders
of the Trust Preferred Securities) to a date no later than __________ __, 2047.
Such right may only be exercised, however, if at the time such election is made
and at the time of such extension (i) the Company is not in bankruptcy,
otherwise insolvent or in liquidation, (ii) the Company is not in default in the
payment of any interest or principal on the Subordinated Debentures, and (iii)
Capital Trust is not in arrears on payments of Distributions on the
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Trust Preferred Securities and no deferred Distributions are accumulated. See
"Description of the Subordinated Debentures--General."
Rights Under the Guarantee
Under the Guarantee, the Company guarantees to the holders of the Trust
Preferred Securities, to the extent not paid by Capital Trust, (i) any accrued
and unpaid Distributions required to be paid on the Trust Preferred Securities,
to the extent that Capital Trust has funds available therefor at such time, (ii)
the Redemption Price (as defined herein) with respect to any Trust Preferred
Securities called for redemption, to the extent that Capital Trust has funds
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of Capital Trust (other than in
connection with the distribution of Subordinated Debentures to the holders of
Trust Preferred Securities or a redemption of all of the Trust Preferred
Securities), the lesser of (a) the amount of the Liquidation Distribution (as
defined herein), to the extent Capital Trust has funds available therefor at
such time, and (b) the amount of assets of Capital Trust remaining available for
distribution to holders of the Trust Preferred Securities in liquidation of
Capital Trust. The holders of not less than a majority in Liquidation Amount of
the Trust 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
Trust Preferred Securities may institute and prosecute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against Capital Trust, the Guarantee
Trustee or any other Person (as defined in the Guarantee). If the Company were
to default on its obligation to pay amounts payable under the Subordinated
Debentures, Capital Trust would lack funds for the payment of Distributions or
amounts payable on redemption of the Trust Preferred Securities or otherwise,
and, in such event, holders of Trust Preferred Securities would not be able to
rely upon the Guarantee for such amounts. In the event, however, that a
Debenture Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest on or principal of
the Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Trust Preferred Securities may institute a legal
proceeding directly against the Company for enforcement of payment to such
holder of the principal of or interest on such Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Trust
Preferred Securities of such holder (a "Direct Action"). In connection with such
Direct Action, the Company will have a right of set-off under the Indenture to
the extent of any payment made by the Company to such holder of Trust Preferred
Securities in the Direct Action. Except as described herein, holders of Trust
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debentures or assert directly any
other rights in respect of the Subordinated Debentures. See "Description of the
Subordinated Debentures--Enforcement of Certain Rights by Holders of Trust
Preferred Securities," "--Debenture Events of Default" and "Description of the
Guarantee." The Trust Agreement provides that each holder of Trust Preferred
Securities by acceptance thereof agrees to the provisions of the Guarantee and
the Indenture.
No Voting Rights Except in Limited Circumstances
Holders of Trust Preferred Securities will have no voting rights except in
limited circumstances relating only to the modification of the Trust Preferred
Securities and the exercise of the rights of Capital Trust as holder of the
Subordinated Debentures and the Guarantee. Holders of Trust Preferred Securities
will not be entitled to vote to appoint, remove or replace the Property Trustee
or the Delaware Trustee, as such voting rights are vested exclusively in the
holder of the Common Securities (except upon the occurrence of certain events
described herein), and the holders of Trust Preferred Securities will in no
event be entitled to appoint, remove or replace the Administrative Trustees. The
Property Trustee, the Administrative Trustees and the Company may amend the
Trust Agreement without the consent of holders of Trust Preferred Securities to
ensure that Capital Trust will be classified for United States federal income
tax purposes as a grantor trust or to ensure that Capital Trust will not be
required to register as an investment company, even if such action adversely
affects the interests of such holders. See "Description of the Trust Preferred
Securities--Voting Rights; Amendment of Trust Agreement" and "--Removal of
Capital Trust Trustees."
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Possible Tax Legislation
Congress and the Clinton Administration have in the past considered certain
proposed tax law changes that would, among other things, generally deny
corporate issuers a federal income tax deduction for payment of interest on
instruments with characteristics similar to the Subordinated Debentures.
Although such proposed tax law changes have not been enacted into law, there can
be no assurance that such tax law changes will not be reintroduced into future
legislation which, if enacted after the date hereof, may adversely affect the
federal income tax deductibility of interest payable on the Subordinated
Debentures, potentially on a retroactive basis. Accordingly, there can be no
assurance that a Tax Event will not occur. A Tax Event would permit the Company,
upon approval of the Federal Reserve if then required under applicable capital
guidelines, policies or regulations of the Federal Reserve, to cause a
redemption of the Trust Preferred Securities by electing to prepay the
Subordinated Debentures. See "Description of the Trust Preferred Securities--
Redemption or Exchange--Tax Event Redemption, Investment Company Event
Redemption or Capital Treatment Event Redemption."
Redemption; Exchange of Trust Preferred Securities for Subordinated Debentures
The Company has the right at any time to dissolve, wind-up or terminate
Capital Trust and cause the Subordinated Debentures to be distributed to the
holders of the Trust Preferred Securities in exchange therefor in liquidation of
Capital Trust. The exercise of such right is subject to the Company having
received prior approval of the Federal Reserve if then required under applicable
capital guidelines, policies or regulations of the Federal Reserve. The Company
will have the right, in certain circumstances, to redeem the Subordinated
Debentures in whole or in part, in lieu of a distribution of the Subordinated
Debentures by Capital Trust, in which event Capital Trust will redeem the Trust
Preferred Securities on a pro rata basis to the same extent as the Subordinated
Debentures are redeemed by the Company. Any such distribution or redemption
prior to the Stated Maturity will be subject to prior approval of the Federal
Reserve if then required under applicable capital guidelines, policies or
regulations of the Federal Reserve. See "Description of the Subordinated
Debentures--Redemption or Exchange" and "Description of the Trust Preferred
Securities--Redemption or Exchange--Tax Event Redemption, Investment Company
Event Redemptions or Capital Treatment Redemption."
Under current United States federal income tax law, a distribution of
Subordinated Debentures upon the liquidation of Capital Trust would not be a
taxable event to holders of the Trust Preferred Securities. If, however, Capital
Trust is characterized as an association taxable as a corporation at the time of
the dissolution of Capital Trust, the distribution of the Subordinated
Debentures may constitute a taxable event to holders of Trust Preferred
Securities. Moreover, upon the occurrence of a Tax Event, a dissolution of
Capital Trust in which holders of the Trust Preferred Securities receive cash
may be a taxable event to such holders. See "Certain Federal Income Tax
Consequences--Receipt of Subordinated Debentures or Cash Upon Liquidation of
Capital Trust."
If the Subordinated Debentures are distributed to the holders of Trust
Preferred Securities upon the liquidation of Capital Trust, the Company will use
its reasonable efforts to list the Subordinated Debentures on the Nasdaq
National Market/SM/ ("Nasdaq") or such stock exchanges, if any, on which the
Trust Preferred Securities are then listed.
Trading Price
The Trust Preferred Securities may trade at prices that do not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder of Trust Preferred Securities that disposes of
its Trust Preferred Securities between record dates for payments of
Distributions (and consequently does not receive a Distribution from Capital
Trust for the period prior to such disposition) will nevertheless be required to
include in income accrued but unpaid interest on the Subordinated Debentures
through the date of disposition as ordinary income and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Subordinated
Debentures deemed disposed of. Such holder will recognize a capital loss to the
extent the selling price (which may not fully reflect the value of accrued but
unpaid interest) is less than its adjusted tax basis (which will include all
accrued but unpaid interest). Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes. See "Certain Federal Income Tax Consequences--Disposition
of Trust Preferred Securities."
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Absence of Prior Public Market for the Trust Preferred Securities
The Trust Preferred Securities will be a new issue, and thus no public
market for the Trust Preferred Securities currently exists. While the Company
has applied to have the Trust Preferred Securities approved for listing on
Nasdaq, there can be no assurance that an active and liquid trading market will
develop or that a continued listing of the Trust Preferred Securities will be
available on Nasdaq. Although each Underwriter has informed Capital Trust and
the Company that it intends to act as a market maker in the Trust Preferred
Securities, the Underwriters are not obligated to do so and any such market-
making activity may be terminated at any time without notice to the holders of
the Trust Preferred Securities. In the event that an active trading market for
the Trust Preferred Securities does not develop, the market price and liquidity
of the Trust Preferred Securities will be adversely affected.
Future trading prices of the Trust Preferred Securities may be subject to
significant fluctuations in response to prevailing interest rates, the operating
results and financial condition of the Company, the market for similar
securities and general market and economic conditions. The offering price and
rate of Distributions of the Trust Preferred Securities have been determined by
negotiations among representatives of the Company and the Underwriters, and the
offering price of the Trust Preferred Securities may not be indicative of the
market price following the offering. As a result of the existence of the
Company's right to (i) defer interest payments on or, subject to prior approval
of the Federal Reserve if then required under applicable capital guidelines,
policies or regulations of the Federal Reserve, shorten the Stated Maturity of
the Subordinated Debentures, and (ii) dissolve Capital Trust and distribute
Subordinated Debentures to the holders of Trust Preferred Securities, the market
price of the Trust Preferred Securities may be more volatile than the market
prices of debt securities that are not subject to such provisions. There can be
no assurance as to the market prices for the Trust Preferred Securities or the
Subordinated Debentures that a holder of the Trust Preferred Securities may
receive in liquidation of Capital Trust. Accordingly, such securities may trade
at a discount from the price that the investor paid to purchase the Trust
Preferred Securities. See "Description of the Trust Preferred Securities--
Liquidation Distribution Upon Termination."
Trust Preferred Securities Are Not Insured
The Trust Preferred Securities are not insured by the Bank Insurance Fund
or the Savings Association Insurance Fund of the Federal Deposit Insurance
Corporation or by any other governmental agency.
Limited Covenants
The covenants in the Indenture are limited, and there are no covenants
relating to the Company in the Trust Agreement. As a result, neither the
Indenture nor the Trust Agreement protects holders of Subordinated Debentures or
Trust Preferred Securities, respectively, in the event of a material adverse
change in the Company's financial condition or results of operations nor limits
the ability of the Company or any subsidiary to incur additional indebtedness.
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or similar transaction involving the Company that may adversely
affect such holders.
Absence of Rating for Trust Preferred Securities
The Trust Preferred Securities are not rated by any rating agency and are
not anticipated to be rated in the future. The Company believes, however, that
if the Trust Preferred Securities were to be rated at this time, the rating
determined would be that of speculative grade.
Risk Factors Relating to the Company
Impact of De Novo Operations and Branch Openings on Profitability; Enhancement
of Recent Earnings from Recognition of Prior NOL's
The Company's historical results have been impacted by its strategy of de
novo bank formations and branch openings through which the Company has built an
infrastructure that management believes can support additional
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internal growth in the Banks' respective markets. To expand into additional
communities in and around Chicago, the Company may undertake additional de novo
bank formations or branch openings. Based on the Company's experience,
management believes that it generally takes from 13 to 24 months for new banking
facilities to first achieve operational profitability, due to the impact of
organizational and overhead expenses, the start-up phase of generating deposits
and the time lag typically involved in redeploying deposits into attractively
priced loans and other higher yielding earning assets. For example, while the
Company achieved first months of profitable operations at Lake Forest Bank and
Hinsdale Bank within 15 to 17 months, openings of additional full-service
branches in Glencoe in 1995 and in Winnetka in 1996 have extended the time for
North Shore Bank to achieve profitability. North Shore Bank, which commenced
operations in September 1994, recorded net losses for 1994, 1995 and 1996.
Barrington Bank, which was opened in December 1996, and Crystal Lake Bank which
opened in December 1997, are still in initial phases of operations and are not
yet profitable. In addition, the Company has recently organized WAMC, a newly
formed subsidiary which is in the process of obtaining necessary regulatory
approvals to operate as a trust company providing trust services to customers of
all of the Banks. Due to significant investment in the necessary staffing and
other overhead, these start-up trust operations are not anticipated to become
profitable for at least two years while WAMC continues to add qualified
personnel in order to attract new trust accounts and develop increased
investment management business.
The level of reported net income, return on average equity and return on
average assets for the Company will in the near term continue to be impacted by
start-up costs associated with these de novo bank and branching operations and
the start-up of WAMC. To the extent the Company undertakes additional branching
and de novo bank and business formations, the Company is likely to continue to
experience the effects of higher operating expenses relative to operating income
from the new operations, which may limit increases in profitability, although
management currently intends to focus on balancing future growth with earnings
improvements and anticipates that future results of operations will reflect
greater leveraging of the investments the Company has made to date in the
infrastructures of the existing Banks.
In addition, since 1995 the Company's ability to recognize net operating
loss carryforwards ("NOL's") has had a positive impact on reported net income of
the Company. It is anticipated that at the end of 1998, the Company will have
fully recognized the value of prior NOL's for financial statement reporting
purposes and, accordingly, will not continue to benefit from this contribution
to earnings in future periods.
Acquisition Strategy
Although the Company has historically grown through de novo bank formations
and the establishment of new branch offices, the Company's strategic plan also
includes potential acquisition of other financial institutions in attractive
markets and potential acquisitions of specialty finance or commercial finance
businesses that offer unique earning asset niches. Growth through acquisition
may offer the Company the opportunity to increase market share in existing and
new markets without incurring the full earnings impact of start-up operations.
However, there can be no assurance that potential acquisitions will be available
on terms acceptable or favorable to the Company or that the required regulatory
approvals for any proposed acquisitions will be obtained. There also can be no
assurance that the Company will be able to successfully integrate, operate and
manage any business that it acquires so as to maintain or increase
profitability.
Dependence on Management; Recent Management Changes
The Company's success to date has been influenced strongly by its ability
to attract and to retain senior management experienced in banking and financial
services. The Company's ability to retain the current management teams of each
of the Banks, FIFC and WAMC, and, as the Company grows, to attract and retain
qualified additional senior and middle management will continue to be important
to successful implementation of the Company's strategies. The Company does not
currently maintain key-man life insurance policies. The unexpected loss of
services of any key management personnel, or the inability to recruit and retain
qualified personnel in the future, could have an adverse effect on the Company's
business and financial results. The Company recently implemented certain
management changes as a result of which its president and former chief operating
officer, Edward J. Wehmer, assumed the position of chief executive officer and
the former chairman and chief executive officer, Howard D. Adams, is no longer
an employee of the Company. No assurance can be given as to the possible effect
of these management changes. Mr. Adams continues to serve as a director of the
Company with a term expiring at the annual shareholders meeting in 2000.
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The Company has entered into employment agreements with Edward J. Wehmer,
who has served as the Company's president since inception and, since May 1998,
its chief executive officer, and its other senior management and senior officers
of subsidiaries. The agreements provide for, among other things, certain non-
competition agreements, severance arrangements and benefits.
Allowance for Possible Loan Losses; Credit Risk
The Company's allowance for possible loan losses is established in
consultation with management of its operating subsidiaries and is maintained at
a level considered adequate by management to absorb anticipated loan losses. The
amount of future losses is susceptible to changes in economic, operating and
other conditions, including changes in interest rates, that may be beyond the
Company's control, and such losses may exceed current estimates. Rapidly growing
and de novo bank loan portfolios are by their nature unseasoned. As a result,
estimating loan loss allowances for the Banks is more difficult, and therefore
the Banks may be more susceptible to changes in estimates, and to losses
exceeding estimates, than banks with more seasoned loan portfolios. Although
management believes that the allowance for possible loan losses is adequate to
absorb losses on any existing loans that may become uncollectible, there can be
no assurance that the allowance for possible loan losses will prove sufficient
to cover actual loan losses in the future.
A portion of the Company's assets are concentrated in insurance premium
finance loans that the Company generates through FIFC. These loans, intended to
enhance the average yield of earning assets of the Banks, may involve a higher
level of risk of collection than generally associated with loan portfolios of
more traditional community banks.
Impact of Interest Rate Changes
The Company's results of operations are derived from the operations of its
subsidiaries and are principally dependent on net interest income, calculated as
the difference between interest earned on loans and investments and the interest
expense paid on deposits and other borrowings. Like other banks and financial
institutions, the Company's interest income and interest expense are affected by
general economic conditions and by the policies of regulatory authorities,
including the monetary policies of the Federal Reserve. While management has
taken measures intended to manage the risks of operating in a changing interest
rate environment, there can be no assurance that such measures will be effective
in avoiding undue interest rate risk.
Competition
The financial services business is highly competitive, and the Company
encounters strong direct competition for deposits, loans and other financial
services in all of its market areas. The Company's principal competitors include
other commercial banks, savings banks, savings and loan associations, mutual
funds, money market funds, finance companies, trust companies, insurers, leasing
companies, credit unions, mortgage companies, private issuers of debt
obligations and suppliers of other investment alternatives, such as securities
firms. Many of the Company's non-bank competitors are not subject to the same
degree of regulation as that imposed on bank holding companies, federally
insured banks and national or Illinois chartered banks. As a result, such non-
bank competitors have advantages over the Company in providing certain services.
In addition, in recent years, several major multi-bank holding companies have
entered or expanded in the Chicago metropolitan market. Generally, these
financial institutions are significantly larger than the Company and have
greater access to capital and other resources.
Regulatory Restrictions on Bank Dividends
The Company's sources of funds for payment of interest on the Subordinated
Debentures (which payments will be the sole source of funds available for
payment of Distributions on the Trust Preferred Securities) will consist
primarily of other borrowings (including amounts drawn down under its revolving
line of credit) and dividends, if any, from its direct and indirect
subsidiaries. None of the Company's banking subsidiaries has paid any dividends
to date. Under the provisions of the Illinois Banking Act, dividends may not be
declared by Lake Forest Bank, Hinsdale Bank, North Shore Bank, nor Libertyville
Bank except out of each Bank's net profits (as defined therein), and unless each
Bank has transferred to surplus at least one-tenth of its net profits since the
date of the declaration of the last preceding dividend, until the amount of its
surplus is at least equal to its capital. However, as Federal Reserve member
banks, dividends declared in any calendar year by any of the Banks may not
exceed its net profit for the year plus its retained net profits for the
preceding two years. In addition, each of Libertyville Bank, Barrington Bank and
Crystal Lake Bank is currently subject to additional restrictions prohibiting
the payment of dividends by a de novo bank in its first three years of
operations. The de novo period will end for Libertyville Bank in October 1998,
for Barrington Bank in December 1999, and for Crystal Lake Bank in December
2000. Subsequent to these dates, the Banks would be allowed to pay dividends
subject to the regulatory limitations that are applicable to all state-
chartered, Federal Reserve member banks, or in the case of Barrington Bank
24
<PAGE>
and Crystal Lake Bank, national banks. As of June 30, 1998, based upon
applicable regulatory limitations, Lake Forest Bank and Hinsdale Bank had
approximately $5.6 million and $1.9 million, respectively, available to pay as
dividends to the Company, subject to regulatory capital maintenance
requirements.
Financial Institution Regulation
The Company, the Banks and WAMC are subject to extensive federal and state
legislation, regulation and supervision. Recently enacted, proposed and future
legislation and regulations have had, will continue to have or may have
significant impact on the financial services industry. Some of the legislative
and regulatory changes may benefit the Company, the Banks and WAMC; others,
however, may increase their costs of doing business and thereby assist
competitors.
Year 2000 Compliance
A critical issue has emerged in the banking industry, and generally for all
industries that are heavily reliant upon computers, regarding how existing
software application programs and operating systems can accommodate the date
value for the Year 2000. The Year 2000 issue is the result of computer programs
being written using two digits (rather than four) to define the applicable year.
As such, certain programs that have time-sensitive software may recognize a date
using "00" as the Year 1900 rather than the Year 2000. As a result, the year
1999 (i.e. "99") could be the maximum date value these systems will be able to
accurately process. During 1997, management began the process of working with
its outside data processor and other software vendors to ensure that the Company
is prepared for the Year 2000. That process has continued during 1998 and
current expectations are that testing will be completed in early 1999.
Regardless of the Year 2000 compliance of the Company's systems, there can be no
assurance that the Company will not be adversely affected by the failure of
others to become Year 2000 compliant. Such risks may include potential losses
related to loans made to third parties whose businesses are adversely affected
by the Year 2000 issue, the disruption or inaccuracy of data provided by non-
Year 2000 compliant third parties and business disruption caused by the failure
of service providers, such as security and data processing companies, to become
Year 2000 compliant. Because of these uncertainties, there can be no assurance
that the Year 2000 issue will not have a material financial impact in any future
period, although management does not anticipate a material adverse effect.
Forward-looking Statements
This Prospectus (including documents incorporated herein by reference)
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Such forward-looking statements may be deemed to
include, among other things, statements relating to anticipated improvements in
financial performance and management's long-term performance goals, as well as
statements relating to the Company's operational and growth strategies,
including anticipated internal growth and plans to pursue additional specialized
earning asset niches, to seek potential acquisitions of community banking
institutions in desirable markets or possible formation of additional de novo
banks and new branch offices, and to pursue potential development or acquisition
of specialty finance businesses. Actual results could differ materially from
those addressed in the forward-looking statements as a result of the factors
discussed above in this "Risk Factors" section and elsewhere in this Prospectus.
25
<PAGE>
USE OF PROCEEDS
Capital Trust will use the gross proceeds received from the sale of the
Trust Preferred Securities to purchase Subordinated Debentures from the Company.
The Company anticipates that, based on applicable Federal Reserve limitations,
approximately $_____ million of the proceeds from the sale of the Trust
Preferred Securities will constitute Tier 1 capital of the Company upon
consummation of this offering.
The net proceeds to the Company from the sale of the Subordinated
Debentures are estimated to be $ (assuming no exercise of the over-
allotment option and after deduction of underwriting commissions and estimated
offering expenses of approximately $_____). The Company will use such net
proceeds to repay all or a portion of the amounts outstanding under the
Company's $30 million revolving line of credit with LaSalle National Bank. At
July 31, 1998, approximately $27.2 million of indebtedness was outstanding under
the line. Borrowings under the line bear interest at a floating rate equal to,
at the Company's option, either the lender's prime rate or the London Inter-Bank
Offered Rate ("LIBOR") plus 125 basis points. The weighted average rate at July
31, 1998, was 6.94% and loans drawn on the line mature on or before September 1,
1998. The revolving line of credit is secured by a pledge of the stock of each
of the Banks, other than Crystal Lake Bank.
Following such repayment, the unused portion of the entire line (which the
lender has agreed to increase to $40 million effective September 1, 1998) will
remain available until its maturity and the Company may use the line for future
borrowings from time to time for general corporate purposes, including, without
limitation, payment of interest on the Subordinated Debentures and for continued
growth of the Company's banking and finance subsidiaries, for future branch
office openings and possible additional de novo bank formations, and for
potential future acquisitions of community banking organizations or specialty
finance companies or investments in businesses engaged in niche consumer lending
or selected commercial finance activities, although the Company does not
currently have any plans regarding any specific acquisition.
ACCOUNTING TREATMENT
Capital Trust will be treated, for financial reporting purposes, as a
subsidiary of the Company and, accordingly, the accounts of Capital Trust will
be included in the consolidated financial statements of the Company. The Trust
Preferred Securities will be presented as a separate line item in the
consolidated balance sheet of the Company under the caption "Company Obligated
Mandatory Redeemable Preferred Securities of Subsidiary Trust Holding Solely
Subordinated Debentures," and appropriate disclosures about the Trust Preferred
Securities, the Guarantee and the Subordinated Debentures will be included in
the notes to consolidated financial statements. For financial reporting
purposes, the Company will record Distributions payable on the Trust Preferred
Securities as interest expense in the Consolidated Statement of Operations.
All future reports of the Company filed under the Exchange Act will (i)
present the Trust Preferred Securities issued by Capital Trust on the balance
sheet as a separate line-item entitled "Company Obligated Mandatory Redeemable
Preferred Securities of Subsidiary Trust Holding Solely Subordinated
Debentures," (ii) include in a footnote to the annual financial statements
disclosure that the sole assets of Capital Trust are the Subordinated Debentures
(including the outstanding principal amount, interest rate and maturity date of
such Subordinated Debentures), and (iii) include in a footnote to the annual
financial statements disclosure that the Company owns all of the Common
Securities of Capital Trust, and the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the Expense Agreement in the
aggregate constitute a full, irrevocable and unconditional guarantee, on a
subordinated basis, by the Company of the obligations of Capital Trust under the
Trust Preferred Securities.
26
<PAGE>
CAPITALIZATION
The following table sets forth the total deposits, total indebtedness and
capitalization of the Company as of June 30, 1998 (i) on an historical basis and
(ii) as adjusted, giving effect to the issuance of the Trust Preferred
Securities by Capital Trust (assuming no exercise of the Underwriters' over-
allotment option) and the application of the estimated net proceeds from the
sale thereof to purchase the Subordinated Debentures from the Company. See "Use
of Proceeds." This data should be read in conjunction with the summary
consolidated financial data of the Company included elsewhere in this Prospectus
and the consolidated financial statements, including the notes thereto,
incorporated herein by reference.
<TABLE>
<CAPTION>
June 30, 1998
-------------------------
Actual As Adjusted
---------- -----------
(in thousands)
<S> <C> <C>
Total deposits..................................................... $1,063,590 $1,063,590
========== ==========
Indebtedness:
Notes payable...................................................... $ 26,603 $ --
Company Obligated Mandatory Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Subordinated Debentures........... -- 27,000
Shareholders' equity:
Preferred Stock, 20,000,000 shares authorized; no shares issued or
outstanding....................................................... -- --
Common Stock, without par value, $1.00 stated value; 30,000,000
shares authorized; 8,148,772 shares issued and outstanding........ 8,149 8,149
Common stock warrants; 155,430 warrants issued and outstanding..... 100 100
Surplus............................................................ 72,868 72,868
Retained deficit................................................... (10,112) (10,112)
Accumulated other comprehensive income............................. (22) (22)
---------- ----------
Total shareholders' equity......................................... 70,983 70,983
---------- ----------
Total capitalization............................................... $ 97,586 $ 97,983
========== ==========
</TABLE>
The following table sets forth the Company's actual consolidated regulatory
capital ratios at June 30, 1998, and as adjusted at June 30, 1998, to give
effect to the application of the estimated net proceeds (assuming no exercise of
the Underwriters' over-allotment option) from the offering (see "Use of
Proceeds"):
<TABLE>
<CAPTION>
June 30, 1998
----------------------------------------------------------------------------
Actual As Adjusted
----------------------------------- -------------------------------------
"Well- Excess/ "Well-
capitalized" (Deficit) capitalized" Excess
Capital Standard/(1)/ Capital Capital/(2)/ Standard/(1)/ Capital
------- ------------- --------- ------------ ------------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Dollar basis:
Tier 1 leverage capital........... $69,359 $ 56,773 $ 12,586 $ 92,479 $ 56,773 $35,706
Tier 1 risk-based capital......... 69,359 60,266 9,093 92,479 60,266 32,213
Total risk-based capital.......... 75,215 100,443 (25,228) 102,215 100,443 1,772
Percentage basis:
Leverage ratio.................... 6.11% 5.00% 8.14% 5.00%
Tier 1 risk-based capital ratio... 6.91% 6.00% 9.21% 6.00%
Total risk-based capital ratio.... 7.49% 10.00% 10.18% 10.00%
</TABLE>
- ------------
(1) Reflects the minimum amount of capital necessary to meet the "well-
capitalized" regulatory standard. As of June 30, 1998, the Company exceeded
the minimum "well capitalized" standard for both Tier 1 leverage and Tier 1
risk-based capital but not the total risk-based capital standard. Due to
growth in assets subsequent to June 30, 1998, the Company does not expect
its total
27
<PAGE>
risk-based capital to exceed the "well-capitalized" standards. The Company
will, however, meet the "adequately capitalized" standard for total risk-
based capital upon completion of the offering.
(2) Federal Reserve guidelines for calculation of Tier 1 capital limit the
aggregate amount of cumulative preferred stock, including securities
similar to the Trust Preferred Securities, which can be included in Tier 1
capital to 25% of total Tier 1 capital. As of June 30, 1998, approximately
$23.1 million of the aggregate amount of Trust Preferred Securities would
have been included as Tier 1 capital for the Company. To the extent any
amounts of Trust Preferred Securities are not included as Tier 1 capital,
such amounts will be included in total risk-based capital for the Company.
28
<PAGE>
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Trust Agreement. The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act. The Property Trustee, Wilmington Trust, will act as
indenture trustee for the Trust Preferred Securities under the Trust Agreement
for purposes of complying with the provisions of the Trust Indenture Act. The
terms of the Trust Preferred Securities will include those stated in the Trust
Agreement and those made part of the Trust Agreement by the Trust Indenture Act.
The following summary of the material terms and provisions of the Trust
Preferred Securities and the Trust Agreement does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the Trust
Agreement, the Trust Act, and the Trust Indenture Act. Wherever particular
defined terms of the Trust Agreement are referred to, but not defined herein,
such defined terms are incorporated herein by reference. The form of the Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
General
Pursuant to the terms of the Trust Agreement, an Administrative Trustee,
on behalf of Capital Trust, will issue the Trust Securities. All of the Common
Securities will be owned by the Company. The Trust Preferred Securities will
represent preferred undivided beneficial interests in the assets of Capital
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. The Trust Agreement does not permit the issuance by
Capital Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by Capital Trust.
The Trust 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." Legal title to the Subordinated Debentures
will be held by the Property Trustee in trust for the benefit of the holders of
the Trust Securities. The Guarantee executed by the Company for the benefit of
the holders of the Trust Preferred Securities will be a guarantee on a
subordinated basis with respect to the Trust Preferred Securities, but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Trust Preferred Securities when Capital Trust does not have
funds on hand available to make such payments. Wilmington Trust Company, as
Guarantee Trustee, will hold the Guarantee for the benefit of the holders of the
Trust Preferred Securities. See "Description of the Guarantee" and "Relationship
Among the Trust Preferred Securities, the Subordinated Debentures and the
Guarantee." Distributions
Payment of Distributions. Distributions on each Trust Preferred Security
will be payable at the annual rate of % of the stated Liquidation Amount of
$25, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, to the holders of the Trust Preferred Securities on
the relevant record dates (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). The record date will be
the 15th day of the month in which the relevant Distribution Date occurs.
Distributions will accumulate from the date of original issuance. The first
Distribution Date for the Trust Preferred Securities will be December 31, 1998.
The amount of Distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
Distributions are payable on the Trust 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 (and without any additional
Distributions, 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 Distribution will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally due and payable. "Business Day" means any day other than a Saturday,
a Sunday, a day on which banking institutions in The City of New York are
authorized or required by law or executive order to remain closed or a day on
which the corporate trust office of the Property Trustee or the Debenture
Trustee is closed for business.
Extended Interest Payment Period. The Company has the right under the
Indenture, so long as no Debenture Event of Default has occurred and is
continuing, to defer the payment of interest on the Subordinated Debentures at
any time, or from time to time (each, an "Extended Interest Payment Period"),
which right, if exercised, would defer quarterly Distributions on the Trust
Preferred Securities during any such Extended Interest Payment Period.
Distributions to which
29
<PAGE>
holders of the Trust Preferred Securities are entitled will accumulate
additional Distributions thereon at the rate per annum of % thereof,
compounded quarterly from the relevant Distribution Date. "Distributions," as
used herein, includes any such additional Distributions. The right to defer the
payment of interest on the Subordinated Debentures is limited, however, to a
period not exceeding 20 consecutive quarters and no Extended Interest Payment
Period may extend beyond the Stated Maturity of the Subordinated Debentures or
end on a date other than an Interest Payment Date. During any such Extended
Interest Payment 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 (other than the
reclassification of any class of the Company's capital stock into another class
of capital stock), (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank pari passu with or junior in interest to the Subordinated Debentures or
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks pari
passu with or junior in interest to the Subordinated Debentures (other than
payments under the Guarantee), or (iii) redeem, purchase or acquire less than
all of the Subordinated Debentures or any of the Trust Preferred Securities.
Prior to the termination of any such Extended Interest Payment Period, so long
as no Debenture Event of Default shall have occurred and be continuing, the
Company may further defer the payment of interest; provided that such Extended
Interest Payment Period may not exceed 20 consecutive quarters or extend beyond
the Stated Maturity of the Subordinated Debentures or end on a date other than
an Interest Payment Date. Upon the termination of any such Extended Interest
Payment Period and the payment of all amounts then due, the Company may elect to
begin a new Extended Interest Payment Period, subject to the above requirements.
Subject to the foregoing, there is no limitation on the number of times that the
Company may elect to begin an Extended Interest Payment Period.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.
Source of Distributions. The funds of Capital Trust available for
distribution to holders of the Trust Preferred Securities will be limited to
payments under the Subordinated Debentures in which Capital Trust will invest
the proceeds from the issuance and sale of the Trust Securities. See
"Description of the Subordinated Debentures." Distributions will be paid through
the Property Trustee, who will hold amounts received in respect of the
Subordinated Debentures in the Property Account for the benefit of the holders
of the Trust Securities. If the Company does not make interest payments on the
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Trust Securities. The payment of Distributions (if and
to the extent Capital Trust has funds available for the payment of such
Distributions) is guaranteed by the Company. See "Description of the Guarantee."
Distributions on the Trust Preferred Securities will be payable to the
holders thereof as they appear on the register of holders of the Trust Preferred
Securities on the relevant record dates, which date will be the 15th day of the
month in which the relevant Distribution Date occurs. Subject to any applicable
laws and regulations and the provisions of the Trust Agreement, each such
payment will be made as described above under "--Distributions--Payment of
Distributions."
Redemption or Exchange
General. The Subordinated Debentures will mature on _________ __, 2028. The
Company will have the right to redeem the Subordinated Debentures (i) on or
after September 30, 2003 in whole at any time or in part from time to time, or
(ii) at any time, in whole (but not in part), within 180 days following the
occurrence of a Tax Event, an Investment Company Event or a Capital Treatment
Event, in each case subject to receipt of prior approval by the Federal Reserve
if then required under applicable capital guidelines, policies or regulations of
the Federal Reserve. The Company will not have the right to purchase the
Subordinated Debentures, in whole or in part, from Capital Trust until after
September 30, 2003, except if a Tax Event, an Investment Company Event or a
Capital Treatment Event has occurred. See "Description of the Subordinated
Debentures--General."
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Subordinated Debentures, whether at Stated Maturity or upon earlier
redemption as provided in the Indenture, the proceeds from such repayment or
redemption will be applied by the Property Trustee to redeem a Like Amount (as
defined herein) of the Trust Securities, upon not less than 30 days nor more
than 60 days notice, at a redemption price (the "Redemption Price")
30
<PAGE>
equal to 100% of the aggregate Liquidation Amount of such Trust Securities plus
accumulated but unpaid Distributions and Additional Interest (if any is
required) thereon to the date of redemption (the "Redemption Date"). See
"Description of the Subordinated Debentures--Redemption or Exchange." If less
than all of the Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption will be
allocated to redemption of the Trust Preferred Securities and redemption of the
Common Securities pro rata.
Distribution of Subordinated Debentures. Subject to the Company having
received prior approval of the Federal Reserve if so required under applicable
capital guidelines, policies or regulations of the Federal Reserve, the Company
will have the right at any time to dissolve, wind-up or terminate Capital Trust
and, after satisfaction of the liabilities of creditors of Capital Trust as
provided by applicable law, cause the Subordinated Debentures to be distributed
to the holders of Trust Securities in liquidation of Capital Trust. See
"--Liquidation Distribution Upon Termination."
Tax Event Redemption, Investment Company Event Redemption or Capital
Treatment Event Redemption. If a Tax Event, an Investment Company Event or
Capital Treatment Event in respect of the Trust Securities occurs and is
continuing, the Company has the right to redeem the Subordinated Debentures in
whole (but not in part) and thereby cause a mandatory redemption of such Trust
Securities in whole (but not in part) at the Redemption Price within 180 days
following the occurrence of such Tax Event, Investment Company Event or Capital
Treatment Event. In the event a Tax Event, an Investment Company Event or
Capital Treatment Event in respect of the Trust Securities has occurred and the
Company does not elect to redeem the Subordinated Debentures and thereby cause a
mandatory redemption of such Trust Securities or to dissolve Capital Trust and
cause the Subordinated Debentures to be distributed to holders of such Trust
Securities in liquidation of Capital Trust as described below under
"--Liquidation Distribution Upon Termination," such Trust Preferred Securities
will remain outstanding and Additional Interest (as defined herein) may be
payable on the Subordinated Debentures.
"Additional Interest" means the additional amounts as may be necessary to
be paid by the Company in order that the amount of Distributions then due and
payable by Capital Trust on the outstanding Trust Securities will not be reduced
as a result of any additional taxes, duties and other governmental charges to
which Capital Trust has become subject.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture, which will be used to pay the Redemption Price of
such Trust Securities, and (ii) with respect to a distribution of Subordinated
Debentures to holders of Trust Securities in connection with a
liquidation of Capital Trust, Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the holder to whom
such Subordinated Debentures are distributed. Each Subordinated Debenture
distributed pursuant to clause (ii) above will carry with it accrued interest in
an amount equal to the accrued and unpaid interest then due on such Subordinated
Debenture.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among
the Trust Securities.
After the liquidation date fixed for any distribution of Subordinated
Debentures for Trust Preferred Securities (i) such Trust Preferred Securities
will no longer be deemed to be outstanding, and (ii) any certificates
representing Trust Preferred Securities will be deemed to represent the
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of such Trust Preferred Securities, and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid Distributions on the
Trust Preferred Securities until such certificates are presented to the
Administrative Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Trust Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Trust Preferred Securities if a dissolution and liquidation of Capital Trust
were to occur. The Trust Preferred Securities that an investor may purchase, or
the Subordinated Debentures that an investor may receive on dissolution and
liquidation of Capital Trust, may, therefore, trade at a discount to the price
that the investor paid to purchase the Trust Preferred Securities offered
hereby.
31
<PAGE>
Redemption Procedures
Trust Preferred Securities redeemed on each Redemption Date will be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Subordinated Debentures. Redemptions of the
Trust Preferred Securities will be made and the Redemption Price will be payable
on each Redemption Date only to the extent that Capital Trust has funds on hand
available for the payment of such Redemption Price. See "--Subordination of
Common Securities."
If Capital Trust gives a notice of redemption in respect of its Trust
Securities, then the Property Trustee, to the extent funds are available, will
irrevocably deposit with the depositary for the Trust Securities funds
sufficient to pay the aggregate Redemption Price and will give the depositary
for the Trust Securities irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of their certificates
evidencing such Trust Securities. See "Book-Entry Issuance." If the Trust
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will deposit with the paying agent for such
Trust Preferred Securities funds sufficient to pay the aggregate Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing such Trust Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption will be payable to the holders of such
Trust Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption has been given and funds deposited as required,
then upon the date of such deposit, all rights of the holders of such Trust
Securities so called for redemption will cease, except the right of the holders
of such Trust Securities to receive the Redemption Price, but without interest
on such Redemption Price, and such Trust Securities will cease to be
outstanding. In the event that any date fixed for redemption of Trust Securities
is not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day which is a Business Day (and without any
additional Distribution, 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 interest will be made on the immediately preceding Business Day,
in each case, with the same force and effect as if made on such date. In the
event that payment of the Redemption Price in respect of Trust Securities called
for redemption is improperly withheld or refused and not paid either by Capital
Trust, or by the Company pursuant to the Guarantee, Distributions on such Trust
Securities will continue to accumulate at the then applicable rate, from the
Redemption Date originally established by Capital Trust for such Trust
Securities to the date such Redemption Price is actually paid, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price. See "Description of the
Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law), and further provided, that the Company has not and is
not continuing to exercise its right to defer interest payments, the Company or
its subsidiaries may at any time and from time to time purchase outstanding
Trust Preferred Securities by tender, in the open market or by private
agreement.
Payment of the Redemption Price on the Trust Preferred Securities and any
distribution of Subordinated Debentures to holders of Trust Preferred Securities
will be made to the applicable recordholders thereof as they appear on the
register for the Trust Preferred Securities on the relevant record date, for the
related Distribution Date.
If less than all of the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate Liquidation Amount of such Trust Securities to be
redeemed will be allocated pro rata to the Trust Securities based upon the
relative Liquidation Amounts. The particular Trust Preferred Securities to be
redeemed will be selected by the Property Trustee from the outstanding Trust
Preferred Securities not previously called for redemption, by such method as the
Property Trustee deems fair and appropriate and which may provide for the
selection for redemption of portions (equal to $25 or integral multiples of $25
in excess thereof) of the Liquidation Amount of Trust Preferred Securities of a
denomination larger than $25. The Property Trustee will promptly notify the
registrar for the Trust Preferred Securities in writing of the Trust Preferred
Securities selected for redemption and, in the case of any Trust 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 Trust Preferred
Securities will relate to the portion of the aggregate Liquidation Amount of
Trust Preferred Securities which has been or is to be redeemed.
32
<PAGE>
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the redemption price on the Subordinated Debentures, on and after the Redemption
Date interest will cease to accrue on such Subordinated Debentures or portions
thereof (and Distributions will cease to accumulate on the related Trust
Securities or portions thereof) called for redemption.
Subordination of Common Securities
Payment of Distributions (including Additional Interest, if any is
required) on, and the Redemption Price of, the Trust Preferred Securities and
Common Securities, as applicable, will be made pro rata based on the Liquidation
Amount of the Trust Preferred Securities and Common Securities; provided,
however, that if on any Distribution Date or Redemption Date a Debenture Event
of Default has occurred and is continuing, no payment of any Distribution on, or
Redemption Price of, any of the Common Securities, and no other payment on
account of the redemption, liquidation or other acquisition of such Common
Securities, will be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Interest, if any is required) on all
of the outstanding Trust Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the outstanding Trust
Preferred Securities then called for redemption, will have been made or provided
for, and all funds available to the Property Trustee will first be applied to
the payment in full in cash of all Distributions (including Additional Interest,
if any is required) on, or Redemption Price of, the Trust Preferred Securities
then due and payable.
In the case of the occurrence and continuance of any Event of Default
resulting from a Debenture Event of Default, the Company, as holder 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 effect of any
such Event of Default with respect to the Trust Preferred Securities has been
cured, waived or otherwise eliminated. Until any such Event of Default under the
Trust Agreement with respect to the Trust Preferred Securities has been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Trust Preferred Securities and not on behalf of the
Company, as holder of the Common Securities, and only the holders of the Trust
Preferred Securities will have the right to direct the Property Trustee to act
on their behalf.
Liquidation Distribution Upon Termination
The Company will have the right at any time to dissolve, wind-up or
terminate Capital Trust and cause the Subordinated Debentures to be distributed
to the holders of the Trust Preferred Securities. Such right is subject,
however, to the Company having received prior approval of the Federal Reserve if
then required under applicable capital guidelines, policies or regulations of
the Federal Reserve.
Pursuant to the Trust Agreement, Capital Trust will automatically terminate
upon expiration of its term and will terminate earlier on the first to occur of
(i) certain events of bankruptcy, dissolution or liquidation of the Company,
(ii) the distribution of a Like Amount of the Subordinated Debentures to the
holders of its Trust Securities, if the Company, as depositor, has given written
direction to the Property Trustee to terminate Capital Trust (which direction is
optional and wholly within the discretion of the Company, as depositor, subject
to the Company's having received prior approval of the Federal Reserve if so
required under applicable guidelines, policies or regulations thereof), (iii)
redemption of all of the Trust Preferred Securities as described under
"--Redemption or Exchange--Mandatory Redemption" or (iv) the entry of an order
for the dissolution of Capital Trust by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv) of
the preceding paragraph, Capital Trust will be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of Capital Trust as provided by
applicable law, to the holders of Trust Securities a Like Amount
of the Subordinated Debentures, unless such distribution is determined by the
Property Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of Capital Trust available for
distribution to holders, after satisfaction of liabilities to creditors of
Capital Trust as provided by applicable law, an amount equal to, in the case of
holders of Trust 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 Capital Trust has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by Capital Trust on the Trust Securities will be paid to holders on a
pro rata basis based on Liquidation Amounts. The Company, as the holder of the
Common Securities, will be entitled to
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receive Liquidation Distributions pro rata with the holders of the Trust
Preferred Securities, except that, if a Debenture Event of Default has occurred
and is continuing, the Trust Preferred Securities will have a priority over the
Common Securities. See "--Subordination of Common Securities."
Under current United States federal income tax law and interpretations and
assuming, as expected, that Capital Trust is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Trust Preferred Securities. Should there be a change in law, a
change in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Trust Preferred
Securities. See "Certain Federal Income Tax Consequences--Receipt of
Subordinated Debentures or Cash Upon Liquidation of Capital Trust." If the
Company elects neither to redeem the Subordinated Debentures prior to maturity
nor to liquidate Capital Trust and distribute the Subordinated Debentures to
holders of the Trust Preferred Securities, the Trust Preferred Securities will
remain outstanding until the repayment of the Subordinated Debentures.
If the Company elects to dissolve Capital Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Trust Preferred
Securities in liquidation of Capital Trust, the Company will continue to have
the right to shorten or extend the maturity of such Subordinated Debentures,
subject to certain conditions. See "Description of the Subordinated
Debentures--General."
Liquidation Value
The amount of the Liquidation Distribution payable on the Trust Preferred
Securities in the event of any liquidation of Capital Trust is $25 per Trust
Preferred Security plus accumulated and unpaid Distributions thereon to the date
of payment, which may be in the form of a distribution of such amount in
Subordinated Debentures, subject to certain exceptions. See "--Liquidation
Distribution Upon Termination."
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 Trust Preferred
Securities (whatever the reason for such Event of Default and whether voluntary
or involuntary or 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 the Subordinated Debentures--Debenture Events of Default"); or
(ii) default by Capital 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 Capital 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 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 clauses (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 Trustee(s) by the
holders of at least 25% in aggregate Liquidation Amount of the outstanding
Trust 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 and the failure by the Company to appoint a
successor Property Trustee within 60 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 the Trust Preferred
Securities, the Administrative Trustees and the Company, as depositor, unless
such Event of Default has been cured or waived. The
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Company, as depositor, and the Administrative Trustees are required to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under the
Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities will have a preference over the Common Securities upon
termination of Capital Trust. See "--Subordination of Common Securities" and
"--Liquidation Distribution Upon Termination." The existence of an Event of
Default does not entitle the holders of Trust Preferred Securities to accelerate
the maturity thereof, unless such Event of Default is caused by the occurrence
of a Debenture Event of Default and both the Debenture Trustee and holders of at
least 25% in principal amount of the Subordinated Debentures fail to accelerate
the maturity thereof.
Removal of Capital Trust Trustees
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the Property Trustee
or the Delaware Trustee may be removed at such time by the holders of a majority
in Liquidation Amount of the outstanding Trust Preferred Securities. In no
event, however, will the holders of the Trust Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee will be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Trust Agreement.
Co-Trustees and Separate Property Trustee
Unless an Event of Default has occurred and is continuing, at any time
for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust Property (as defined
in the Trust Agreement) may at the time be located, the Company, as the holder
of the Common Securities, will have power to appoint, and upon written request
of the Property Trustee will appoint, one or more Persons (as defined in the
Trust Agreement) either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such Trust Property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or Persons
in such capacity any property, title, right or power deemed necessary or
desirable, subject to the provisions of the Trust Agreement. In case a Debenture
Event of Default has occurred and is continuing, the Property Trustee alone will
have power to make such appointment.
Merger or Consolidation of Trustees
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural Person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of Capital Trust
Capital 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 corporation or other Person, except as
described below. Capital Trust may, at the request of the Company, with the
consent of the Administrative Trustees and without the consent of the holders of
the Trust Preferred Securities, the Property Trustee or the Delaware Trustee,
merge with or into, consolidate, amalgamate, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations of Capital
Trust with respect to the Trust Preferred Securities, or (b) substitutes for the
Trust Preferred Securities other securities having substantially the same terms
as the Trust Preferred Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Trust Preferred Securities rank in
priority with respect to distributions and payments upon liquidation, redemption
and otherwise, (ii) the Company expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property
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Trustee in its capacity as the holder of the Subordinated Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Trust Preferred Securities are then listed (including,
if applicable, Nasdaq), if any, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Trust Preferred Securities
(including any Successor Securities) in any material respect, (v) such successor
entity has a purpose substantially identical to that of Capital Trust, (vi)
prior to such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Company has received an opinion from independent counsel
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 Trust Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
Capital Trust nor such successor entity will be required to register as an
"investment company" under the Investment Company Act, and (vii) the Company
owns all of the common securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee. Notwithstanding the foregoing, Capital
Trust will not, except with the consent of holders of 100% in Liquidation Amount
of the Trust 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 Person or permit any other Person to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause Capital Trust or the successor entity to be classified as other than
a grantor trust for United States federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "Description of the Guarantee--
Amendments and Assignment" and as otherwise required by the Trust Act and the
Trust Agreement, the holders of the Trust Preferred Securities will have no
voting rights.
The Trust Agreement may be amended from time to time by the Company and
the Trustees, without the consent of the holders of the Trust Preferred
Securities (i) with respect to acceptance of appointment by a successor trustee,
(ii) to cure any ambiguity, correct or supplement any provisions in such Trust
Agreement that may be inconsistent with any other provision, or to make any
other provisions with respect to matters or questions arising under the Trust
Agreement (provided such amendment is not inconsistent with the other provisions
of the Trust Agreement), or (iii) to modify, eliminate or add to any provisions
of the Trust Agreement to such extent as is necessary to ensure that Capital
Trust will be classified for United States federal income tax purposes as a
grantor trust at all times that any Trust Securities are outstanding or to
ensure that Capital Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the case
of clause (ii), such action may not adversely affect in any material respect the
interests of any holder of Trust Securities, and any amendments of such Trust
Agreement will become effective when notice thereof is given to the holders of
Trust Securities. The Trust Agreement may be amended by the Trustees and the
Company (i) with the consent of holders representing not less than a majority in
aggregate Liquidation Amount of the outstanding Trust Securities, and (ii) upon
receipt by the Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect Capital Trust's status as a grantor trust
for United States federal income tax purposes or Capital Trust's exemption from
status as an "investment company" under the Investment Company Act.
Notwithstanding anything in this paragraph to the contrary, without the consent
of each holder of Trust Securities, the Trust Agreement may not be amended to
(a) 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 (b) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.
The Trustees will not, so long as any Subordinated Debentures are held by
the Property Trustee, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures will be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent is required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Trust
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Securities; provided, however, that where a consent under the Indenture requires
the consent of each holder of Subordinated Debentures affected thereby, no such
consent will be given by the Property Trustee without the prior consent of each
holder of the Trust Securities. The Trustees may not revoke any action
previously authorized or approved by a vote of the holders of the Trust
Securities except by subsequent vote of the holders of the Trust Securities. The
Property Trustee will notify each holder of Trust Securities of any notice of
default with respect to the Subordinated Debentures. In addition to obtaining
the foregoing approvals of the holders of the Trust Securities, prior to taking
any of the foregoing actions, the Trustees must obtain an opinion of counsel
experienced in such matters to the effect that Capital Trust will not be
classified as an association taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of Trust Securities may be given at a
meeting of holders of Trust Securities convened for such purpose or pursuant to
written consent. The Property Trustee will cause a notice of any meeting at
which holders of Trust Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of Trust Securities in the manner set forth in the Trust
Agreement.
No vote or consent of the holders of Trust Preferred Securities will be
required for Capital Trust to redeem and cancel its Trust Preferred Securities
in accordance with the Trust Agreement.
Notwithstanding the fact that holders of Trust Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Trust Preferred Securities that are owned by the Company, the Trustees or
any affiliate of the Company or any Trustee, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
Global Trust Preferred Securities
The Trust Preferred Securities will be represented by one or more Global
Trust Preferred Securities registered in the name of DTC or its nominee.
Beneficial interests in the Global Trust Preferred Securities will be shown on,
and transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described below, Trust Preferred Securities in
definitive form will not be issued in exchange for the Global Trust Preferred
Securities. See "Book-Entry Issuance."
No Global Trust Preferred Security may be exchanged for Trust Preferred
Securities registered in the names of persons other than DTC or its nominee
unless (i) DTC notifies the Indenture Trustee that it is unwilling or unable to
continue as a depositary for such Global Trust Preferred Security and the
Company is unable to locate a qualified successor depositary, (ii) the Company
executes and delivers to the Indenture Trustee a written order stating that it
elects to terminate the book-entry system through DTC, or (iii) there shall have
occurred and be continuing a Debenture Event of Default under the Indenture. Any
Global Trust Preferred Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in such
names as DTC shall direct. It is expected that such instructions will be based
upon directions received by DTC with respect to ownership of beneficial
interests in such Global Trust Preferred Security. In the event that Trust
Preferred Securities are issued in definitive form, such Trust Preferred
Securities will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below.
Unless and until it is exchanged in whole or in part for the individual
Trust Preferred Securities represented thereby, a Global Trust Preferred
Security may not be transferred except as a whole by DTC to a nominee of DTC, by
a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee to a
successor depositary or any nominee of such successor.
Payments on Global Trust Preferred Securities will be made to DTC, as the
depositary for the Global Trust Preferred Securities. In the event the Trust
Preferred Securities are issued in definitive form, Distributions will be
payable, the transfer of the Trust Preferred Securities will be registrable, and
Trust Preferred Securities will be exchangeable, for Trust Preferred Securities
of other denominations of a like aggregate Liquidation Amount, at the corporate
office of the Property Trustee, or at the offices of any paying agent or
transfer agent appointed by the Administrative Trustees, provided that payment
of any Distribution may be made at the option of the Administrative
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Trustees by check mailed to the address of the persons entitled thereto or by
wire transfer. In addition, if the Trust Preferred Securities are issued in
definitive form, the record dates for payment of Distributions will be the 15th
day of the month in which the relevant Distribution Date occurs. For a
description of the terms of DTC arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-Entry
Issuance."
Upon the issuance of one or more Global Trust Preferred Securities, and the
deposit of such Global Trust Preferred Security with or on behalf of DTC or its
nominee, DTC or its nominee will credit, on its book-entry registration and
transfer system, the respective aggregate Liquidation Amounts of the individual
Trust Preferred Securities represented by such Global Trust Preferred Security
to the accounts of persons that have accounts with DTC ("Participants"). Such
accounts shall be designated by the dealers, underwriters or agents with respect
to such Trust Preferred Securities. Ownership of beneficial interests in a
Global Trust Preferred Security will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such Global Trust Preferred Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Trust Preferred Security.
So long as DTC or such other depositary, or its nominee, is the registered
owner of such Global Trust Preferred Security, such depositary or such nominee,
as the case may be, will be considered the sole owner or holder of the Trust
Preferred Securities represented by such Global Trust Preferred Security for all
purposes under the Trust Agreement. Except as described herein, owners of
beneficial interests in a Global Trust Preferred Security will not be entitled
to have any of the individual Trust Preferred Securities represented by such
Global Trust Preferred Security registered in their names, will not receive or
be entitled to receive physical delivery of any such Trust Preferred Securities
in definitive form and will not be considered the owners or holders thereof
under the Trust Agreement.
None of the Company, the Property Trustee, any paying agent or the
securities registrar for such Trust Preferred Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Trust
Preferred Security representing such Trust Preferred Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
the Liquidation Amount or Distributions in respect of a Global Trust Preferred
Security immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the aggregate
Liquidation Amount of such Global Trust Preferred Security as shown on the
records of DTC or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Trust Preferred
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants. See "Book-Entry
Issuance."
Payment and Paying Agency
Payments in respect of the Trust Preferred Securities shall be made to DTC,
which shall credit the relevant accounts of Participants on the applicable
Distribution Dates, or, if any of the Trust Preferred Securities are not held by
DTC, such payments shall be made by check mailed to the address of the holder
entitled thereto as such address will appear on the register of holders of the
Trust Preferred Securities. The paying agent for the Trust Preferred Securities
will initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and the Company.
The paying agent for the Trust Preferred Securities may resign as paying agent
upon 30 days' written notice to the Administrative Trustees, the Property
Trustee and the Company. In the event that the Property Trustee no longer is the
paying agent for the Trust Preferred Securities, the Administrative Trustees
will appoint a successor (which must be a bank or trust company acceptable to
the Property Trustee and the Company) to act as paying agent.
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Registrar and Transfer Agent
The Property Trustee will act as the registrar and the transfer agent for
the Trust Preferred Securities. Registration of transfers of Trust Preferred
Securities will be effected without charge by or on behalf of Capital Trust, but
upon payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. Capital Trust and its registrar and
transfer agent will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, until 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 it exercises or uses in the conduct of its 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 Trust Preferred Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby. If no Event of Default has occurred and is continuing and the Property
Trustee is required to decide between alternative causes of action, construe
ambiguous provisions in the Trust Agreement or is unsure of the application of
any provision of the Trust Agreement, and the matter is not one on which holders
of Trust Preferred Securities are entitled under the Trust Agreement to vote,
then the Property Trustee will take such action as is directed by the Company
and if not so directed, will take such action as it deems advisable and in the
best interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate Capital Trust in such a way that Capital Trust will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. The Company and the Administrative Trustees are
authorized, in this connection, to take any action, not inconsistent with
applicable law, the certificate of trust of Capital Trust or the Trust
Agreement, that the Company and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes.
Holders of the Trust Preferred Securities have no preemptive or similar
rights.
The Trust Agreement and the Trust Preferred Securities will be governed by,
and construed in accordance with, the internal laws of the State of Delaware.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Concurrently with the issuance of the Trust Preferred Securities, Capital
Trust will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Subordinated Debentures issued by
the Company. The Subordinated Debentures will be issued as unsecured debt under
the Indenture, to be dated as of __________, 1998 ("Indenture"), between the
Company and Wilmington Trust Company, as trustee (the "Debenture Trustee"). The
Indenture will be qualified as an indenture under the Trust Indenture Act. The
following summary of the material terms and provisions of the Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture and to the Trust
Indenture Act. Wherever particular defined terms of the Indenture are referred
to, but not defined herein, such defined terms are incorporated herein by
reference. The form of the Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
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General
The Subordinated Debentures will be limited in aggregate principal amount
to approximately $28 million (or approximately $32 million if the overallotment
option described under the heading "Underwriting" is exercised in full by the
Underwriters), such amount being the sum of the aggregate stated Liquidation
Amounts of the Trust Securities. The Subordinated Debentures will bear interest
at the annual rate of _____% of the principal amount thereof, payable quarterly
in arrears on the last calendar day of each of March, June, September and
December of each year (each, an "Interest Payment Date") beginning December 31,
1998, to the Person (as defined in the Indenture) in whose name each
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the 15th day of the month in which such Interest Payment
Date occurs. It is anticipated that, until the liquidation, if any, of Capital
Trust, the Subordinated Debentures will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such business day is in the next succeeding
calendar year, payment of such interest will be made on the immediately
preceding business day, in each case, with the same force and effect as if made
on the date such payment was originally due and payable. Accrued interest that
is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the rate per
annum of % thereof, compounded quarterly. 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 Interest, as
applicable.
The Subordinated Debentures will mature on _________ __, 2028 (such date,
as it may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened once at any time by the Company to any
date not earlier than September 30, 2003, subject to the Company having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines, policies or regulations of the Federal Reserve. Such date may also
be extended once at any time at the election of the Company but in no event to a
date later than __________ __, 2047, provided that at the time such election is
made and at the time of extension (i) the Company is not in bankruptcy,
otherwise insolvent or in liquidation, (ii) the Company is not in default in the
payment of any interest or principal on the Subordinated Debentures, and (ii)
Capital Trust is not in arrears on payments of Distributions on the Trust
Preferred Securities and no deferred Distributions are accumulated. In the event
that the Company elects to shorten or extend the Stated Maturity of the
Subordinated Debentures, it will give notice to the Debenture Trustee and
Capital Trust (unless Capital Trust is not the holder of the Subordinated
Debentures, in which case the Debenture Trustee will give notice to the holders
of the Subordinated Debentures), no more than 180 days and no less than 90 days
prior to the effectiveness thereof. The Company will not have the right to
redeem the Subordinated Debentures from Capital Trust until after September 30,
2003, except if a Tax Event, an Investment Company Event or a Capital Treatment
Event has occurred (in which case such redemption may be effected in whole, but
not in part).
The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of the Company's businesses, upon any such businesses' liquidation or
reorganization or otherwise (and thus the ability of holders of the Subordinated
Debentures to benefit indirectly from such distribution), is subject to the
prior claim of creditors of the Company's businesses, except to the extent that
the Company may itself be recognized as a creditor of such business. The
Subordinated Debentures will, therefore, be effectively subordinated to all
existing and future liabilities of the businesses, and holders of Subordinated
Debentures should look only to the assets of the Company for payments on the
Subordinated Debentures. The Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Company, including Senior Debt,
Subordinated Debt and Additional Senior Obligations, whether under the Indenture
or any existing indenture or other indenture that the Company may enter into in
the future or otherwise. See "--Subordination."
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
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Option to Extend Interest Payment Period
The Company has the right under the Indenture at any time during the term
of the Subordinated Debentures, so long as no Debenture Event of Default has
occurred and is continuing, to defer the payment of interest at any time, or
from time to time (each, an "Extended Interest Payment Period"). The right to
defer the payment of interest on the Subordinated Debentures is limited,
however, to a period, in each instance, not exceeding 20 consecutive quarters
and no Extended Interest Payment Period may extend beyond the Stated Maturity of
the Subordinated Debentures or end on a date other than an Interest Payment
Date. At the end of each Extended Interest Payment Period, the Company must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of ___%, compounded quarterly, to the extent permitted by applicable
law, and Additional Interest (if any then required)). During an Extended
Interest Payment Period, interest will continue to accrue and holders of
Subordinated Debentures (or the holders of Trust Preferred Securities if such
securities are then outstanding) will be required to accrue and recognize income
for United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Potential Extension of Interest Payment Period and Original Issue
Discount."
During any such Extended Interest Payment 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 (other than the reclassification of any class of the Company's capital
stock into another class of capital stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks pari passu or junior in interest to the Subordinated
Debentures (other than payments under the Guarantee), or (iii) redeem, purchase
or acquire less than all of the Subordinated Debentures or any of the Trust
Preferred Securities. Prior to the termination of any such Extended Interest
Payment Period, so long as no Debenture Event of Default shall have occurred and
be continuing, the Company may further defer the payment of interest; provided
that no Extended Interest Payment Period may exceed 20 consecutive quarters,
extend beyond the Stated Maturity of the Subordinated Debentures or end on a
date other than an Interest Payment Date. Upon the termination of any such
Extended Interest Payment Period and the payment of all amounts then due, the
Company may elect to begin a new Extended Interest Payment Period subject to the
above requirements. No interest will be due and payable during an Extended
Interest Payment Period, except at the end thereof. The Company has no present
intention of exercising its rights to defer payments of interest on the
Subordinated Debentures. The Company must give the Property Trustee, the
Administrative Trustees and the Trustee of its selection, notice of its election
of such Extended Interest Payment Period at least two Business Days prior to the
earlier of (i) the next succeeding date on which Distributions on the Trust
Securities would have been payable except for the election to begin such
Extended Interest Payment Period, or (ii) the date Capital Trust or the Company
is required to give notice of the record date, or the date such Distributions
are payable, to Nasdaq (or other applicable self-regulatory organization) or to
holders of the Trust Preferred Securities, but in any event at least one
Business Day prior to such record date. Subject to the foregoing, there is no
limitation on the number of times that the Company may elect to begin an
Extended Interest Payment Period.
Additional Interest
If Capital Trust or the Property Trustee is required to pay any additional
taxes, duties or other governmental charges as a result of the occurrence of a
Tax Event, the Company will pay Additional Interest on the Subordinated
Debentures such additional interest as may be required so that the net amounts
received and retained by Capital Trust after paying any such additional taxes,
duties or other governmental charges will not be less than the amounts Capital
Trust would have received had such additional taxes, duties or other
governmental charges not been imposed.
Redemption or Exchange
The Company will have the right to redeem the Subordinated Debentures prior
to maturity (i) on or after September 30, 2003, in whole at any time or in part
from time to time, or (ii) at any time in whole (but not in part), within 180
days following the occurrence of a Tax Event, an Investment Company Event or a
Capital Treatment Event, in each case at a redemption price equal to the accrued
and unpaid interest on the Subordinated Debentures so redeemed to the date fixed
for redemption, plus 100% of the principal amount thereof. Any such redemption
prior to the Stated Maturity will be subject to prior approval of the Federal
Reserve if then required under applicable capital guidelines, policies or
regulations of the Federal Reserve.
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"Tax Event" means the receipt by Capital Trust and the Company of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Trust Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) interest payable by the Company on the Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by the Company, in whole or in part, for United States federal income
tax purposes, (ii) Capital Trust is, or will be within 90 days after the date of
such opinion of counsel, subject to United States federal income tax with
respect to income received or accrued on the Subordinated Debentures, or (iii)
Capital Trust is, or will be within 90 days after the date of such opinion of
counsel, subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges. The Company or Capital Trust must
request and receive an opinion with regard to such matters within a reasonable
period of time after the Company or Capital Trust becomes aware of the possible
occurrence of any of the events described in clauses (i) through (iii) above.
"Investment Company Event" means the receipt by Capital Trust and the
Company of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, Capital Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act, which change becomes effective on or after the date of
original issuance of the Trust Preferred Securities. The Company or Capital
Trust must request and receive an opinion with regard to such matters within a
reasonable period of time after the Company or Capital Trust becomes aware of
the possible occurrence of any such event.
"Capital Treatment Event" means the receipt by Capital Trust and the
Company of an opinion of counsel experienced in such matters to the effect that,
as a result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision 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 prospective change, pronouncement or decision is announced on or after the
date of issuance of the Trust Preferred Securities under the Trust Agreement,
there is more than an insubstantial risk of impairment of the Company's ability
to treat the Trust Preferred Securities (or any substantial portion thereof) as
Tier 1 capital (or the then equivalent thereof), for purposes of the capital
adequacy guidelines of the Federal Reserve, as then in effect and applicable to
the Company. Capital Trust or the Company must request and receive an opinion
with regard to such matters within a reasonable period of time after the Company
or Capital Trust becomes aware of the possible occurrence of any such event.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Subordinated Debentures to
be redeemed at its registered address. Redemption of less than all outstanding
Subordinated Debentures shall be effected pro rata, by lot or in such other
manner deemed to be fair by the Debenture Trustee. Unless the Company defaults
in payment of the redemption price for the Subordinated Debentures, on and after
the redemption date interest ceases to accrue on such Subordinated Debentures or
portions thereof called for redemption.
The Subordinated Debentures will not be subject to any sinking fund.
Distribution Upon Liquidation
As described under "Description of the Trust Preferred Securities--
Liquidation Distribution Upon Termination," under certain circumstances, the
Subordinated Debentures may be distributed to the holders of the Trust Preferred
Securities in liquidation of Capital Trust after satisfaction of liabilities to
creditors of Capital Trust as provided by applicable law. Any such distribution
will be subject to receipt of prior approval by the Federal Reserve if then
required under applicable policies, guidelines or regulations of the Federal
Reserve. If the Subordinated Debentures are distributed to the holders of Trust
Preferred Securities upon the liquidation of Capital Trust, the Company will use
its reasonable efforts to list the Subordinated Debentures on Nasdaq or such
stock exchanges, if any, on which the Trust Preferred Securities are then
listed. There can be no assurance as to the market price of any Subordinated
Debentures that may be distributed to the holders of Trust Preferred Securities.
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Restrictions on Certain Payments
If at any time (i) there has occurred a Debenture Event of Default, (ii)
the Company is in default with respect to its obligations under the Guarantee,
or (iii) the Company has given notice of its election of an Extended Interest
Payment Period as provided in the Indenture with respect to the Subordinated
Debentures and has not rescinded such notice, or such Extended Interest Payment
Period, or any extension thereof, is continuing, the Company will not (1)
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 (other than the reclassification of any class of the Company's capital
stock into another class of capital stock), (2) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks pari passu or junior in interest to the Subordinated
Debentures (other than payments under the Guarantee), or (3) redeem, purchase or
acquire less than all of the Subordinated Debentures or any of the Trust
Preferred Securities.
Subordination
The Indenture provides that the Subordinated Debentures issued thereunder
are subordinated and junior in right of payment to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshaling of
assets or any bankruptcy, insolvency, debt restructuring or similar proceedings
in connection with any insolvency or bankruptcy proceedings of the Company, the
holders of Senior Debt, Subordinated Debt and Additional Senior Obligations of
the Company will first be entitled to receive payment in full of principal of
(and premium, if any) and interest, if any, on such Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company before the holders of
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of the
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with respect
to any Senior Debt, Subordinated Debt or Additional Senior Obligations of the
Company resulting in the acceleration of the maturity thereof, or if any
judicial proceeding is pending with respect to any such default.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person 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 such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person 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), (v) every capital lease obligation of such Person, and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Senior Debt" means, with respect to the Company, the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on or prior to the date of the Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to
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the Subordinated Debentures or to other Debt which is pari passu with, or
subordinated to, the Subordinated Debentures; provided, however, that Senior
Debt will not be deemed to include (i) any Debt 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,
(ii) any Debt of the Company to any of its subsidiaries, (iii) any Debt to any
employee of the Company, (iv) any Debt which by its terms is subordinated to
trade accounts payable or accrued liabilities arising in the ordinary course of
business to the extent that payments made to the holders of such Debt by the
holders of the Subordinated Debentures as a result of the subordination
provisions of the Indenture would be greater than they otherwise would have been
as a result of any obligation of such holders to pay amounts over to the
obligees on such trade accounts payable or accrued liabilities arising in the
ordinary course of business as a result of subordination provisions to which
such Debt is subject, (v) Debt which constitutes Subordinated Debt.
"Subordinated Debt" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, which is by its terms expressly provided to be
junior and subordinate to other Debt of the Company (other than the Subordinated
Debentures); provided, however, that Subordinated Debt will not be deemed to
include (i) any Debt 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, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv) any
Debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Subordinated
Debentures as a result of the subordination provisions of the Indenture would be
greater than they otherwise would have been as a result of any obligation of
such holders to pay amounts over to the obligees on such trade accounts payable
or accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, (v) Debt which
constitutes Senior Debt, and (vi) any Debt of the Company under debt securities
(and guarantees in respect of these debt securities) initially issued to any
trust, or a trustee of a trust, partnership or other entity affiliated with the
Company that is, directly or indirectly, a financing vehicle of the Company in
connection with the issuance by that entity of preferred securities or other
securities which are intended to qualify for Tier 1 capital treatment.
"Additional Senior Obligations" means, with respect to the Company, all
thereafter incurred, for Claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations do not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Subordinated Debentures or to rank pari passu in right of payment
with the Subordinated Debentures. "Claim," as used herein, has the meaning
assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978,
as amended.
The Indenture places no limitation on the amount of additional Senior Debt,
Subordinated Debt or Additional Senior Obligations that may be incurred by the
Company. The Company expects from time to time to incur additional indebtedness
constituting Senior Debt, Subordinated Debt and Additional Senior Obligations.
At June 30, 1998, the Company had consolidated Senior Debt, Subordinated Debt
and Additional Obligations of approximately $26.6 million. Because the Company
is a holding company, the Subordinated Debentures are effectively subordinated
to all existing and future liabilities of the Company's subsidiaries, including
obligations to depositors of the Banks.
Payment and Paying Agents
Payment of principal of and any interest on the Subordinated Debentures
will be made at the office of the Debenture Trustee in New York, New York,
except that, at the option of the Company, payment of any interest may be made
(i) by check mailed to the address of the Person entitled thereto as such
address appears in the register of holders of the Subordinated Debentures, or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the register of holders of the Subordinated Debentures, provided
that proper transfer instructions have been received by the regular record date.
Payment of any interest on Subordinated Debentures will be made to the Person in
whose name such Subordinated Debenture is registered at the close of business on
the regular record date for such interest, except in the case of defaulted
interest. The Company may at any time designate additional paying agents for the
Subordinated Debentures or rescind the designation of any paying agent for the
Subordinated Debentures; however, the Company will at all times be required to
maintain a paying agent in New York, New York, and each place of payment for the
Subordinated Debentures.
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Any moneys deposited with the Debenture Trustee or any paying agent for the
Subordinated Debentures, or then held by the Company in trust, for the payment
of the principal of or interest on the Subordinated Debentures and remaining
unclaimed for two years after such principal or interest has become due and
payable will be repaid to the Company on May 31 of each year or (if then held in
trust by the Company) will be discharged from such trust and the holder of such
Subordinated Debenture will thereafter look, as a general unsecured creditor,
only to the Company for payment thereof.
Registrar and Transfer Agent
The Debenture Trustee will act as the registrar and the transfer agent for
the Subordinated Debentures. Subordinated Debentures 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 registrar. The Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts; provided that the Company maintains a transfer agent in New
York, New York. The Company may at any time designate additional transfer agents
with respect to the Subordinated Debentures. In the event of any redemption,
neither the Company nor the Debenture Trustee will be required to (i) issue,
register the transfer of or exchange Subordinated Debentures during a period
beginning at the opening of business 15 days before the day of selection for
redemption of Subordinated Debentures and ending at the close of business on the
day of mailing of the relevant notice of redemption, or (ii) transfer or
exchange any Subordinated Debentures so selected for redemption, except, in the
case of any Subordinated Debentures being redeemed in part, any portion thereof
not to be redeemed.
Modification of Indenture
The Company and the Debenture Trustee may, from time to time without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act or for any
other purpose that does not materially adversely affect the rights of the
holders of the Subordinated Debentures. The 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 outstanding
Subordinated Debentures, to modify the Indenture; provided, that no such
modification may, without the consent of the holder of each outstanding
Subordinated Debenture affected by such proposed modification, (i) extend the
fixed maturity of the Subordinated Debentures, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or (ii) reduce the percentage of principal amount of Subordinated Debentures,
the holders of which are required to consent to any such modification of the
Indenture; provided that so long as any of the Trust Preferred Securities remain
outstanding, no such modification may be made that requires the consent of the
holders of the Subordinated Debentures, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default may be effective, without
the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Trust Preferred Securities.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an event of default (each, a "Debenture Event of
Default") with respect to the Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Subordinated
Debentures, when due (subject to the deferral of any due date in the case
of an Extended Interest Payment Period); or
(ii) failure to pay any principal on the Subordinated Debentures when
due whether at maturity, upon redemption by declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the Subordinated Debentures; or
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(iv) certain events in bankruptcy, insolvency or reorganization of
the Company or dissolution of Capital Trust.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee. The
Debenture Trustee, or the holders of not less than 25% in aggregate outstanding
principal amount of the Subordinated Debentures, may declare the principal due
and payable immediately upon a Debenture Event of Default. The holders of a
majority in aggregate outstanding principal amount of the Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of the Subordinated Debentures
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of the Subordinated Debentures fail to annul such declaration
and waive such default, the holders of at least 25% in aggregate Liquidation
Amount of the Trust Preferred Securities will have such right.
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 Indenture.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Subordinated Debentures, and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such Subordinated Debentures.
Enforcement of Certain Rights by Holders of the Trust 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 interest on or
principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Trust Preferred Securities may
institute a Direct Action. In connection with such Direct Action, the Company
will have a right of set-off under the Indenture to the extent of any payment
made by the Company to such holder of Trust Preferred Securities in the Direct
Action. The Company may not amend the Indenture to remove the foregoing right to
bring a Direct Action without the prior written consent of the holders of all of
the Trust Preferred Securities. If the right to bring a Direct Action is
removed, Capital Trust may become subject to the reporting obligations under the
Exchange Act.
The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Subordinated Debentures unless there has been an
Event of Default under the Trust Agreement. See "Description of the Trust
Preferred Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Company may not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person, and no Person may consolidate with or merge into the Company or sell,
convey, transfer or otherwise dispose of its properties and assets substantially
as an entirety to the Company, unless (i) in the event 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 by supplemental indenture
the Company's obligations on the Subordinated Debentures issued under the
Indenture (or substitutes substantially similar securities therefor), and (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time, or both, would become a Debenture
Event of Default, has occurred and is continuing, and (iii) certain other
conditions as prescribed in the Indenture are met.
Satisfaction and Discharge
The Indenture will cease to be of further effect (except as to the
Company's obligations to pay certain sums due pursuant to the Indenture and to
provide certain officers' certificates and opinions of counsel described
therein) and the Company will be deemed to have satisfied and discharged the
Indenture when, among other things, all Subordinated
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Debentures not previously delivered to the Debenture Trustee for cancellation
(i) have become due and payable, or (ii) will become due and payable at their
Stated Maturity within one year or are to be called for redemption 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 Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation, for the principal and
interest to the date of the deposit or to the Stated Maturity or redemption
date, as the case may be.
Governing Law
The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Illinois.
Information Concerning the Debenture Trustee
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Debenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
Miscellaneous
The Company has agreed, pursuant to the Indenture, for so long as Trust
Preferred Securities remain outstanding, (i) to maintain directly or indirectly
100% ownership of the Common Securities of Capital Trust (provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities), (ii) not to voluntarily
terminate, wind up or liquidate Capital Trust, except upon prior approval of the
Federal Reserve if then so required under applicable capital guidelines,
policies or regulations of the Federal Reserve, and use its reasonable efforts
to cause Capital Trust (a) to remain a business trust (and to avoid involuntary
termination, winding up or liquidation), except in connection with a
distribution of Subordinated Debentures, the redemption of all of the Trust
Securities of Capital Trust or certain mergers, consolidations or amalgamations,
each as permitted by the Trust Agreement; and (b) to otherwise continue not to
be treated as an association taxable as a corporation or partnership for United
States federal income tax purposes; and (iii) to use its reasonable efforts to
cause each holder of Trust Securities to be treated as owning an individual
beneficial interest in the Subordinated Debentures.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Trust Preferred
Securities and, in the event of the distribution of the Subordinated Debentures
to holders of Trust Preferred Securities, may act as securities depositary for
all of the Subordinated Debentures. Except as described herein, the Trust
Preferred Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more Global Trust
Preferred Securities will be issued for the Trust Preferred Securities and will
be deposited with DTC.
DTC is a limited purpose trust company organized under New York banking
law, a "banking organization" within the meaning of the New York banking law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers,
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banks and trust companies that clear through or maintain custodial relationships
with Direct Participants, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Trust Preferred Securities within the DTC system must be made
by or through Direct Participants, which will receive a credit for the Trust
Preferred Securities on DTC's records. The ownership interest of each actual
purchaser of each Trust Preferred Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participant's records. Beneficial Owners
will not receive written confirmation from the depositary of their purchases,
but Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which the Beneficial Owners
purchased Trust Preferred Securities. Transfers of ownership interests in the
Trust Preferred Securities are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interest in Trust
Preferred Securities, except in the event that use of the book-entry system for
the Trust Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Trust Preferred Securities are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners, will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Trust Preferred Securities. If less than all of the Trust Preferred
Securities are being redeemed, the amount to be redeemed will be determined in
accordance with the Trust Agreement.
Although voting with respect to the Trust Preferred Securities is limited
to the holders of record of the Trust Preferred Securities, in those instances
in which a vote is required, neither DTC nor Cede & Co. will itself consent or
vote with respect to Trust Preferred Securities. Under its usual procedures, DTC
would mail an omnibus proxy (the "Omnibus Proxy") to the Property Trustee as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts such
Trust Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Distribution payments on the Trust Preferred Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC, the
Property Trustee, Capital Trust or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
Distributions to DTC is the responsibility of the Property Trustee, disbursement
of such payments to Direct Participants is the responsibility of DTC, and
disbursements of such payments to the Beneficial Owners is the responsibility of
Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Trust Preferred Securities at any time by giving
reasonable notice to the Property Trustee and the Company. In the event that a
successor securities depositary is not obtained, definitive Trust Preferred
Securities representing such Trust Preferred Securities are required to be
printed and delivered. The Company, at its option, may decide to discontinue use
of the system of book-entry transfers through DTC (or a successor depositary).
After a Debenture Event of Default, the holders of a majority in Liquidation
Amount of Trust Preferred Securities may determine to discontinue the system of
book-entry transfers through DTC. In any such event, definitive certificates for
such Trust Preferred Securities will be printed and delivered.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Capital Trust and the Company believe to be
accurate, but Capital Trust and the Company assume no responsibility for the
accuracy thereof. Neither Capital Trust nor the Company has any responsibility
for the performance by DTC or its Participants of their respective obligations
as described herein or under the rules and procedures governing their respective
operations.
DESCRIPTION OF THE GUARANTEE
The Trust Preferred Securities Guarantee Agreement (the "Guarantee") will
be executed and delivered by the Company concurrently with the issuance of the
Trust Preferred Securities for the benefit of the holders of the Trust Preferred
Securities. The Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Guarantee Trustee will act as indenture trustee under the
Guarantee for purposes of complying with the provisions of the Trust Indenture
Act. The Guarantee Trustee, Wilmington Trust Company, will hold the Guarantee
for the benefit of the holders of the Trust Preferred Securities. The following
summary of the material terms and provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee and the Trust Indenture Act. Wherever
particular defined terms of the Guarantee are referred to, but not defined
herein, such defined terms are incorporated herein by reference. The form of
the Guarantee has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
General
The Company will, pursuant to the Guarantee, irrevocably agree to pay in
full on a subordinated basis, to the extent set forth therein, the Guarantee
Payments (as defined below) to the holders of the Trust Preferred Securities, as
and when due, regardless of any defense, right of set-off or counterclaim that
Capital Trust may have or assert other than the defense of payment. The
following payments with respect to the Trust Preferred Securities, to the extent
not paid by or on behalf of Capital Trust (the "Guarantee Payments"), will be
subject to the Guarantee: (i) any accrued and unpaid Distributions required to
be paid on the Trust Preferred Securities, to the extent that Capital Trust has
funds available therefor at such time, (ii) the Redemption Price with respect to
any Trust Preferred Securities called for redemption to the extent that Capital
Trust has funds available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of Capital Trust (other than
in connection with the distribution of Subordinated Debentures to the holders of
Trust Preferred Securities or a redemption of all of the Trust Preferred
Securities), the lesser of (a) the amount of the Liquidation Distribution, to
the extent Capital Trust has funds available therefor at such time, and (b) the
amount of assets of Capital Trust remaining available for distribution to
holders of Trust Preferred Securities in liquidation of Capital Trust. The
obligation of the Company to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Trust
Preferred Securities or by causing Capital Trust to pay such amounts to such
holders.
The Guarantee will not apply to any payment of Distributions except to the
extent Capital Trust has funds available therefor. If the Company does not make
interest payments on the Subordinated Debentures held by Capital Trust, Capital
Trust will not pay Distributions on the Trust Preferred Securities and will not
have funds available therefor.
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 Debt,
Subordinated Debt and Additional Senior Obligations of the Company in the same
manner as the Subordinated Debentures. The Guarantee does not place a
limitation on the amount of additional Senior Debt, Subordinated Debt or
Additional Senior Obligations that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Debt, Subordinated Debt and Additional Senior Obligations.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against any other Person or entity). The Guarantee will not
be discharged except by payment of the
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Guarantee Payments in full to the extent not paid by Capital Trust or upon
distribution of the Subordinated Debentures to the holders of the Trust
Preferred Securities. Because the Company is a holding company, the right of the
Company to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent the Company may
itself be recognized as a creditor of that subsidiary. The Company's obligations
under the Guarantee, therefore, will be effectively subordinated to all existing
and future liabilities of the Company's subsidiaries, and claimants should look
only to the assets of the Company for payments thereunder.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
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 Trust Preferred Securities. See "Description of the Trust
Preferred Securities--Voting Rights; Amendment of Trust Agreement."
Events of Default; Remedies
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. The
holders of not less than a majority in aggregate Liquidation Amount of the Trust
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 holder of Trust Preferred Securities may institute and prosecute a
legal proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against Capital Trust,
the Guarantee Trustee or any other Person.
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.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon (a)
full payment of the Redemption Price of the Trust Preferred Securities, (b) full
payment of the amounts payable upon liquidation of Capital Trust, or (c)
distribution of the Subordinated Debentures to the holders of the Trust
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 Trust Preferred
Securities must restore payment of any sums paid under such Trust Preferred
Securities or the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of Illinois.
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
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 such provisions, 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 any Trust Preferred Securities, unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
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Expense Agreement
The Company will, pursuant to the Agreement as to Expenses and Liabilities
entered into by it under the Trust Agreement (the "Expense Agreement"),
irrevocably and unconditionally guarantee to each person or entity to whom
Capital Trust becomes indebted or liable, the full payment of any costs,
expenses or liabilities of Capital Trust, other than obligations of Capital
Trust to pay to the holders of the Trust Preferred Securities or other similar
interests in Capital Trust of the amounts due such holders pursuant to the terms
of the Trust Preferred Securities or such other similar interests, as the case
may be. Third party creditors of Capital Trust may proceed directly against the
Company under the Expense Agreement, regardless of whether such creditors had
notice of the Expense Agreement.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE SUBORDINATED
DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent Capital Trust has funds available for the payment of
such Distributions) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of the Guarantee." The Company and Capital
Trust believe that, taken together, the obligations of the Company under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of Distributions
and other amounts due on the Trust Preferred Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the obligations of Capital Trust under the Trust
Preferred Securities. If and to the extent that the Company does not make
payments on the Subordinated Debentures, Capital Trust will not pay
Distributions or other amounts due on the Trust Preferred Securities. The
Guarantee does not cover payment of Distributions when Capital Trust does not
have sufficient funds to pay such Distributions. In such event, the remedy of a
holder of Trust Preferred Securities is to institute a legal proceeding directly
against the Company for enforcement of payment of such Distributions to such
holder. The obligations of the Company under the Guarantee are subordinate and
junior in right of payment to all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover Distributions
and other payments due on the Trust Preferred Securities, primarily because (i)
the aggregate principal amount of the Subordinated Debentures will be equal to
the sum of the aggregate stated Liquidation Amount of the Trust Securities, (ii)
the interest rate and interest and other payment dates on the Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Trust Preferred Securities, (iii) the Company will pay for all and
any costs, expenses and liabilities of Capital Trust (except the obligations of
Capital Trust to pay to holders of the Trust Preferred Securities the amounts
due such holders pursuant to the terms of the Trust Preferred Securities), and
(iv) the Trust Agreement further provides that Capital Trust will not engage in
any activity that is not consistent with the limited purposes of Capital Trust.
Enforcement Rights of Holders of Trust 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, Capital
Trust or any other Person. A default or event of default under any Senior Debt,
Subordinated Debt or Additional Senior Obligations of the Company would not
constitute a default or Event of Default under the Trust Agreement. In the
event, however, of payment defaults under, or acceleration of, Senior Debt,
Subordinated Debt or Additional Senior Obligations of the Company, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Subordinated Debentures until such Senior Debt, Subordinated
Debt or Additional Senior Obligations has been paid in full or any payment
default thereunder has been cured or waived. Failure to make required payments
on the Subordinated Debentures would constitute an Event of Default under the
Trust Agreement.
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Limited Purpose of Capital Trust
The Trust Preferred Securities evidence preferred undivided beneficial
interests in the assets of Capital Trust. Capital Trust exists for the exclusive
purposes of issuing the Trust Securities, investing the proceeds thereof in
Subordinated Debentures and engaging in only those other activities necessary,
advisable or incidental thereto. A principal difference between the rights of a
holder of a Trust Preferred Security and the rights of a holder of a
Subordinated Debenture is that a holder of a Subordinated Debenture is entitled
to receive from the Company the principal amount of and interest accrued on
Subordinated Debentures held, while a holder of Trust Preferred Securities is
entitled to receive Distributions from Capital Trust (or from the Company under
the Guarantee) if and to the extent Capital Trust has funds available for the
payment of such Distributions.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or liquidation of
Capital Trust involving the liquidation of the Subordinated Debentures, the
holders of the Trust Preferred Securities will be entitled to receive, out of
assets held by Capital Trust, the Liquidation Distribution in cash. See
"Description of the Trust Preferred Securities--Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of
the Company, the Property Trustee, as holder of the Subordinated Debentures,
would be a subordinated creditor of the Company, subordinated in right of
payment to all Senior Debt, Subordinated Debt and Additional Senior Obligations
of the Company (as set forth in the Indenture), but entitled to receive payment
in full of principal and interest before any shareholders of the Company receive
payments or distributions. Since the Company is the guarantor under the
Guarantee and has agreed to pay for all costs, expenses and liabilities of
Capital Trust (other than the obligations of Capital Trust to pay to holders of
the Trust Preferred Securities the amounts due such holders pursuant to the
terms of the Trust Preferred Securities), the positions of a holder of the Trust
Preferred Securities and a holder of the Subordinated Debentures relative to
other creditors and to shareholders 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
The following summary of the material United States federal income tax
considerations that may be relevant to the purchasers of Trust Preferred
Securities represents the opinion of Vedder, Price, Kaufman & Kammholz, counsel
to the Company and Capital Trust insofar as it relates to matters of law and
legal conclusions. The conclusions expressed herein are based upon current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
regulations thereunder and current administrative rulings and court decisions,
all of which are subject to change at any time, with possible retroactive
effect. Subsequent changes may cause tax consequences to vary substantially
from the consequences described below. Furthermore, the authorities on which
the following summary is based are subject to various interpretations, and it is
therefore possible that the United States federal income tax treatment of the
purchase, ownership, and disposition of Trust Preferred Securities may differ
from the treatment described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Trust Preferred
Securities. Moreover, the discussion generally focuses on holders of Trust
Preferred Securities who are individual citizens or residents of the United
States and who acquire Trust Preferred Securities on their original issue at
their offering price and hold Trust Preferred Securities as capital assets. The
discussion has only limited application to dealers in securities, corporations,
estates, trusts or nonresident aliens and does not address all the tax
consequences that may be relevant to holders who may be subject to special tax
treatment, such as, for example, banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, or persons that will hold the Trust Preferred
Securities as a position in a "straddle," as part of a "synthetic security" or
"hedge," as part of a "conversion transaction" or other integrated investment,
or as other than a capital asset. The following summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Trust Preferred Securities. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Trust Preferred Securities. Accordingly, each prospective investor
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should consult, and should rely exclusively on, such investor's own tax advisors
in analyzing the federal, state, local and foreign tax consequences of the
purchase, ownership or disposition of Trust Preferred Securities.
Classification of the Subordinated Debentures
The Company intends to take the position that the Subordinated Debentures
will be classified for United States federal income tax purposes as indebtedness
of the Company under current law, and, by acceptance of a Trust Preferred
Security, each holder covenants to treat the Subordinated Debentures as
indebtedness and the Trust Preferred Securities as evidence of an indirect
beneficial ownership interest in the Subordinated Debentures. No assurance can
be given, however, that such position of the Company will not be challenged by
the Internal Revenue Service or, if challenged, that such a challenge will not
be successful. The remainder of this discussion assumes that the Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company.
Classification of Capital Trust
With respect to the Trust Preferred Securities, Vedder, Price, Kaufman &
Kammholz, counsel to the Company and Capital Trust, has rendered its opinion
generally to the effect that, under then current law and assuming full
compliance with the terms of the Trust Agreement and Indenture, Capital Trust
will be classified for United States federal income tax purposes as a grantor
trust and not as an association taxable as a corporation. Accordingly, for
United States federal income tax purposes, each holder of Trust Preferred
Securities generally will be treated as owning an undivided beneficial interest
in the Subordinated Debentures, and each holder will be required to include in
its gross income any original issue discount ("OID") accrued with respect to its
allocable share of the Subordinated Debentures whether or not cash is actually
distributed to such holder.
Potential Extension of Interest Payment Period and Original Issue Discount
The Company has the option, under the terms of the Subordinated
Debentures, to defer payments (so long as no Debenture Event of Default has
occurred and is continuing) of interest by extending interest payment periods
for up to 20 consecutive quarters. Under federal income tax regulation, all of
the stated interest payments on the Subordinated Debentures will be treated as
OID unless the Indenture or the Subordinated Debentures contain terms or
conditions that make the exercise of the deferral remote. Because the Company
does not have a policy of paying dividends on its common stock and instead
reinvests its earnings in its business, the covenant in the Indenture
prohibiting the Company from paying dividends during an Extended Interest
Payment Period does not provide an effective deterrent to the Company's exercise
of the deferral option. As a result tax counsel to the Company is unable to
conclude that the Indenture or the Subordinated Debentures contain terms or
conditions that make the exercise of the deferral option remote. Accordingly,
all of a holder's taxable interest income with respect to the Subordinated
Debentures will be accounted for as OID. Holders of debt instruments issued with
OID must include that discount in income on an economic accrual basis before the
receipt of cash attributable to the interest, regardless of their method of tax
accounting. Actual payments and distributions of stated interest will not,
however, be separately reported as taxable income. The amount of OID that
accrues in any quarter will approximately equal the amount of the interest that
accrues on the Subordinated Debentures in that quarter at the stated interest
rate. In the event that the interest payment period is extended, holders will
continue to accrue OID approximately equal to the amount of the interest payment
due at the end of the extended interest payment period on an economic accrual
basis over the length of the extended interest payment period.
Because income on the Trust Preferred Securities will constitute interest,
corporate holders of Trust Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Trust Preferred Securities.
Market Discount and Acquisition Premium
Holders of Trust Preferred Securities other than a holder who purchased the
Trust Preferred Securities upon original issuance may be considered to have
acquired their undivided interests in the Subordinated Debentures with "market
discount" or "acquisition premium" as such phrases are defined for United States
federal income tax purposes. Such holders are advised to consult their tax
advisors as to the income tax consequences of the acquisition, ownership and
disposition of the Trust Preferred Securities.
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Receipt of Subordinated Debentures or Cash Upon Liquidation of Capital Trust
Under certain circumstances, as described under "Description of the Trust
Preferred Securities--Redemption or Exchange" and "--Liquidation Distribution
Upon Termination," the Subordinated Debentures may be distributed to holders of
Trust Preferred Securities upon a liquidation of Capital Trust. Under current
United States federal income tax law, such a distribution would be treated as a
nontaxable event to each such holder and would result in such holder having an
aggregate tax basis in the Subordinated Debentures received in the liquidation
equal to such holder's aggregate tax basis in the Trust Preferred Securities
immediately before the distribution. A holder's holding period in the
Subordinated Debentures so received in liquidation of Capital Trust would
include the period for which such holder held the Trust Preferred Securities.
If, however, a Tax Event occurs which results in Capital Trust being
treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to holders of the Trust Preferred Securities.
Under certain circumstances described herein, the Subordinated Debentures may be
redeemed for cash and the proceeds of such redemption distributed to holders in
redemption of their Trust Preferred Securities. Under current law, such a
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Trust Preferred Securities, and a holder
would recognize gain or loss as if the holder sold such Trust Preferred
Securities for cash. See "Description of the Trust Preferred Securities--
Redemption or Exchange" and "--Liquidation Upon Termination."
Disposition of Trust Preferred Securities
A holder that sells Trust Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Trust
Preferred Securities and the holder's adjusted tax basis in such Trust Preferred
Securities. A holder's adjusted tax basis in the Trust Preferred Securities
generally will be its initial purchase price increased by OID previously
includible in such holder's gross income to the date of disposition and
decreased by payments received on the Trust Preferred Securities to the date of
disposition. Such gain or loss will generally be a capital gain or loss and
will be a long-term capital gain or loss if the Trust Preferred Securities have
been held for more than 12 months at the time of sale.
The Trust Preferred Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to the
underlying Subordinated Debentures. A holder that disposes of its Trust
Preferred Securities between record dates for payments of distributions thereon
will be required to include accrued but unpaid interest on the Subordinated
Debentures through the date of disposition in income as ordinary income, and to
add such amount to its adjusted tax basis in its pro rata share of the
underlying Subordinated Debentures deemed disposed of. To the extent the selling
price is less than the holder's adjusted tax basis (which basis will include, in
the form of OID, all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
Effect of Possible Changes in Tax Laws
Congress and the Clinton Administration have considered certain proposed
tax law changes in the past that would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations if such debt obligation have a maximum term in excess of 20 years
and are not shown as indebtedness on the issuer's applicable consolidated
balance sheet. Although such proposed tax law changes have not been enacted
into law, there can be no assurance that such tax law changes will not be
reintroduced into future legislation which, if enacted after the date hereof,
may adversely affect the federal income tax deductibility of interest payable on
the Subordinated Debentures. Accordingly, there can be no assurance that a Tax
Event will not occur. A Tax Event would permit the Company, upon approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve, to cause a redemption of the Preferred
Securities before, as well as after, September 30, 2003. See "Description of
the Subordinated Debentures--Redemption or Exchange" and "Description of the
Trust Preferred Securities--Redemption or Exchange--Tax Event Redemption or
Investment Company Event Redemptions."
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Backup Withholding and Information Reporting
The amount of OID accrued on the Trust Preferred Securities held of record
by individual citizens or residents of the United States, or certain trusts,
estates, and partnerships, will be reported to the Internal Revenue Service on
Forms 1099, which forms should be mailed to such holders of Trust Preferred
Securities by January 31 following each calendar year. Payments made on, and
proceeds from the sale of, the Trust Preferred Securities may be subject to a
"backup" withholding tax (currently at 31%) unless the holder complies with
certain identification and other requirements. Any amounts withheld under the
backup withholding rules will be allowed as a credit against the holder's United
States federal income tax liability, provided the required information is
provided to the Internal Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF TRUST PREFERRED SECURITIES. HOLDERS OF
TRUST PREFERRED SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE
TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
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.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Trust Preferred Securities, subject to the
investing fiduciary's determination that the investment in Trust Preferred
Securities satisfies ERISA's fiduciary standards and other requirements
applicable to investments by the Plan.
In any case, the Company and/or any of its affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to certain plans
(generally, Plans maintained or sponsored by, or contributed to by, any such
persons with respect to which the Company or an affiliate is a fiduciary or
Plans for which the Company or an affiliate provides services). The acquisition
and ownership of Trust Preferred Securities by a Plan (or by an individual
retirement arrangement or other Plans described in Section 4975(e)(1) of the
Code) with respect to which the Company or any of its affiliates is considered a
party in interest or a disqualified person may constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code, unless such
Trust Preferred Securities are acquired pursuant to and in accordance with an
applicable exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Trust Preferred Securities unless such Trust Preferred Securities are acquired
pursuant to and in accordance with an applicable exemption. Any other Plans or
other entities whose assets include Plan assets subject to ERISA or Section 4975
of the Code proposing to acquire Trust Preferred Securities should consult with
their own counsel.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), dated __________, 1998, between the Company, Capital
Trust, EVEREN Securities, Inc., ABN AMRO Incorporated and Piper Jaffray Inc.
(the "Underwriters"), Capital Trust has agreed to sell to the Underwriters, and
the Underwriters have agreed to purchase from Capital Trust, the number of Trust
Preferred Securities set forth opposite their respective names below at the
public offering price subject to the underwriting commissions set forth on the
cover page of this Prospectus.
55
<PAGE>
<TABLE>
<CAPTION>
Number of Trust
Underwriter Preferred Securities
----------- --------------------
<S> <C>
EVEREN Securities, Inc..................
ABN AMRO Incorporated...................
Piper Jaffray Inc....................... _________
Total................................ 1,080,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the Trust Preferred Securities offered hereby
if any of such Trust Preferred Securities are purchased.
The Underwriters have advised the Company and Capital Trust that they
propose to offer the Trust 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 in excess of $0.50 per Trust
Preferred Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $0.25 per Trust Preferred Security to certain other
dealers. After the public offering, the public offering price, concession and
reallowance and other selling terms may be changed by the Underwriters. Because
the National Association of Securities Dealers, Inc. ("NASD") may view the Trust
Preferred Securities as interests in a direct participation program, the
offering of the Trust Preferred Securities is being made in compliance with the
applicable provisions of Rule 2810 of the NASD's Conduct Rules.
The Company and Capital Trust have granted the Underwriters an option,
exercisable within 30 days of the date of this Prospectus, to purchase up to an
additional 162,000 Trust Preferred Securities to cover over-allotments, if any,
at the public offering price plus accrued Distributions. The Underwriters may
exercise such option only for the purpose of covering over-allotments, if any,
made in connection with the distribution of the Trust Preferred Securities
offered hereby.
In view of the fact that the proceeds from the sale of the Trust Preferred
Securities will be used to purchase the Subordinated Debentures issued by the
Company, the Company has agreed to pay as compensation for the Underwriters'
arranging the investment therein of such proceeds an amount equal to $0.90 per
Trust Preferred Security (or $972,000 ($1,117,800 if the over-allotment option
is exercised in full) in the aggregate). The Company has also agreed to
reimburse the Underwriters for out-of-pocket expenses relating to the offering
of the Trust Preferred Securities; provided that such reimbursement may not
exceed $5,000 without the Company's prior consent.
Each of the Company and Capital Trust has agreed to indemnify the
Underwriters and their controlling persons against certain liabilities,
including liabilities under the Securities Act or to contribute to payments the
Underwriters may be required to make in respect thereof.
In connection with the offering of Trust Preferred Securities, the
Underwriters may engage in transactions that are intended to stabilize, maintain
or otherwise affect the market price of the Trust Preferred Securities. Such
transactions may include an overallotment, creating a syndicate short position.
The Underwriters may also bid for and purchase Trust Preferred Securities.
These activities stabilize or maintain the market price of the Trust Preferred
Securities above independent market levels. The Underwriters are not required
to engage in these activities and may end these activities at any time.
EVEREN Securities, Inc. served as the underwriter in the initial public
offering of the Company's common stock completed in March 1997, and EVEREN
Securities, Inc. and ABN AMRO Incorporated have acted as market makers in the
common stock since such time. In addition, the Underwriters may provide in the
future investment banking services to the Company and its affiliates for which
such Underwriters or their affiliates would expect to receive customary fees and
commissions.
LaSalle National Bank, an affiliate of ABN AMRO Incorporated, will receive
more than 10% of the net proceeds of the offering in repayment of amounts
outstanding under the Company's $30 million revolving line of credit, although
after such repayment the facility will remain available for future borrowings by
the Company from time to time. See "Use of Proceeds." Accordingly, the offering
is being made in conformity with Rule 2720 of the NASD's Conduct Rules. In
accordance with such rule, EVEREN Securities, Inc. has agreed to act as a
qualified independent underwriter pursuant to the requirements of 2720(c)(3) of
the NASD. In connection with Rule 2720(c)(3), the Price to Public of the Trust
Preferred Securities will be set at a price which is no higher than that
recommended by EVEREN Securities, Inc., as a qualified independent underwriter.
Moreover, EVEREN Securities, Inc., as a qualified independent underwriter in
connection with the offering, has performed due diligence investigations and has
reviewed and participated in the preparation of this Prospectus.
56
<PAGE>
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities, the enforceability of the Trust Agreement and the
formation of Capital Trust will be passed upon by Richards, Layton & Finger,
special Delaware counsel to the Company and Capital Trust. Certain legal
matters for the Company and Capital Trust, including the validity of the
Guarantee and the Subordinated Debentures, will be passed upon for the Company
and Capital Trust by Vedder, Price, Kaufman & Kammholz, Chicago, Illinois,
counsel to the Company and Capital Trust. Certain legal matters will be passed
upon for the Underwriters by Barack Ferrazzano Kirschbaum Perlman & Nagelberg.
Vedder, Price, Kaufman & Kammholz, and Barack Ferrazzano Kirschbaum Perlman &
Nagelberg, will rely on the opinion of Richards, Layton & Finger as to matters
of Delaware law. Certain matters relating to United States federal income tax
considerations will be passed upon for the Company by Vedder, Price, Kaufman &
Kammholz.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
incorporated herein by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, as stated in their report, which
report is incorporated herein by reference, and has been so incorporated in
reliance upon the authority of said firm as experts in accounting and auditing.
57
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Company with the
Securities and Exchange Commission pursuant to Section 13 of the Exchange Act,
are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997; and
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998.
All reports and any definitive proxy or information statements filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Trust Preferred Securities offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to David
A. Dykstra, Executive Vice President, Wintrust Financial Corporation, 727 North
Bank Lane, Lake Forest, Illinois 60045. Telephone requests may be directed to
(847) 615-4096.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and Capital Trust with the Commission under the
Securities Act, with respect to the Trust Preferred Securities and the
Subordinated Debentures. This Prospectus does not contain all of the
information set forth in such Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, although
it does include a summary of the material terms of the Indenture, the Guarantee
and the Trust Agreement. Reference is made to such Registration Statement and
to the exhibits relating thereto for further information with respect to the
Company, Capital Trust, the Trust Preferred Securities and the Subordinated
Debentures. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission or incorporated by reference herein are not necessarily
complete, and, in each instance, reference is made to the copy of such document
so filed for a more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Exchange
Act and, and in accordance therewith, files reports, proxy statements and other
information with the Commission. Capital Trust is not currently subject to the
information reporting requirements of the Exchange Act and although Capital
Trust will become subject to such requirements upon the effectiveness of the
Registration Statement, it is not expected that Capital Trust will be filing
separate reports under the Exchange Act. The Company's reports, proxy
statements and other information can be inspected and copied at the following
public reference facilities maintained by the Commission: 450 Fifth Street,
N.W., Washington, D.C. 20549, 7 World Trade Center, Suite 1300, New York, New
York 10048; and the Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material may also be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, upon payment of prescribed rates. The
Commission maintains an Internet web site that contains reports, proxy and
information statements and other information regarding issuers who file
electronically with the Commission. The address of that site is
http://www.sec.gov. In addition, reports, proxy statements and other
58
<PAGE>
information concerning the Company may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
No separate financial statements of Capital Trust have been included
herein. The Company does not consider that such financial statements would be
material to holders of Preferred Securities because (i) all of the voting
securities of Capital Trust will be owned by the Company, a reporting company
under the Exchange Act, (ii) Capital Trust has no independent operations but
exists for the exclusive purposes of issuing securities representing undivided
beneficial interests in the assets of Capital Trust, investing the proceeds
thereof in Subordinated Debentures issued by the Company and engaging in only
those other activities necessary, advisable or incident thereto, and (iii) the
obligations of the Company described herein to provide certain indemnities in
respect of and be responsible for certain costs, expenses, debts and liabilities
of Capital Trust under the Indenture and pursuant to the Trust Agreement,
Guarantee, the Subordinated Debentures purchased by Capital Trust and the
related Indenture, taken together, constitute, in the belief of the Company and
Capital Trust, a full, irrevocable and unconditional guarantee of payments due
on the Preferred Securities. See "Prospectus Summary -- Capital Trust,"
"Description of the Trust Preferred Securities," "Description of the
Subordinated Debentures" and "Description of the Guarantee."
59
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representation other than those 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, Capital Trust or any of
the Underwriters. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, to any person in any jurisdiction in which such
offer or solicitation is not authorized, or in which the person making the offer
or solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.............................. 5
Summary Consolidated Financial Data............. 14
Risk Factors.................................... 17
Use of Proceeds................................. 26
Accounting Treatment............................ 26
Capitalization.................................. 27
Description of the Trust Preferred Securities... 29
Description of the Subordinated Debentures...... 39
Book-Entry Issuance............................. 47
Description of the Guarantee.................... 49
Relationship among the Trust Preferred
Securities, the Subordinated
Debentures and the Guarantee................. 51
Certain Federal Income Tax Consequences......... 52
ERISA Considerations............................ 55
Underwriting.................................... 55
Validity of Securities.......................... 57
Experts......................................... 57
Incorporation of Certain Documents by
Reference.................................... 58
Available Information........................... 58
- ----------------------------------------------------
</TABLE>
PROSPECTUS , 1998
- ----------------------------------------------------
1,080,000 Trust Preferred Securities
WINTRUST CAPITAL TRUST I
___% Cumulative Trust Preferred
Securities
(Liquidation Amount $25 per Trust Preferred
Security)
Fully and Unconditionally
Guaranteed, as Described Herein, by
WINTRUST FINANCIAL
CORPORATION [LOGO]
-----------------
EVEREN Securities, Inc.
ABN AMRO Incorporated
Piper Jaffray Inc.
- ----------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with this offering are as set forth in
the following table.
<TABLE>
<S> <C>
SEC registration fee.................... $ 9,159.00
NASD filing fee......................... 3,605.00
Nasdaq listing fee...................... 37,404.00
Reimbursable Underwriter expenses....... 5,000.00
Printing expenses....................... 30,000.00
Accounting fees and expenses............ 35,000.00
Legal fees and expenses................. 120,000.00
Trustee's fees.......................... 15,000.00
Postage and other miscellaneous costs... 19,822.00
-----------
$275,000.00
===========
</TABLE>
Item 15. Indemnification of Directors and Officers.
In accordance with the Illinois Business Corporation Act (being Chapter
805, Act 5 of the Illinois Compiled Statutes), Articles Eight and Nine of the
Registrant's Certificate of Incorporation provide as follows:
ARTICLE EIGHT: No director of the corporation shall be liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director except for liability (a) for any breach of the director's
duty of loyalty to the corporation or its shareholders, (b) for acts or
omissions not in good faith or that involve intentional misconduct of a knowing
violation of law, (c) under Section 8.65 of the BCA, as the same exists or
hereafter may be amended, or (d) for any transaction from which the director
derived an improper personal benefit.
ARTICLE NINE, Paragraph 1: The corporation shall indemnify, to the full
extent that it shall have power under applicable law to do so and in a manner
permitted by such law, any person made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation, or who is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against liabilities and expenses reasonably incurred or paid by
such person in connection with such action, suit or proceeding. The corporation
may indemnify, to the full extent that it shall have power under applicable law
to do so and in a manner permitted by such law, any person made or threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against liabilities and expenses reasonably
incurred or paid by such person in connection with such action, suit or
proceeding. The words "liabilities" and "expenses" shall include, without
limitation: liabilities, losses, damages, judgments, fines, penalties, amounts
paid in settlement, expenses, attorneys' fees and costs. Expenses incurred in
defending a civil, criminal, administrative, investigative or other action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding in accordance with the provisions of Section
8.75 of the BCA.
The indemnification and advancement of expenses provided by this Article
shall not be deemed exclusive of any other rights to which any person
indemnified may be entitled under any statute, by-law, agreement, vote of
shareholders, or disinterested directors or otherwise, both as to action in his
official capacity and as to action in any other capacity while holding such
office, and shall continue as to a person who has ceased to be such director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
Paragraph 2: The corporation may purchase and maintain insurance on behalf
of any person referred to in the preceding paragraph against any liability
asserted against him or her and incurred by him or her in any such capacity,
II-1
<PAGE>
or arising out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such liability under the
provisions of this Article or otherwise.
Paragraph 3: For purposes of this Article, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article with respect to the
resulting or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
Paragraph 4: The provisions of this Article shall be deemed to be a
contract between the corporation and each director or officer who serves in any
such capacity at any time while this Article and the relevant provisions of the
BCA, or other applicable law, if any, are in effect, and any repeal or
modification of any such law or of this Article shall not affect any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
Paragraph 5: For purposes of this Article, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to any employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner not opposed to the best interests of the corporation.
The Illinois Business Corporation Act provides for indemnification of
officers, directors, employees and agents as follows:
5/8.75 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. (a) A corporation may indemnify any person who was or is a party, or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation, or who is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding, if
such person acted in good faith and in a manner he or she 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 or her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation or,
with respect to any criminal action or proceeding, that the person had
reasonable cause to believe that his or her conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party, or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit, if such person acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the corporation, provided that no indemnification shall be
made with respect to any claim, issue, or matter as to which such person, has
been adjudged to have been liable to the corporation, unless, and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
II-2
<PAGE>
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful, on the merits or otherwise, in the defense of
any action, suit or proceeding referred to in subsections (a) and (b), or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case,
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in subsections (a) or (b). Such determination
shall be made (1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum
of disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the shareholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
corporation as authorized in this Section.
(f) The indemnification and advancement of expenses provided by or granted
under the other subsections of this Section shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
(g) A corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or who is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against such person
and incurred by such person in any such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
such person against such liability under the provisions of this Section.
(h) If a corporation has paid indemnity or has advanced expenses to a
director, officer, employee or agent, the corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders meeting.
(i) For purposes of this Section, references to "the corporation" shall
include, in addition to the surviving corporation, any merging corporation
(including any corporation having merged with a merging corporation) absorbed in
a merger which, if its separate existence had continued, would have had the
power and authority to indemnify its directors, officers, and employees or
agents, so that any person who was a director, officer, employee or agent of
such merging corporation, or was serving at the request of such merging
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Section with respect to the surviving
corporation as such person would have with respect to such merging corporation
if its separate existence had continued.
(j) For purposes of this Section, reference to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries. A person who acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interest of the corporation" as referred to in
this Section.
(k) The indemnification and advancement of expenses provided by or granted
under this Section shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer,
II-3
<PAGE>
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of that person. (Last amended by P.A. 88-43, L. '93, eff. 1-1-
94.)
The Company has purchased $20 of million insurance policies which insures
the Company's directors and officers against liability which they may incur as a
result of actions taken in such capacities. In addition, the Company maintains
fiduciary liability coverage up to a $2 million limit and trust errors and
omissions coverage up to a limit of $5 million.
Item 16. Exhibits and Financial Statement Schedules
(a) The exhibits filed as a part of this Registration Statement are as
follows:
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Articles of Incorporation of Wintrust
Financial Corporation (incorporated by reference to Exhibit 3.1
of the Company's Form S-1 Registration Statement (No. 333-18699)
filed with the Securities and Exchange Commission on December 24,
1996).
4.1 Form of Indenture.
4.2 Form of Subordinated Debenture (included as an exhibit to Exhibit
4.1).
4.3 Certificate of Trust of Capital Trust dated as of August 14,
1998.
4.4 Trust Agreement of Capital Trust dated as of August 14, 1998.
4.5 Form of Amended and Restated Trust Agreement of Capital Trust.
4.6 Form of Preferred Security Certificate of Capital Trust (included
as an exhibit to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement for Capital
Trust.
4.8 Form of Agreement as to Expenses and Liabilities (included as an
exhibit to Exhibit 4.5).
5.1 Opinion of Vedder, Price, Kaufman & Kammholz re: legality.*
5.2 Opinion of Richards, Layton & Finger.*
8.1 Opinion of Vedder, Price, Kaufman & Kammholz re: Tax Matters.*
12.1 Statement re: Computation of Ratios.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Vedder, Price, Kaufman & Kammholz (included in Exhibit
5.1).*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2).*
24.1 Powers of Attorney (set forth on Signature page).
25.1 Statement of Eligibility of Trustee.*
- ----------
* To be filed by amendment.
(b) Financial Statement Schedules -- none required.
Item 17. Undertakings
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant
II-4
<PAGE>
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants 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 Registrants 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(i) The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(j) The undersigned Registrants hereby undertake to file an application
for the purposes of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Lake Forest, Illinois on August 17, 1998.
WINTRUST FINANCIAL CORPORATION
By: /s/ EDWARD J. WEHMER
-------------------------------------
Edward J. Wehmer, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
Wintrust Capital Trust I certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Lake Forest, Illinois on August 17, 1998.
WINTRUST CAPITAL TRUST I
By: /s/ EDWARD J. WEHMER
-------------------------------------
Edward J. Wehmer
By: /s/ DAVID A. DYKSTRA
-------------------------------------
David A. Dykstra
By: /s/ RANDOLPH M. HIBBEN
-------------------------------------
Randolph M. Hibben
II-6
<PAGE>
SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Edward J. Wehmer and David A. Dykstra and each of
them (with full power to each of them to act alone), his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ EDWARD J. WEHMER Chief Executive Officer August 17, 1998
- ------------------------------- and Director
Edward J. Wehmer
/s/ DAVID A. DYKSTRA Chief Financial Officer August 17, 1998
- ------------------------------- (and principal accounting officer)
David A. Dykstra
/s/ JOHN S. LILLARD Chairman August 17, 1998
- -------------------------------
John S. Lillard
/s/ ALAN W. ADAMS Director August 17, 1998
- -------------------------------
Alan W. Adams
Director
- -------------------------------
Howard D. Adams
/s/ JOSEPH ALAIMO Director August 17, 1998
- -------------------------------
Joseph Alaimo
/s/ PETER CRIST Director August 17, 1998
- -------------------------------
Peter Crist
/s/ BRUCE K. CROWTHER Director August 17, 1998
- -------------------------------
Bruce K. Crowther
/s/ MAURICE F. DUNNE, JR. Director August 17, 1998
- -------------------------------
Maurice F. Dunne, Jr.
/s/ WILLIAM C. GRAFT Director August 17, 1998
- -------------------------------
William C. Graft
/s/ KATHLEEN R. HORNE Director August 17, 1998
- -------------------------------
Kathleen R. Horne
/s/ JAMES E. MAHONEY Director August 17, 1998
- -------------------------------
James E. Mahoney
/s/ JAMES B. MCCARTHY Director August 17, 1998
- -------------------------------
James B. McCarthy
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ MARGUERITE SAVARD MCKENNA Director August 17, 1998
- -------------------------------
Marguerite Savard McKenna
/s/ ALBIN F. MOSCHNER Director August 17, 1998
- -------------------------------
Albin F. Moschner
/s/ HOLLIS W. RADEMACHER Director August 17, 1998
- -------------------------------
Hollis W. Rademacher
/s/ PETER RUSIN Director August 17, 1998
- -------------------------------
Peter Rusin
/s/ J. CHRISTOPHER REYES Director August 17, 1998
- -------------------------------
J. Christopher Reyes
/s/ JOHN N. SCHAPER Director August 17, 1998
- -------------------------------
John N. Schaper
/s/ JOHN J. SCHORNACK Director August 17, 1998
- -------------------------------
John J. Schornack
/s/ INGRID S. STAFFORD Director August 17, 1998
- -------------------------------
Ingrid S. Stafford
/s/ JANE R. STEIN Director August 17, 1998
- -------------------------------
Jane R. Stein
/s/ KATHARINE V. SYLVESTER Director August 17, 1998
- -------------------------------
Katharine V. Sylvester
/s/ LEMUEL H. TATE, JR. Director August 17, 1998
- -------------------------------
Lemuel H. Tate, Jr.
/s/ LARRY WRIGHT Director August 17, 1998
- -------------------------------
Larry Wright
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Articles of Incorporation of Wintrust Financial
Corporation (incorporated by reference to Exhibit 3.1 of the Company's
Form S-1 Registration Statement (No. 333-18699) filed with the Securities
and Exchange Commission on December 24, 1996).
4.1 Form of Indenture.
4.2 Form of Subordinated Debenture (included as an exhibit to Exhibit 4.1).
4.3 Certificate of Trust of Capital Trust dated as of August 14, 1998.
4.4 Trust Agreement of Capital Trust dated as of August 14, 1998.
4.5 Form of Amended and Restated Trust Agreement of Capital Trust.
4.6 Form of Preferred Security Certificate of Capital Trust (included as an
exhibit to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement for Capital Trust.
4.8 Form of Agreement as to Expenses and Liabilities (included as an exhibit
to Exhibit 4.5).
5.1 Opinion of Vedder, Price, Kaufman & Kammholz re: legality.*
5.2 Opinion of Richards, Layton & Finger.*
8.1 Opinion of Vedder, Price, Kaufman & Kammholz re: Tax Matters.*
12.1 Statement re: Computation of Ratios.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Vedder, Price, Kaufman & Kammholz (included in Exhibit 5.1).*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2).*
24.1 Powers of Attorney (set forth on Signature page).
25.1 Statement of Eligibility of Trustee.*
</TABLE>
- ------------
* To be filed by amendment.
<PAGE>
Exhibit 4.1
[FORM OF]
================================================================================
WINTRUST FINANCIAL CORPORATION
AND
WILMINGTON TRUST COMPANY,
AS INDENTURE TRUSTEE
INDENTURE
____% SUBORDINATED DEBENTURES DUE 2028
Dated as of _________ __, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS..................................................... 2
Section 1.1 Definitions of Terms............................... 2
ARTICLE II
ISSUE, DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE DEBENTURES..................... 10
Section 2.1 Designation and Principal Amount................... 10
Section 2.2 Maturity........................................... 10
Section 2.3 Form and Payment................................... 11
Section 2.4 [Intentionally Left Blank]......................... 11
Section 2.5 Interest........................................... 11
Section 2.6 Execution and Authentications...................... 12
Section 2.7 Registration of Transfer and Exchange.............. 13
Section 2.8 Temporary Debentures............................... 14
Section 2.9 Mutilated, Destroyed, Lost or Stolen Debentures.... 15
Section 2.10 Cancellation....................................... 15
Section 2.11 Benefit of Indenture............................... 16
Section 2.12 Authentication Agent............................... 16
ARTICLE III
REDEMPTION OF DEBENTURES........................................ 17
Section 3.1 Redemption......................................... 17
Section 3.2 Special Event Redemption........................... 17
Section 3.3 Optional Redemption by Company..................... 17
Section 3.4 Notice of Redemption............................... 18
Section 3.5 Payment Upon Redemption............................ 19
Section 3.6 No Sinking Fund.................................... 19
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD............................ 20
Section 4.1 Extension of Interest Payment Period............... 20
Section 4.2 Notice of Extension................................ 20
Section 4.3 Limitation on Transactions......................... 21
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY............................. 21
Section 5.1 Payment of Principal and Interest.................. 21
Section 5.2 Maintenance of Agency.............................. 21
Section 5.3 Paying Agents...................................... 22
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 5.4 Appointment to Fill Vacancy in Office of Trustee..................23
Section 5.5 Compliance with Consolidation Provisions..........................23
Section 5.6 Limitation on Transactions........................................23
Section 5.7 Covenants as to the Trust.........................................24
Section 5.8 Covenants as to Purchases.........................................24
Section 5.9 Waiver of Usury, Stay or Extension Laws...........................24
ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE..................................................25
Section 6.1 Company to Furnish Trustee Names and Addresses of
Debentureholders..................................................25
Section 6.2 Preservation of Information Communications with Debentureholders..25
Section 6.3 Reports by the Company............................................25
Section 6.4 Reports by the Trustee............................................26
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT.............................................................26
Section 7.1 Events of Default.................................................26
Section 7.2 Collection of Indebtedness and Suits for Enforcement by Trustee...28
Section 7.3 Application of Moneys Collected...................................29
Section 7.4 Limitation on Suits...............................................30
Section 7.5 Rights and Remedies Cumulative; Delay or Omission not Waiver......31
Section 7.6 Control by Debentureholders.......................................31
Section 7.7 Undertaking to Pay Costs..........................................32
Section 7.8 Direct Action; Right of Set-Off...................................32
ARTICLE VIII
FORM OF DEBENTURE AND ORIGINAL ISSUE............................................32
Section 8.1 Form of Debenture.................................................32
Section 8.2 Original Issue of Debentures......................................32
ARTICLE IX
CONCERNING THE TRUSTEE..........................................................33
Section 9.1 Certain Duties and Responsibilities Trustee.......................33
Section 9.2 Notice of Defaults................................................34
Section 9.3 Certain Rights of Trustee.........................................34
Section 9.4 Trustee Not Responsible for Recitals, etc.........................36
Section 9.5 May Hold Debentures...............................................36
Section 9.6 Moneys Held in Trust..............................................36
Section 9.7 Compensation and Reimbursement....................................36
Section 9.8 Reliance on Officers' Certificate.................................37
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 9.9 Disqualification: Conflicting Interests.....................................37
Section 9.10 Corporate Trustee Required; Eligibility......................................37
Section 9.11 Resignation and Removal; Appointment of Successor............................38
Section 9.12 Acceptance of Appointment by Successor.......................................39
Section 9.13 Merger, Conversion, Consolidation or Succession to Business..................40
Section 9.14 Preferential Collection of Claims Against the Company........................40
ARTICLE X
CONCERNING THE DEBENTUREHOLDERS............................................................40
Section 10.1 Evidence of Action by Holders................................................40
Section 10.2 Proof of Execution by Debentureholders.......................................41
Section 10.3 Who May be Deemed Owners.....................................................41
Section 10.4 Certain Debentures Owned by Company Disregarded..............................41
Section 10.5 Actions Binding on Future Debentureholders...................................42
ARTICLE XI
SUPPLEMENTAL INDENTURES....................................................................42
Section 11.1 Supplemental Indentures Without the Consent of Debentureholders..............42
Section 11.2 Supplemental Indentures with Consent of Debentureholders.....................43
Section 11.3 Effect of Supplemental Indentures............................................44
Section 11.4 Debentures Affected by Supplemental Indentures...............................44
Section 11.5 Execution of Supplemental Indentures.........................................44
ARTICLE XII
SUCCESSOR CORPORATION......................................................................45
Section 12.1 Company May Consolidate, etc.................................................45
Section 12.2 Successor Corporation Substituted............................................45
Section 12.3 Evidence of Consolidation, etc. to Trustee...................................46
ARTICLE XIII
SATISFACTION AND DISCHARGE.................................................................46
Section 13.1 Satisfaction and Discharge of Indenture......................................46
Section 13.2 Discharge of Obligations.....................................................47
Section 13.3 Deposited Moneys to be Held in Trust.........................................47
Section 13.4 Payment of Monies Held by Paying Agents......................................47
Section 13.5 Repayment to Company.........................................................47
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS............................48
Section 14.1 No Recourse..................................................................48
ARTICLE XV
MISCELLANEOUS PROVISIONS...................................................................48
Section 15.1 Effect on Successors and Assigns.............................................48
Section 15.2 Actions by Successor.........................................................48
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Section 15.3 Surrender of Company Powers..................................................49
Section 15.4 Notices......................................................................49
Section 15.5 Governing Law................................................................49
Section 15.6 Treatment of Debentures as Debt..............................................49
Section 15.7 Compliance Certificates and Opinions.........................................49
Section 15.8 Payments on Business Days....................................................50
Section 15.9 Conflict with Trust Indenture Act............................................50
Section 15.10 Counterparts.................................................................50
Section 15.11 Separability.................................................................50
Section 15.12 Assignment...................................................................50
Section 15.13 Acknowledgment of Rights.....................................................51
ARTICLE XVI
SUBORDINATION OF DEBENTURES................................................................51
Section 16.1 Agreement to Subordinate.....................................................51
Section 16.2 Default on Senior Debt, Subordinated Debt or Additional
Senior Obligations...........................................................51
Section 16.3 Liquidation; Dissolution; Bankruptcy.........................................52
Section 16.4 Subrogation..................................................................53
Section 16.5 Trustee to Effectuate Subordination..........................................54
Section 16.6 Notice by the Company........................................................54
Section 16.7 Rights of the Trustee; Holders of Senior Indebtedness........................55
Section 16.8 Subordination may not be Impaired............................................55
</TABLE>
v
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
SECTION OF
TRUST INDENTURE ACT SECTION OF
OF 1939, AS AMENDED INDENTURE
- ------------------- ----------
<S> <C>
310(a)......................................................................9.10
310(b).......................................................................9.9
.......................................................................9.11
310(c)............................................................Not Applicable
311(a)......................................................................9.14
311(b)......................................................................9.14
311(c)............................................................Not Applicable
312(a).......................................................................6.1
.....................................................................6.2(a)
312(b)....................................................................6.2(c)
312(c)....................................................................6.2(c)
313(a)....................................................................6.4(a)
313(b)....................................................................6.4(b)
313(c)....................................................................6.4(a)
.....................................................................6.4(b)
313(d)....................................................................6.4(c)
314(a)....................................................................6.3(a)
314(b)............................................................Not Applicable
314(c)......................................................................15.7
314(d)............................................................Not Applicable
314(e)......................................................................15.7
314(f)............................................................Not Applicable
315(a)....................................................................9.1(a)
........................................................................9.3
315(b).......................................................................9.2
315(c)....................................................................9.1(a)
315(d)....................................................................9.1(b)
315(e).......................................................................7.7
316(a).......................................................................1.1
........................................................................7.6
316(b)....................................................................7.4(b)
316(c)...................................................................10.1(b)
317(a).......................................................................7.2
317(b).......................................................................5.3
318(a)......................................................................15.9
</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Indenture
vi
<PAGE>
INDENTURE
INDENTURE, dated as of _________ __, 1998, between WINTRUST FINANCIAL
CORPORATION, an Illinois corporation (the "Company") and Wilmington Trust
Company, a Delaware banking corporation duly organized and existing under the
laws of the State of Delaware as trustee (the "Trustee");
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the execution and delivery of this Indenture to provide for the issuance of
securities to be known as its ____% Subordinated Debentures due 2028
(hereinafter referred to as the "Debentures"), the form and substance of such
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in this Indenture;
WHEREAS, Wintrust Capital Trust I, a Delaware statutory business trust (the
"Trust"), has offered to the public up to $31,050,000 aggregate liquidation
amount of its Preferred Securities (as defined herein) and proposes to invest
the proceeds from such offering, together with the proceeds of the issuance and
sale by the Trust to the Company of up to $960,310 aggregate liquidation amount
of its Common Securities (as defined herein), in up to $32,010,310 aggregate
principal amount of the Debentures;
WHEREAS, the Company has requested that the Trustee execute and deliver
this Indenture;
WHEREAS, all requirements necessary to make this Indenture a valid
instrument in accordance with its terms, and to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed, and the execution and
delivery of this Indenture have been duly authorized in all respects;
WHEREAS, to provide the terms and conditions upon which the Debentures are
to be authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; 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, in consideration of the premises and the purchase of the
Debentures by the holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the holders of the Debentures:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 Definitions of Terms.
The terms defined in this Section 1.1 (except as in this Indenture
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.1 and shall include the
plural as well as the singular. All other terms used in this Indenture that are
defined in the Trust Indenture Act, or that are by reference in the Trust
Indenture Act defined in the Securities Act (except as herein otherwise
expressly provided or unless the context otherwise requires), shall have the
meanings assigned to such terms in the Trust Indenture Act and in the Securities
Act as in force at the date of the execution of this instrument. All accounting
terms used herein and not expressly defined shall have the meanings assigned to
such terms in accordance with Generally Accepted Accounting Principles.
"Accelerated Maturity Date" means if the Company elects to accelerate
the Maturity Date in accordance with Section 2.2(c), the date selected by the
Company which is prior to the Scheduled Maturity Date, but is after September
30, 2003.
"Additional Interest" shall have the meaning set forth in Section 2.5.
"Additional Senior Obligations" means all indebtedness of the Company
whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar arrangements;
provided, however, that Additional Senior Obligations does not include claims in
respect of Senior Debt or Subordinated Debt or obligations which, by their
terms, are expressly stated to be not superior in right of payment to the
Debentures or to rank pari passu in right of payment with the Debentures. For
purposes of this definition, "claim" shall have the meaning assigned thereto in
Section 101(4) of the United States Bankruptcy Code of 1978, as amended.
"Administrative Trustees" shall have the meaning set forth in the
Trust Agreement.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person; (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person; (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person; (d) a partnership in which the specified Person is a
general partner; (e) any officer or director of the specified Person; and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
2
<PAGE>
"Authenticating Agent" means an authenticating agent with respect to
the Debentures appointed by the Trustee pursuant to Section 2.12.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or
any duly authorized committee of such Board or any other duly designated
officers of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means, with respect to the Debentures, any day other
than a Saturday or a Sunday or a day on which federal or state banking
institutions in the Borough of Manhattan, The City of New York, are authorized
or required by law, executive order or regulation to close, or a day on which
the Corporate Trust Office of the Trustee or the Property Trustee is closed for
business.
"Capital Treatment Event" means the receipt by the Company and the
Trust of an Opinion of Counsel, rendered by a law firm having a recognized
national bank regulatory practice, 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 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 under the Trust Agreement, there is more than an insubstantial risk
of impairment of the Company's ability to treat the Preferred Securities (or any
substantial portion thereof) as Tier 1 capital (or the then equivalent thereof),
for purposes of the capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Company. The Trust or the Company shall request
and receive an Opinion of Counsel with regard to such matters within a
reasonable period of time after the Trust or the Company shall have become aware
of the possible occurrence of any such event.
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer, the principal accounting officer, the
treasurer or any vice president of the Company. The Certificate need not comply
with the provisions of Section 15.7.
"Change in 1940 Act Law" shall have the meaning set forth in the
definition of "Investment Company Event."
"Commission" means the Securities and Exchange Commission.
"Common Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with the Preferred Securities; provided,
however, that upon the occurrence of an Event of Default, the rights of holders
of Common Securities to payment in respect of distributions
3
<PAGE>
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
"Company" means Wintrust Financial Corporation, a corporation duly
organized and existing under the laws of the State of Illinois, and, subject to
the provisions of Article XII, shall also include its successors and assigns.
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Custodian" means any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debentures" shall have the meaning set forth in the Recitals hereto.
"Debentureholder," "holder of Debentures," "registered holder," or
other similar term, means the Person or Persons in whose name or names a
particular Debenture shall be registered on the books of the Company or the
Trustee kept for that purpose in accordance with the terms of this Indenture.
"Debenture Register" shall have the meaning set forth in Section
2.7(b).
"Debt" means with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person 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 such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person 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); (v) every capital lease obligation of such Person; and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
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"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Trust Agreement and the Debentures held by the Property Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro rata
in accordance with the Trust Agreement.
"Event of Default" means, with respect to the Debentures, any event
specified in Section 7.1, which has continued for the period of time, if any,
and after the giving of the notice, if any, therein designated.
"Exchange Act," means the Securities Exchange Act of 1934, as amended,
as in effect at the date of execution of this instrument.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.
"Extended Maturity Date" means if the Company elects to extend the
Maturity Date in accordance with Section 2.2(b), the date selected by the
Company which is after the Scheduled Maturity Date but before _________,
2047.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Generally Accepted Accounting Principles" means such accounting
principles as are generally accepted at the time of any computation required
hereunder.
"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depositary receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"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.
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"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 in accordance with the terms hereof.
"Interest Payment Date," when used with respect to any installment of
interest on the Debentures, means the date specified in the Debenture or in an
indenture supplemental hereto with respect to the Debentures as the fixed date
on which an installment of interest with respect to the Debentures is due and
payable.
"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.
"Investment Company Event" means the receipt by the Trust and the
Company of an Opinion of Counsel, rendered by a law firm having a recognized
national tax and securities law practice, to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
shall be considered an "investment company" that is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred Securities under the
Trust Agreement. The Trust or the Company shall request and receive an Opinion
of Counsel with regard to such matters within a reasonable period of time after
the Trust or the Company shall have become aware of the possible occurrence of
any such event.
"Maturity Date" means the date on which the Debentures mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional Interest,
if any.
"Ministerial Action" shall have the meaning set forth in Section 3.2.
"Officers' Certificate" means a certificate signed by the President or
an Executive Vice President and by the Treasurer or an Assistant Treasurer or
the Vice President--Finance or the Secretary or an Assistant Secretary of the
Company that is delivered to the Trustee in accordance with the terms hereof.
Each such certificate shall include the statements provided for in Section 15.7,
if and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of independent,
outside legal counsel for the Company that is delivered to the Trustee in
accordance with the terms hereof. Each such opinion
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shall include the statements provided for in Section 15.7, if and to the extent
required by the provisions thereof.
"Outstanding," when used with reference to the Debentures, means,
subject to the provisions of Section 10.4, as of any particular time, all
Debentures theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Debentures theretofore canceled by the Trustee or any
paying agent, or delivered to the Trustee or any paying agent for cancellation
or that have previously been canceled; (b) Debentures or portions thereof for
the payment or redemption of which moneys or Governmental Obligations in the
necessary amount shall have been deposited in trust with the Trustee or with any
paying agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own paying
agent); provided, however, that if such Debentures or portions of such
Debentures are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as in Article III provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and (c)
Debentures in lieu of or in substitution for which other Debentures shall have
been authenticated and delivered pursuant to the terms of Section 2.7; provided,
however, that in determining whether the holders of the requisite percentage of
Debentures have given any request, notice, consent or waiver hereunder,
Debentures held by the Company or any Affiliate of the Company shall not be
included.
"Person" means any individual, corporation, partnership, joint-
venture, joint-stock company, unincorporated organization or government or any
agency or political subdivision thereof.
"Predecessor Debenture" means every previous Debenture evidencing all
or a portion of the same debt as that evidenced by such particular Debenture;
and, for the purposes of this definition, any Debenture authenticated and
delivered under Section 2.9 in lieu of a lost, destroyed or stolen Debenture
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Debenture.
"Preferred Securities" means undivided beneficial interests in the
assets of the Trust which rank pari passu with Common Securities issued by the
Trust; provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the Company
may enter into with the Trustee or other Persons that operate directly or
indirectly for the benefit of holders of Preferred Securities.
"Property Trustee" has the meaning set forth in the Trust Agreement.
"Responsible Officer" when used with respect to the Trustee means any
officer within the Corporate Trust Office of the Trustee, including any vice
president, any assistance vice president, any assistant treasurer, any
assistance secretary, the secretary, the treasurer or any other officer or
assistant officer of the Corporate Trust Office of the Trustee customarily
performing functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
"Scheduled Maturity Date" means ____________, 2028.
"Securities Act," means the Securities Act of 1933, as amended, as in
effect at the date of execution of this instrument.
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"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Debentures or to other Debt which is pari
passu with, or subordinated to, the Debentures; provided, however, that Senior
Debt shall not be deemed to include (i) any Debt 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;
(ii) any Debt of the Company to any of its subsidiaries; (iii) Debt to any
employee of the Company; (iv) Debt which by its terms is subordinated to trade
accounts payable or accrued liabilities arising in the ordinary course of
business to the extent that payments made to the holders of such Debt by the
holders of the Debentures as a result of the subordination provisions of this
Indenture would be greater than they otherwise would have been as a result of
any obligation of such holders to pay amounts over to the obligees on such trade
accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is subject;
and (v) Debt which constitutes Subordinated Debt.
"Senior Indebtedness" shall have the meaning set forth in Section
16.2.
"Special Event" means a Tax Event, an Investment Company Event or a
Capital Treatment Event.
"Subordinated Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to Senior Debt of the Company (other than the Debentures); provided, however,
that Subordinated Debt will not be deemed to include (i) any Debt 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, (ii) any Debt of the Company to any of its subsidiaries, (iii) any
Debt to any employee of the Company, (iv) any Debt which by its terms is
subordinated to trade accounts payable or accrued liabilities arising in the
ordinary course of business to the extent that payments made to the holders of
such Debt by the holders of the Subordinated Debentures as a result
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of the subordination provisions of the Indenture would be greater than they
otherwise would have been as a result of any obligation of such holders to pay
amounts over to the obligees on such trade accounts payable or accrued
liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, (v) Debt which
constitutes Senior Debt, and (vi) any Debt of the Company under debt
securities (and guarantees in respect of these debt securities) initially issued
to any trust, or a trustee of a trust, partnership or other entity affiliated
with the Company that is, directly or indirectly, a financing vehicle of the
Company in connection with the issuance by that entity of preferred securities
or other securities which are intended to qualify for Tier 1 capital treatment.
"Subsidiary" means, with respect to any Person, (i) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries; (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries; and (iii) any limited partnership of which such Person or
any of its Subsidiaries is a general partner.
"Tax Event" means the receipt by the Company and the Trust of an
Opinion of Counsel, rendered by a law firm having a recognized national tax and
securities practice, to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or shall be within 90 days after the
date of such Opinion of Counsel, subject to United States federal income tax
with respect to income received or accrued on the Debentures; (ii) interest
payable by the Company on the Debentures is not, or within 90 days after the
date of such Opinion of Counsel, shall not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes; or (iii) the
Trust is, or shall be within 90 days after the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges. The Trust or the Company shall request and receive
an Opinion of Counsel with regard to such matters within a reasonable period of
time after the Trust or the Company shall have become aware of the possible
occurrence of any of the events described in clauses (i) through (iii) above.
"Trust" means Wintrust Capital Trust I, a Delaware statutory business
trust.
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated _______ __, 1998, of the Trust.
"Trustee" means Wilmington Trust Company and, subject to the
provisions of Article IX, shall also include its successors and assigns, and, if
at any time there is more than one Person acting in such capacity hereunder,
"Trustee" shall mean each such Person.
"Trust Indenture Act," means the Trust Indenture Act of 1939, as
amended, subject to the provisions of Sections 11.1, 11.2, and 12.1, as in
effect at the date of execution of this instrument.
"Trust Securities" means the Common Securities and Preferred
Securities, collectively.
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"Voting Stock," as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
ARTICLE II
ISSUE, DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE DEBENTURES
Section 2.1 Designation and Principal Amount.
There is hereby authorized Debentures designated the "____%
Subordinated Debentures due 2028," limited in aggregate principal amount to
$32,010,310, which amount shall be as set forth in any written order of the
Company for the authentication and delivery of Debentures pursuant to Section
2.6.
Section 2.2 Maturity.
(a) The Maturity Date shall be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to extend the Maturity Date beyond
the Scheduled Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date; or
(iii) if the Company elects to accelerate the Maturity Date to
be a date prior to the Scheduled Maturity Date in accordance with
Section 2.2(c), the Accelerated Maturity Date.
(b) the Company may at any time before the day which is 90 days
before the Scheduled Maturity Date, elect to extend the Maturity Date only once
to the Extended Maturity Date, provided that the Company has received the prior
approval of the Federal Reserve if then required under applicable capital
guidelines, policies or regulations of the Federal Reserve and further provided
that the following conditions in this Section 2.2(b) are satisfied both at the
date the Company gives notice in accordance with Section 2.2(d) of its election
to extend the Maturity Date and at the Scheduled Maturity Date:
(i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation;
(ii) the Company is not in default in the payment of interest
or principal on the Debentures; and
(iii) the Trust is not in arrears on payments of Distributions
on the Trust Securities issued by it and no deferred Distributions are
accumulated.
(c) the Company may at any time before the day which is 90 days
before the Scheduled Maturity Date and after September 30, 2003, elect to
shorten the Maturity Date only once to the Accelerated Maturity Date provided
that the Company has received the prior approval of the Federal
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Reserve if then required under applicable capital guidelines, policies or
regulations of the Federal Reserve.
(d) if the Company elects to extend the Maturity Date in accordance
with Section 2.2(b), the Company shall give notice to the registered holders of
the Debentures, the Property Trustee and the Trust of the extension of the
Maturity Date and the Extended Maturity Date at least 90 days and no more than
180 days before the Scheduled Maturity Date.
(e) if the Company elects to accelerate the Maturity Date in
accordance with Section 2.2(c), the Company shall give notice to the registered
holders of the Debentures, the Property Trustee and the Trust of the extension
of the Maturity Date and the Accelerated Maturity Date at least 90 days and no
more than 180 days before the Accelerated Maturity Date.
Section 2.3 Form and Payment.
The Debentures shall be issued in fully registered certificated form
without interest coupons. Principal and interest on the Debentures issued in
certificated from shall be payable, the transfer of such Debentures shall be
registrable and such Debentures shall be exchangeable for Debentures bearing
identical terms and provisions at the office or agency of the Trustee; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the holder at such address as shall appear in the Debenture
Register or by wire transfer to an account maintained by the holder as specified
in the Debenture Register, provided that the holder provides proper transfer
instructions by the regular record date. Notwithstanding the foregoing, so long
as the holder of any Debentures is the Property Trustee, the payment of
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Debentures held by the Property Trustee shall be made
at such place and to such account as may be designated by the Property Trustee.
Section 2.4 [Intentionally Left Blank].
Section 2.5 Interest.
(a) Each Debenture shall bear interest at the rate of ____% per annum
(the "Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, an "Interest
Payment Date"), commencing on December 31, 1998 to the Person in whose name
such Debenture or any Predecessor Debenture
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is registered, at the close of business on the regular record date for such
interest installment, which shall be the fifteenth day of the last month of the
calendar quarter.
(b) The amount of interest payable for any period shall be computed
on the basis of a 360-day year of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed, shall be computed on the basis of the number of days elapsed in a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Debentures is not a Business Day, then payment of
interest payable on such date shall be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day (and
without any reduction of interest or any other payment in respect of any such
acceleration), in each case with the same force and effect as if made on the
date such payment was originally payable.
(c) If, at any time while the Property Trustee is the holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company shall pay as additional interest ("Additional
Interest") on the Debentures held by the Property Trustee, such additional
amounts as shall be required so that the net amounts received and retained by
the Trust and the Property Trustee after paying such taxes, duties, assessments
or other governmental charges shall be equal to the amounts the Trust and the
Property Trustee would have received had no such taxes, duties, assessments or
other government charges been imposed.
Section 2.6 Execution and Authentications.
(a) The Debentures shall be signed on behalf of the Company by its
President or one of its Vice Presidents, under its corporate seal attested by
its Secretary or one of its Assistant Secretaries. Signatures may be in the form
of a manual or facsimile signature. The Company may use the facsimile signature
of any Person who shall have been a President or Vice President thereof, or of
any Person who shall have been a Secretary or Assistant Secretary thereof,
notwithstanding the fact that at the time the Debentures shall be authenticated
and delivered or disposed of such Person shall have ceased to be the President
or a Vice President, or the Secretary or an Assistant Secretary, of the Company
(and any such signature shall be binding on the Company). The seal of the
Company may be in the form of a facsimile of such seal and may be impressed,
affixed, imprinted or otherwise reproduced on the Debentures. The Debentures may
contain such notations, legends or endorsements required by law, stock exchange
rule or usage. Each Debenture shall be dated the date of its authentication by
the Trustee.
(b) A Debenture shall not be valid until authenticated manually by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Debentures signed by its
Chairman, President or any Vice President and its Treasurer or any Assistant
Treasurer,
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and the Trustee in accordance with such written order shall authenticate and
deliver such Debentures.
(d) In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
(e) The Trustee shall not be required to authenticate such Debentures
if the issue of such Debentures pursuant to this Indenture shall affect the
Trustee's own rights, duties or immunities under the Debentures and this
Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.
Section 2.7 Registration of Transfer and Exchange.
(a) Debentures may be exchanged upon presentation thereof at the
office or agency of the Company designated for such purpose in the Borough of
Manhattan, The City of New York, or at the office of the Debenture Registrar,
for other Debentures and for a like aggregate principal amount in denominations
of integral multiples of $25, upon payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, all as provided in this
Section 2.7. In respect of any Debentures so surrendered for exchange, the
Company shall execute, the Trustee shall authenticate and such office or agency
shall deliver in exchange therefor the Debenture or Debentures that the
Debentureholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose in the Borough of Manhattan, The City of New
York, or at the office of the Debenture Registrar or such other location
designated by the Company a register or registers (herein referred to as the
"Debenture Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall register the Debentures and the transfers of
Debentures as in this Article II provided and which at all reasonable times
shall be open for inspection by the Trustee. The registrar for the purpose of
registering Debentures and transfer of Debentures as herein provided shall
initially be the Trustee and thereafter as may be appointed by the Company as
authorized by Board Resolution (the "Debenture Registrar"). Upon surrender for
transfer of any Debenture at the office or agency of the Company designated for
such purpose, the Company shall execute, the Trustee shall authenticate and such
office or agency shall deliver in the name of the transferee or transferees a
new Debenture or Debentures for a like aggregate principal amount. All
Debentures presented or surrendered for exchange or registration of transfer, as
provided in this Section 2.7, shall be accompanied (if so required by the
Company or the Debenture Registrar) by a written instrument or instruments of
transfer, in form satisfactory to the Company or the Debenture Registrar, duly
executed by the registered holder or by such holder's duly authorized attorney
in writing.
(c) No service charge shall be made for any exchange or registration
of transfer of Debentures, or issue of new Debentures in case of partial
redemption, but the Company may require
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payment of a sum sufficient to cover any tax or other governmental charge in
relation thereto, other than exchanges pursuant to Section 2.8, the second
paragraph of Section 3.5 and Section 11.4 not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debentures during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
less than all the Outstanding Debentures and ending at the close of business on
the day of such mailing; nor (ii) to register the transfer of or exchange any
Debentures or portions thereof called for redemption.
(e) Debentures may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Indenture. Any
transfer or purported transfer of any Debenture not made in accordance with this
Indenture shall be null and void.
Section 2.8 Temporary Debentures.
Pending the preparation of definitive Debentures, the Company may
execute, and the Trustee shall authenticate and deliver, temporary Debentures
(printed, lithographed, or typewritten). Such temporary Debentures shall be
substantially in the form of the definitive Debentures in lieu of which they are
issued, but with such omissions, insertions and variations as may be appropriate
for temporary Debentures, all as may be determined by the Company. Every
temporary Debenture shall be executed by the Company and be authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Debentures. Without unnecessary delay the Company
shall execute and shall furnish definitive Debentures and thereupon any or all
temporary Debentures may be surrendered in exchange therefor (without charge to
the holders), at the office or agency of the Company designated for the purpose
in the Borough of Manhattan, The City of New York, and the Trustee shall
authenticate and such office or agency shall deliver in exchange for such
temporary Debentures an equal aggregate principal amount of definitive
Debentures, unless the Company advises the Trustee to the effect that definitive
Debentures need not be executed and furnished until further notice from the
Company. Until so exchanged, the temporary Debentures shall be entitled to the
same benefits under this Indenture as definitive Debentures authenticated and
delivered hereunder.
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Section 2.9 Mutilated, Destroyed, Lost or Stolen Debentures.
(a) In case any temporary or definitive Debenture shall become
mutilated or be destroyed, lost or stolen, the Company (subject to the next
succeeding sentence) shall execute, and upon the Company's request the Trustee
(subject as aforesaid) shall authenticate and deliver, a new Debenture bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated Debenture, or in lieu of and in substitution for the Debenture so
destroyed, lost, stolen or mutilated. In every case the applicant for a
substituted Debenture shall furnish to the Company and the Trustee such security
or indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the destruction,
loss or theft of the applicant's Debenture and of the ownership thereof. The
Trustee may authenticate any such substituted Debenture and deliver the same
upon the written request or authorization of the Chairman, President or any Vice
President and the Treasurer or any Assistant Treasurer of the Company. Upon the
issuance of any substituted Debenture, 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. In case any Debenture that has matured or is
about to mature shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Debenture, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
Debenture) if the applicant for such payment shall furnish to the Company and
the Trustee such security or indemnity as they may require to save them
harmless, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of
such Debenture and of the ownership thereof.
(b) Every replacement Debenture issued pursuant to the provisions of
this Section 2.9 shall constitute an additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen Debenture shall
be found at any time, or be enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other Debentures duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
Section 2.10 Cancellation.
All Debentures surrendered for the purpose of payment, redemption,
exchange or registration of transfer shall, if surrendered to the Company or any
paying agent, be delivered to the Trustee for cancellation, or, if surrendered
to the Trustee, shall be canceled by it, and no Debentures shall be issued in
lieu thereof except as expressly required or permitted by any of the provisions
of this Indenture. On request of the Company at the time of such surrender, the
Trustee shall deliver to the Company canceled Debentures held by the Trustee. In
the absence of such request the Trustee may
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dispose of canceled Debentures in accordance with its standard procedures and
deliver a certificate of disposition to the Company. If the Company shall
otherwise acquire any of the Debentures, however, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Debentures unless and until the same are delivered to the Trustee for
cancellation.
Section 2.11 Benefit of Indenture.
Nothing in this Indenture or in the Debentures, express or implied,
shall give or be construed to give to any Person, other than the parties hereto
and the holders of the Debentures (and, with respect to the provisions of
Article XVI, the holders of Senior Indebtedness) any legal or equitable right,
remedy or claim under or in respect of this Indenture, or under any covenant,
condition or provision herein contained; all such covenants, conditions and
provisions being for the sole benefit of the parties hereto and of the holders
of the Debentures (and, with respect to the provisions of Article XVI, the
holders of Senior Indebtedness).
Section 2.12 Authentication Agent.
(a) So long as any of the Debentures remain Outstanding there may be
an Authenticating Agent for any or all such Debentures, which the Trustee shall
have the right to appoint. Said Authenticating Agent shall be authorized to act
on behalf of the Trustee to authenticate Debentures issued upon exchange,
transfer or partial redemption thereof, and Debentures 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. All references in
this Indenture to the authentication of Debentures by the Trustee shall be
deemed to include authentication by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the Company and shall be a corporation that has a
combined capital and surplus, as most recently reported or determined by it,
sufficient under the laws of any jurisdiction under which it is organized or in
which it is doing business to conduct a trust business, and that is otherwise
authorized under such laws to conduct such business and is subject to
supervision or examination by federal or state authorities. If at any time any
Authenticating Agent shall cease to be eligible in accordance with these
provisions, it shall resign immediately.
(b) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
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ARTICLE III
REDEMPTION OF DEBENTURES
Section 3.1 Redemption.
Subject to the Company having received prior approval of the Federal
Reserve, if then required under the applicable capital guidelines, policies or
regulations of the Federal Reserve, the Company may redeem the Debentures issued
hereunder on and after the dates set forth in and in accordance with the terms
of this Article III.
Section 3.2 Special Event Redemption.
Subject to the Company having received the prior approval of the
Federal Reserve, if then required under the applicable capital guidelines,
policies or regulations of the Federal Reserve, if a Special Event has occurred
and is continuing, then, notwithstanding Section 3.3(a) but subject to Section
3.3(b), the Company shall have the right upon not less than 30 days nor more
than 60 days notice to the holders of the Debentures to redeem the Debentures,
in whole but not in part, for cash within 180 days following the occurrence of
such Special Event (the "180-Day Period") at a redemption price equal to 100% of
the principal amount to be redeemed plus any accrued and unpaid interest thereon
to the date of such redemption (the "Redemption Price"), provided that if at the
time there is available to the Company the opportunity to eliminate, within the
180-Day Period, a Tax Event by taking some ministerial action (a "Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on the Company, the Trust
or the holders of the Trust Securities issued by the Trust, the Company shall
pursue such Ministerial Action in lieu of redemption. The Redemption Price shall
be paid prior to 12:00 noon, New York time, on the date of such redemption or
such earlier time as the Company determines, provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption Price by
10:00 a.m., New York time, on the date such Redemption Price is to be paid.
Section 3.3 Optional Redemption by Company.
(a) Subject to the provisions of Section 3.3(b), except as otherwise
may be specified in this Indenture, the Company shall have the right to redeem
the Debentures, in whole or in part, from time to time, on or after September
30, 2003, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon to the date of such
redemption. Any redemption pursuant to this Section 3.3(a) shall be made upon
not less than 30 days nor more than 60 days notice to the holder of the
Debentures, at the Redemption Price. If the Debentures are only partially
redeemed pursuant to this Section 3.3, the Debentures shall be redeemed pro rata
or by lot or in such other manner as the Trustee shall deem appropriate and fair
in its discretion. The Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time as the Company
determines provided that the Company shall deposit with the
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Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New York
time, on the date such Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in the
delisting of the Preferred Securities issued by the Trust from The Nasdaq
National Market(SM) or any national securities exchange or other organization on
which the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Debentures
in whole.
Section 3.4 Notice of Redemption.
(a) In case the Company shall desire to exercise such right to redeem
all or, as the case may be, a portion of the Debentures in accordance with the
right reserved so to do, the Company shall, or shall cause the Trustee to upon
receipt of 45 days' written notice from the Company (which notice shall, in the
event of a partial redemption, include a representation to the effect that such
partial redemption will not result in the delisting of the Preferred Securities
as described in Section 3.3(b) above), give notice of such redemption to holders
of the Debentures to be redeemed by mailing, first class postage prepaid, a
notice of such redemption not less than 30 days and not more than 60 days before
the date fixed for redemption to such holders at their last addresses as they
shall appear upon the Debenture Register unless a shorter period is specified in
the Debentures to be redeemed. Any notice that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the registered holder receives the notice. In any case, failure duly to give
such notice to the holder of any Debenture designated for redemption in whole or
in part, or any defect in the notice, shall not affect the validity of the
proceedings for the redemption of any other Debentures. In the case of any
redemption of Debentures prior to the expiration of any restriction on such
redemption provided in the terms of such Debentures or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with any such restriction. Each such notice of redemption
shall specify the date fixed for redemption and the Redemption Price and shall
state that payment of the Redemption Price shall be made at the office or agency
of the Company in the Borough of Manhattan, The City of New York or at the
Corporate Trust Office, upon presentation and surrender of such Debentures, that
interest accrued to the date fixed for redemption shall be paid as specified in
said notice and that from and after said date interest shall cease to accrue. If
less than all the Debentures are to be redeemed, the notice to the holders of
the Debentures shall specify the particular Debentures to be redeemed. If the
Debentures are to be redeemed in part only, the notice shall state the portion
of the principal amount thereof to be redeemed and shall state that on and after
the redemption date, upon surrender of such Debenture, a new Debenture or
Debentures in principal amount equal to the unredeemed portion thereof shall be
issued.
(b) If less than all the Debentures are to be redeemed, the Company
shall give the Trustee at least 45 days' notice in advance of the date fixed for
redemption as to the aggregate principal amount of Debentures to be redeemed,
and thereupon the Trustee shall select, pro rata or by lot or in such other
manner as it shall deem appropriate and fair in its discretion, the portion or
portions (equal to $25 or any integral multiple thereof) of the Debentures to be
redeemed and shall thereafter promptly notify the Company in writing of the
numbers of the Debentures to be redeemed, in whole
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or in part. The Company may, if and whenever it shall so elect pursuant to the
terms hereof, by delivery of instructions signed on its behalf by its Chairman,
its President or any Vice President, instruct the Trustee or any paying agent to
call all or any part of the Debentures for redemption and to give notice of
redemption in the manner set forth in this Section 3.4, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the
case may be, such Debenture Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required under the
provisions of this Section 3.4.
Section 3.5 Payment Upon Redemption.
(a) If the giving of notice of redemption shall have been completed as
above provided, the Debentures or portions of Debentures to be redeemed
specified in such notice shall become due and payable on the date and at the
place stated in such notice at the applicable Redemption Price, and interest on
such Debentures or portions of Debentures shall cease to accrue on and after the
date fixed for redemption, unless the Company shall default in the payment of
such Redemption Price with respect to any such Debenture or portion thereof. On
presentation and surrender of such Debentures on or after the date fixed for
redemption at the place of payment specified in the notice, said Debentures
shall be paid and redeemed at the Redemption Price (but if the date fixed for
redemption is an interest payment date, the interest installment payable on such
date shall be payable to the registered holder at the close of business on the
applicable record date pursuant to Section 3.3).
(b) Upon presentation of any Debenture that is to be redeemed in part
only, the Company shall execute and the Trustee shall authenticate and the
office or agency where the Debenture is presented shall deliver to the holder
thereof, at the expense of the Company, a new Debenture of authorized
denomination in principal amount equal to the unredeemed portion of the
Debenture so presented.
Section 3.6 No Sinking Fund.
The Debentures are not entitled to the benefit of any sinking fund.
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1 Extension of Interest Payment Period.
The Company shall have the right, at any time and from time to time
during the term of the Debentures so long as no Event of Default has occurred
and is continuing, to defer payments of interest by extending the interest
payment period of such Debentures for a period not exceeding 20 consecutive
quarters (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable; provided that no
Extended Interest Payment Period may extend beyond the Maturity Date or end on a
date other than an Interest Payment Date. To the extent permitted by applicable
law, interest, the payment of which has been deferred because of the extension
of the interest payment period pursuant to this Section 4.1, shall bear interest
thereon at the Coupon Rate compounded quarterly for each quarter of the Extended
Interest Payment Period ("Compounded Interest"). At the end of the Extended
Interest Payment Period, the Company shall calculate (and deliver such
calculation to the Trustee) and pay all interest accrued and unpaid on the
Debentures, including any Additional Interest and Compounded Interest (together,
"Deferred Interest") that shall be payable to the holders of the Debentures in
whose names the Debentures are registered in the Debenture Register on the first
record date after the end of the Extended Interest Payment Period. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period so long as no Event of Default has occurred and is
continuing, provided that such period together with all such further extensions
thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity
Date of the Debentures or end on a date other than an Interest Payment Date.
Upon the termination of any Extended Interest Payment Period and upon the
payment of all Deferred Interest then due, the Company may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
Section 4.2 Notice of Extension.
(a) If the Property Trustee is the only registered holder of the
Debentures at the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to the Administrative Trustees, the
Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period two Business Days before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by the Trust are
payable; or (ii) the date the Trust is required to give notice of the record
date, or the date such Distributions are payable, to The Nasdaq National
Market/SM/ or other applicable self-regulatory organization or to holders of the
Preferred Securities issued by the Trust, but in any event at least one Business
Day before such record date.
(b) If the Property Trustee is not the only holder of the Debentures
at the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the
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Debentures and the Trustee written notice of its selection of such Extended
Interest Payment Period at least two Business Days before the earlier of (i) the
next succeeding Interest Payment Date; or (ii) the date the Company is required
to give notice of the record or payment date of such interest payment to The
Nasdaq National Market/SM/ or other applicable self-regulatory organization or
to holders of the Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the 20 quarters
permitted in the maximum Extended Interest Payment Period permitted under
Section 4.1.
Section 4.3 Limitation on Transactions.
If (i) the Company shall exercise its right to defer payment of
interest as provided in Section 4.1; or (ii) there shall have occurred and be
continuing any Event of Default, then (a) the Company shall not declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than as a result of a reclassification of its capital stock for another
class of its capital stock) and (b) the Company shall not make any payment of
interest, principal or premium, if any, or repay, repurchase or redeem any debt
securities issued by the Company which rank pari passu with or junior to the
Debentures or make any guarantee payment with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior to the Debentures; provided, however,
that notwithstanding the foregoing the Company may make payments pursuant to its
obligations under the Preferred Securities Guarantee; and (c) the Company shall
not redeem, purchase or acquire less than all of the outstanding Debentures or
any of the Preferred Securities.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal and Interest.
The Company shall duly and punctually pay or cause to be paid the
principal of and interest on the Debentures at the time and place and in the
manner provided herein.
Section 5.2 Maintenance of Agency.
So long as any of the Debentures remain Outstanding, the Company shall
maintain, or shall cause to be maintained, an office or agency in the Borough of
Manhattan, The City of New York, and at such other location or locations as may
be designated as provided in this Section 5.2, where (i) Debentures may be
presented for payment; (ii) Debentures may be presented as hereinabove
authorized for registration of transfer and exchange; and (iii) notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be given or served, such designation
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to continue with respect to such office or agency until the Company shall, by
written notice signed by its President or an Executive Vice President and
delivered to the Trustee, designate some other office or agency for such
purposes or any of them. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, 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, notices and demands.
In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside of the Borough of Manhattan,
The City of New York, where the Debentures may be presented for registration or
transfer and for exchange in the manner provided herein, and the Company may
from time to time rescind such designation as the Company may deem desirable or
expedient; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain any such office or
agency in the Borough of Manhattan, The City of New York, for the purposes above
mentioned. The Company shall give the Trustee prompt written notice of any such
designation or rescission thereof.
Section 5.3 Paying Agents.
(a) The Company shall be the initial paying agent. If the Company
shall appoint one or more paying agents for the Debentures, other than the
Trustee, the Company shall cause each such paying agent to execute and deliver
to the Trustee an instrument in which such agent shall agree with the Trustee,
subject to the provisions of this Section 5.3:
(i) that it shall hold all sums held by it as such agent for
the payment of the principal of or interest on the Debentures (whether
such sums have been paid to it by the Company or by any other obligor
of such Debentures) in trust for the benefit of the Persons entitled
thereto;
(ii) that it shall give the Trustee notice of any failure by
the Company (or by any other obligor of such Debentures) to make any
payment of the principal of or interest on the Debentures when the
same shall be due and payable;
(iii) that it shall, at any time during the continuance of any
failure referred to in the preceding paragraph (a)(ii) above, upon the
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such paying agent; and
(iv) that it shall perform all other duties of paying agent as
set forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to
the Debentures, it shall on or before each due date of the principal of or
interest on such Debentures, set aside, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay such principal
or interest so becoming due on Debentures until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and shall promptly notify
the Trustee of such action, or
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any failure (by it or any other obligor on such Debentures) to take such action.
Whenever the Company shall have one or more paying agents for the Debentures, it
shall, prior to each due date of the principal of or interest on any Debentures,
deposit with the paying agent a sum sufficient to pay the principal or interest
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest, and (unless such paying agent is the
Trustee) the Company shall promptly notify the Trustee of this action or failure
so to act.
(c) Notwithstanding anything in this Section 5.3 to the contrary, (i)
the agreement to hold sums in trust as provided in this Section 5.3 is subject
to the provisions of Section 13.3 and 13.4; and (ii) 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 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 and conditions 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.
Section 5.4 Appointment to Fill Vacancy in Office of Trustee.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, shall appoint, in the manner provided in Section 9.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
Section 5.5 Compliance with Consolidation Provisions.
The Company shall not, while any of the Debentures remain outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other company unless the provisions of
Article XII hereof are complied with.
Section 5.6 Limitation on Transactions.
If Debentures are issued to the Trust or a Trustee of the Trust in
connection with the issuance of Trust Securities by the Trust and (i) there
shall have occurred any event that would constitute an Event of Default; (ii)
the Company shall be in default with respect to any of its obligations under the
Preferred Securities Guarantee relating to the Trust; or (iii) the Company shall
have given notice of its election to defer payments of interest on such
Debentures by extending the interest payment period as provided in this
Indenture and such period, or any extension thereof, shall be continuing, then
(a) the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (other than as a result of a
reclassification of its capital stock); and (b) the Company shall not make any
payment of interest, principal or premium, if any, or repay, repurchase or
redeem any debt securities issued by the Company which rank pari passu with or
junior to the Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks pari passu with or junior in interest to the Debentures;
provided, however, that the Company may make payments pursuant to its
obligations
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under the Preferred Securities Guarantee; and (c) the Company shall not redeem,
purchase or acquire less than all of the outstanding Debentures or any of the
Preferred Securities.
Section 5.7 Covenants as to the Trust.
For so long as such Trust Securities of the Trust remain outstanding,
the Company shall (i) maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of the
Company under this Indenture may succeed to the Company's ownership of the
Common Securities; (ii) not voluntarily terminate, wind up or liquidate the
Trust, except upon prior approval of the Federal Reserve if then so required
under applicable capital guidelines, policies or regulations of the Federal
Reserve and use its reasonable efforts to cause the Trust (a) to remain a
business trust (and to avoid involuntary termination, winding up or
liquidation), except in connection with a distribution of Debentures, the
redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement; and
(b) to otherwise continue not to be treated as an association taxable as a
corporation or partnership for United States federal income tax purposes; and
(iii) use its reasonable efforts to cause each holder of Trust Securities to be
treated as owning an individual beneficial interest in the Debentures. In
connection with the distribution of the Debentures to the holders of the
Preferred Securities issued by the Trust upon a Dissolution Event, the Company
shall use its best efforts to list such Debentures on The Nasdaq National
Market/SM/ or on such other exchange as the Preferred Securities are then
listed.
Section 5.8 Covenants as to Purchases.
Prior to September 30, 2003, the Company shall not purchase any
Debentures, in whole or in part, from the Trust.
Section 5.9 Waiver of Usury, Stay or Extension Laws.
The Company shall 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 performances 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.
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ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 6.1 Company to Furnish Trustee Names and Addresses of Debentureholders.
The Company shall furnish or cause to be furnished to the Trustee (a)
on a monthly basis on each regular record date (as described in Section 2.5) a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the holders of the Debentures as of such regular record date,
provided that the Company shall not be obligated to furnish or cause to furnish
such list at any time that the list shall not differ in any respect from the
most recent list furnished to the Trustee by the Company (in the event the
Company fails to provide such list on a monthly basis, the Trustee shall be
entitled to rely on the most recent list provided by the Company); 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;
provided, however, that, in either case, no such list need be furnished if the
Trustee shall be the Debenture Registrar.
Section 6.2 Preservation of Information Communications with Debentureholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debentures contained in the most recent list furnished to it as provided in
Section 6.1 and as to the names and addresses of holders of Debentures received
by the Trustee in its capacity as registrar for the Debentures (if acting in
such capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.
(c) Debentureholders may communicate as provided in Section 312(b) of
the Trust Indenture Act with other Debentureholders with respect to their rights
under this Indenture or under the Debentures.
Section 6.3 Reports by the Company.
(a) The Company covenants and agrees to file with the Trustee, within
15 days after the Company is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) that the Company may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic
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information, documents and reports that may be required pursuant to Section 13
of the Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from to time
by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable over-night delivery service that provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to subsections (a) and (b) of this Section
6.3 as may be required by rules and regulations prescribed from time to time by
the Commission.
Section 6.4 Reports by the Trustee.
(a) On or before July 15 in each year in which any of the Debentures
are Outstanding, the Trustee shall transmit by mail, first class postage
prepaid, to the Debentureholders, as their names and addresses appear upon the
Debenture Register, a brief report dated as of the preceding May 15, if and to
the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Debentureholders, be filed by the Trustee with the Company, with
each stock exchange upon which any Debentures are listed (if so listed) and also
with the Commission. The Company agrees to notify the Trustee when any
Debentures become listed on any stock exchange.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
Section 7.1 Events of Default.
(a) Whenever used herein with respect to the Debentures, "Event of
Default" means any one or more of the following events that has occurred and is
continuing:
(i) the Company defaults in the payment of any installment of
interest upon any of the Debentures, as and when the same shall become
due and payable, and continuance of
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such default for a period of 30 days; provided, however, that a valid
extension of an interest payment period by the Company in accordance
with the terms of this Indenture shall not constitute a default in the
payment of interest for this purpose;
(ii) the Company defaults in the payment of the principal on
the Debentures as and when the same shall become due and payable
whether at maturity, upon redemption, by declaration or otherwise;
provided, however, that a valid extension of the maturity of such
Debentures in accordance with the terms of this Indenture shall not
constitute a default in the payment of principal;
(iii) the Company fails to observe or perform any other of its
covenants or agreements with respect to the Debentures for a period of
90 days after the date on which written notice of such failure,
requiring the same to be remedied and stating that such notice is a
"Notice of Default" hereunder, 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 principal amount of the
Debentures at the time Outstanding;
(iv) the Company pursuant to or within the meaning of any
Bankruptcy Law (i) commences a voluntary case; (ii) consents to the
entry of an order for relief against it in an involuntary case; (iii)
consents to the appointment of a Custodian of it or for all or
substantially all of its property; or (iv) makes a general assignment
for the benefit of its creditors;
(v) a court of competent jurisdiction enters an order under
any Bankruptcy Law that (i) is for relief against the Company in an
involuntary case; (ii) appoints a Custodian of the Company for all or
substantially all of its property; or (iii) orders the liquidation of
the Company, and the order or decree remains unstayed and in effect
for 90 days; or
(vi) the Trust shall have voluntarily or involuntarily
dissolved, wound-up its business or otherwise terminated its existence
except in connection with (i) the distribution of Debentures to
holders of Trust Securities in liquidation of their interests in the
Trust; (ii) the redemption of all of the outstanding Trust Securities
of the Trust; or (iii) certain mergers, consolidations or
amalgamations, each as permitted by the Trust Agreement.
(b) In each and every such case, unless the principal of all the
Debentures shall have already become due and payable, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the Debentures
then Outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by such Debentureholders) may declare the principal of all the
Debentures to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, notwithstanding
anything contained in this Indenture or in the Debentures.
(c) At any time after the principal of the Debentures shall have been
so declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been
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obtained or entered as hereinafter provided, the holders of a majority in
aggregate principal amount of the Debentures then Outstanding hereunder, 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 all matured installments of interest upon
all the Debentures and the principal of any and all Debentures that shall have
become due otherwise than by acceleration (with interest upon such principal,
and, to the extent that such payment is enforceable under applicable law, upon
overdue installments of interest, at the rate per annum expressed in the
Debentures to the date of such payment or deposit) and the amount payable to the
Trustee under Section 9.6; and (ii) any and all Events of Default under this
Indenture, other than the nonpayment of principal on Debentures that shall not
have become due by their terms, shall have been remedied or waived as provided
in Section 7.6. No such rescission and annulment shall extend to or shall affect
any subsequent default or impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and in
every such case the Company and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies and powers
of the Company and the Trustee shall continue as though no such proceedings had
been taken.
Section 7.2 Collection of Indebtedness and Suits for Enforcement by Trustee.
(a) The Company covenants that (1) in case it shall default in the
payment of any installment of interest on any of the Debentures, and such
default shall have continued for a period of 90 Business Days; or (2) in case it
shall default in the payment of the principal of any of the Debentures when the
same shall have become due and payable, whether upon maturity of the Debentures
or upon redemption or upon declaration or otherwise, then, upon demand of the
Trustee, the Company shall pay to the Trustee, for the benefit of the holders of
the Debentures, the whole amount that then shall have been become due and
payable on all such Debentures for principal or interest, or both, as the case
may be, with interest upon the overdue principal and (to the extent that payment
of such interest is enforceable under applicable law and, if the Debentures are
held by the Trust or a trustee of the Trust, without duplication of any other
amounts paid by the Trust or trustee in respect thereof) upon overdue
installments of interest at the rate per annum expressed in the Debentures; and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, and the amount payable to the Trustee under
Section 9.7.
(b) If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the
Debentures and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or other obligor upon
the Debentures, wherever situated.
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(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or judicial proceedings
affecting the Company or the creditors or property of either, the Trustee shall
have power to intervene in such proceedings and take any action therein that may
be permitted by the court and shall (except as may be otherwise provided by law)
be entitled to file such proofs of claim and other papers and documents as may
be necessary or advisable in order to have the claims of the Trustee and of the
holders of the Debentures allowed for the entire amount due and payable by the
Company under this Indenture at the date of institution of such proceedings and
for any additional amount that may become due and payable by the Company after
such date, and to collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after the deduction of
the amount payable to the Trustee under Section 9.7; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
holders of the Debentures to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
such Debentureholders, to pay to the Trustee any amount due it under Section
9.7.
(d) All rights of action and of asserting claims under this Indenture,
or under any of the terms established with respect to Debentures, may be
enforced by the Trustee without the possession of any of such Debentures, or the
production thereof at any trial or other proceeding relative thereto, and any
such suit or proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for payment to the Trustee of any amounts due under Section 9.7, be
for the ratable benefit of the holders of the Debentures. In case of an Event of
Default hereunder, the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law. Nothing contained herein shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Debentureholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Debentureholder in
any such proceeding.
Section 7.3 Application of Moneys Collected.
Any moneys or other assets collected by the Trustee pursuant to this
Article VII with respect to the Debentures shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys or other assets on account of principal or interest,
upon presentation of the Debentures, and notation thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 9.6;
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SECOND: To the payment of all Senior Indebtedness of the Company if
and to the extent required by Article XVI; and
THIRD: To the payment of the amounts then due and unpaid upon the
Debentures for principal and 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 Debentures for principal and interest, respectively.
Section 7.4 Limitation on Suits.
(a) Except as set forth herein, no holder of any Debenture shall have
any right by virtue or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (i) such holder previously shall have
given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Debentures specifying such Event of
Default, as hereinbefore provided; (ii) the holders of not less than 25% in
aggregate principal amount of the Debentures then Outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as trustee hereunder; (iii) such holder or holders shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby; (iv) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action, suit or proceeding;
and (v) during such 60 day period, the holders of a majority in principal amount
of the Debentures do not give the Trustee a direction inconsistent with the
request.
(b) Notwithstanding anything contained herein to the contrary or any
other provisions of this Indenture, the right of any holder of the Debentures to
receive payment of the principal of and interest on the Debentures, as therein
provided, on or after the respective due dates expressed in such Debenture (or
in the case of redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates or redemption
date, shall not be impaired or affected without the consent of such holder and
by accepting a Debenture hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Debenture with every other such
taker and holder and the Trustee, that no one or more holders of Debentures
shall have any right in any manner whatsoever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of the
holders of any other of such Debentures, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Debentures. For the protection and enforcement
of the provisions of this Section 7.4, each and every Debentureholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
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Section 7.5 Rights and Remedies Cumulative; Delay or Omission not Waiver.
(a) Except as otherwise provided in Section 2.9, all powers and
remedies given by this Article VII to the Trustee or to the Debentureholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any other powers and remedies available to the Trustee or the holders of the
Debentures, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such Debentures.
(b) No delay or omission of the Trustee or of any holder of any of the
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or on acquiescence
therein; and, subject to the provisions of Section 7.4, every power and remedy
given by this Article VII or by law to the Trustee or the Debentureholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Debentureholders.
Section 7.6 Control by Debentureholders.
The holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding, determined in accordance with Section 10.4,
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided, however, that such direction shall not
be in conflict with any rule of law or with this Indenture. Subject to the
provisions of Section 9.1, the Trustee shall have the right to decline to follow
any such direction if the Trustee in good faith shall, by a Responsible Officer
or Officers of the Trustee, determine that the proceeding so directed would
involve the Trustee in personal liability. The holders of a majority in
aggregate principal amount of the Debentures at the time Outstanding affected
thereby, determined in accordance with Section 10.4, may on behalf of the
holders of all of the Debentures waive any past default in the performance of
any of the covenants contained herein and its consequences, except (i) a default
in the payment of the principal of or interest on, any of the Debentures as and
when the same shall become due by the terms of such Debentures otherwise than by
acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal has been deposited with the
Trustee (in accordance with Section 7.1(c)); (ii) a default in the covenants
contained in Section 5.6; or (iii) in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of the holder of each
Outstanding Debenture affected; provided, however, that if the Debentures are
held by the Trust or a trustee of the Trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the Trust shall have consented to such waiver
or modification to such waiver; provided further, that if the consent of the
holder of each Outstanding Debenture is required, such waiver shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such waiver. Upon any such waiver, the default covered thereby
shall be deemed to be cured for all purposes of this Indenture and the Company,
the Trustee and the holders of the
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Debentures shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
Section 7.7 Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Debentures
by such holder's acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, 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 7.7 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Debentureholder, or group of
Debentureholders holding more than 10% in aggregate principal amount of the
Outstanding Debentures, or to any suit instituted by any Debentureholder for the
enforcement of the payment of the principal of or interest on the Debentures, on
or after the respective due dates expressed in such Debenture or established
pursuant to this Indenture. In the event that an Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay interest on or principal of the 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 the principal of or interest on such Debentures having
a principal amount equal to the aggregate Liquidation Amount of the Preferred
Securities of such holders.
Section 7.8 Direct Action; Right of Set-Off
In the event that an Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest on or
principal of the 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 the
principal of or interest on such Debentures having a principal amount equal to
the aggregate Liquidation Amount of the Preferred Securities of such holders (a
"Direct Action"). In connection with such Direct Action, the Company will have
a right of set-off under this Indenture to the extent of any payment made by the
Company to such holder of the Preferred Securities with respect to such Direct
Action.
ARTICLE VIII
FORM OF DEBENTURE AND ORIGINAL ISSUE
Section 8.1 Form of Debenture.
The Debenture and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the forms contained as Exhibit A to
this Indenture, attached hereto and incorporated herein by reference.
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Section 8.2 Original Issue of Debentures.
Debentures in the aggregate principal amount of $27,835,052 may, upon
execution of this Indenture, be executed by the Company and delivered to the
Trustee for authentication. If the Underwriters exercise their Option and there
is an Option Closing Date (as such terms are defined in the Underwriting
Agreement, dated ______ __, 1998, by and among the Company, the Trust, EVEREN
Securities, Inc., ABN AMRO Incorporated and Piper Jaffray Inc., then, on such
Option Closing Date, Debentures in the additional aggregate principal amount of
$4,175,258 may be executed by the Company and delivered to the Trustee for
authentication. The Trustee shall thereupon authenticate and deliver said
Debentures to or upon the written order of the Company, signed by its President,
or any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company.
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.1 Certain Duties and Responsibilities of the Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform with respect to the Debentures such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
shall be read into this Indenture against the Trustee. In case an Event of
Default has occurred that has not been cured or waived, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) 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) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(1) the duties and obligations of the Trustee shall with
respect to the Debentures be determined solely by the
express provisions of this Indenture, and the Trustee
shall not be liable with respect to the Debentures
except for the performance of such duties and
obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee;
and
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(2) in the absence of bad faith on the part of the Trustee,
the Trustee may with respect to the Debentures
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(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 the holders of not less than a majority in principal
amount of the Debentures at the time Outstanding 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 Debentures; and
(iv) none of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably
assured to it.
Section 9.2 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 the Debentures,
as their names and addresses appear in the Debenture Register, notice of such
default, unless such default shall have been cured or waived; provided, however,
that, except in the case default in the payment of the principal or interest
(including any Additional Interest) on any Debenture, 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 the directors and/or Responsible
Officers of the Trustee determines in good faith that the withholding of such
notice is in the interests of the holders of such Debentures; and provided,
further, that in the case of any default of the character specified in Section
7.1(a)(3), no such notice to holders of Debentures need be sent until at least
30 days after the occurrence thereof. For the purposes of this Section 9.2, the
term "default" means any event which is, or after notice or lapse of time or
both, would become, an Event of Default with respect to the Debentures.
Section 9.3 Certain Rights of Trustee.
Except as otherwise provided in Section 9.1:
(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, consent, order, approval, bond, 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;
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(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Board Resolution or an instrument
signed in the name of the Company by its President or any Vice President and by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer thereof (unless other evidence in respect thereof is specifically
prescribed herein);
(c) The Trustee shall not be deemed to have knowledge of a default or
an Event of Default, other than an Event of Default specified in Section
7.1(a)(i); or (ii), unless and until it receives written notification of such
Event of Default from the Company or by holders of at least 25% of the aggregate
principal amount of the Debentures at the time Outstanding;
(d) The Trustee may consult with counsel 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 or suffered or omitted 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, order or
direction of any of the Debentureholders, pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (that has not been cured or waived) to exercise with respect to the
Debentures such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
(f) The Trustee shall not be liable for any action taken or omitted to
be taken by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, security, or
other papers or documents, unless requested in writing so to do by the holders
of not less than a majority in principal amount of the Outstanding Debentures
(determined as provided in Section 10.4); provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of
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such investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand; and
(h) 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.
Section 9.4 Trustee Not Responsible for Recitals, etc.
(a) The Recitals contained herein and in the Debentures shall be taken
as the statements of the Company, and the Trustee assumes no responsibility for
the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or application by
the Company of any of the Debentures or of the proceeds of such Debentures, or
for the use or application of any moneys paid over by the Trustee in accordance
with any provision of this Indenture, or for the use or application of any
moneys received by any paying agent other than the Trustee.
Section 9.5 May Hold Debentures.
The Trustee or any paying agent or registrar for the Debentures, in
its individual or any other capacity, may become the owner or pledgee of
Debentures with the same rights it would have if it were not Trustee, paying
agent or Debenture Registrar.
Section 9.6 Moneys Held in Trust.
Subject to the provisions of Section 13.5, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but 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 moneys received by it hereunder except such as it
may agree with the Company to pay thereon.
Section 9.7 Compensation and Reimbursement.
(a) The Company covenants and agrees to pay to the Trustee, and the
Trustee shall be entitled to, such reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), as the Company and the Trustee may from time to time agree in
writing, for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and, except as otherwise expressly provided herein,
the Company shall pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith. The Company also
covenants to indemnify the Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any loss, liability or expense
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incurred without negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim of
liability in the premises.
(b) The obligations of the Company under this Section 9.7 to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to that
of the Debentures upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the holders of particular
Debentures.
Section 9.8 Reliance on Officers' Certificate.
Except as otherwise provided in Section 9.1, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.
Section 9.9 Disqualification: Conflicting Interests.
If the Trustee has or shall acquire any "conflicting interest" within
the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
Section 9.10 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee with respect to the Debentures
issued hereunder which shall at all times be a corporation organized and doing
business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or other
Person permitted to act as trustee by the Commission, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 9.10, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any Person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.10, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.11.
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Section 9.11 Resignation and Removal; Appointment of Successor.
(a) The Trustee or any successor hereafter appointed, may at any time
resign by giving written notice thereof to the Company and by transmitting
notice of resignation by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the Debenture
Register. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee with respect to Debentures by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee with respect to
Debentures, or any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six months may, subject to the provisions
of Section 9.9, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor trustee. Such court may
thereupon after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any one of the following shall occur
(i) the Trustee shall fail to comply with the provisions of
Section 9.9 after written request therefor by the Company or by any
Debentureholder who has been a bona fide holder of a Debenture or
Debentures for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.10 and shall fail to resign after written
request therefor by the Company or by any such Debentureholder; or
(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy
proceeding, or a receiver of the Trustee or of its property shall be
appointed or consented to, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then, in any such
case, the Company may remove the Trustee with respect to all
Debentures and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee, or, subject to the provisions of
Section 9.9, unless the Trustee's duty to resign is stayed as provided
herein, any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six months may, on behalf of that
holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon after
such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
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(c) The holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding may at any time remove the Trustee by so
notifying the Trustee and the Company and may appoint a successor Trustee with
the consent of the Company.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures pursuant to any of the
provisions of this Section 9.11 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 9.12.
(e) Any successor trustee appointed pursuant to this Section 9.11 may
be appointed with respect to the Debentures, and at any time there shall be only
one Trustee with respect to the Debentures.
Section 9.12 Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor trustee with
respect to the Debentures, every 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 successor trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor trustee all such rights, powers and trusts referred to in
paragraph (a) of this Section 9.12.
(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 IX.
(d) Upon acceptance of appointment by a successor trustee as provided
in this Section 9.12, the Company shall transmit notice of the succession of
such trustee hereunder by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the Debenture
Register. If the Company fails to transmit such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be transmitted at the expense of the Company.
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Section 9.13 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 9.9 and eligible under the provisions
of Section 9.10, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debentures 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 Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.
Section 9.14 Preferential Collection of Claims Against the Company.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be subject
to Section 311(a) of the Trust Indenture Act to the extent included therein.
ARTICLE X
CONCERNING THE DEBENTUREHOLDERS
Section 10.1 Evidence of Action by Holders.
(a) Whenever in this Indenture it is provided that the holders of a
majority or specified percentage in aggregate principal amount of the Debentures
may take any action (including the making of any demand or request, the giving
of any notice, consent or waiver or the taking of any other action), the fact
that at the time of taking any such action the holders of such majority or
specified percentage have joined therein may be evidenced by any instrument or
any number of instruments of similar tenor executed by such holders of
Debentures in Person or by agent or proxy appointed in writing.
(b) If the Company shall solicit from the Debentureholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining
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whether Debentureholders of the requisite proportion of Outstanding Debentures
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Outstanding Debentures shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Debentureholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.
Section 10.2 Proof of Execution by Debentureholders.
Subject to the provisions of Section 9.1, proof of the execution of
any instrument by a Debentureholder (such proof shall not require notarization)
or his agent or proxy and proof of the holding by any Person of any of the
Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Debentures shall be proved by the Debenture
Register of such Debentures or by a certificate of the Debenture Registrar
thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section 10.2 as it shall deem necessary.
Section 10.3 Who May be Deemed Owners.
Prior to the due presentment for registration of transfer of any
Debenture, the Company, the Trustee, any paying agent, any Authenticating Agent
and any Debenture Registrar may deem and treat the Person in whose name such
Debenture shall be registered upon the books of the Company as the absolute
owner of such Debenture (whether or not such Debenture shall be overdue and
notwithstanding any notice of ownership or writing thereon made by anyone other
than the Debenture Registrar) for the purpose of receiving payment of or on
account of the principal of and interest on such Debenture (subject to Section
2.3) and for all other purposes; and neither the Company nor the Trustee nor any
paying agent nor any Authenticating Agent nor any Debenture Registrar shall be
affected by any notice to the contrary.
Section 10.4 Certain Debentures Owned by Company Disregarded.
In determining whether the holders of the requisite aggregate
principal amount of Debentures have concurred in any direction, consent or
waiver under this Indenture, the Debentures that are owned by the Company or any
other obligor on the Debentures or by any Person directly or indirectly
controlling or controlled by or under common control with the Company or any
other obligor on the Debentures shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only Debentures that the Trustee actually
knows are so owned shall be so disregarded. The Debentures so owned that have
been
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pledged in good faith may be regarded as Outstanding for the purposes of this
Section 10.4, if the pledgee shall establish to the satisfaction of the Trustee
the pledgee's right so to act with respect to such Debentures and that the
pledgee is not a Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any such other
obligor. In case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.
Section 10.5 Actions Binding on Future Debentureholders.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 10.1, of the taking of any action by the holders of the
majority or percentage in aggregate principal amount of the Debentures specified
in this Indenture in connection with such action, any holder of a Debenture that
is shown by the evidence to be included in the Debentures the holders of which
have consented to such action may, by filing written notice with the Trustee,
and upon proof of holding as provided in Section 10.2, revoke such action so far
as concerns such Debenture. Except as aforesaid any such action taken by the
holder of any Debenture shall be conclusive and binding upon such holder and
upon all future holders and owners of such Debenture, and of any Debenture
issued in exchange therefor, on registration of transfer thereof or in place
thereof, irrespective of whether or not any notation in regard thereto is made
upon such Debenture. Any action taken by the holders of the majority or
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the holders of all the Debentures.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 Supplemental Indentures Without the Consent of Debentureholders.
In addition to any supplemental indenture otherwise authorized by this
Indenture, the Company and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as then in effect), without the
consent of the Debentureholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, in the
Debentures;
(b) to comply with Article X;
(c) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures;
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(d) to add to the covenants of the Company for the benefit of the
holders of all or any of the Debentures or to surrender any right or power
herein conferred upon the Company;
(e) to add to, delete from, or revise the conditions, limitations,
and restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Debentures, only as herein set forth;
(f) to make any change that does not adversely affect the rights of
any Debentureholder in any material respect;
(g) to provide for the issuance of and establish the form and terms
and conditions of the Debentures, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or of the
Debentures, or to add to the rights of the holders of the Debentures; or
(h) qualify or maintain the qualification of this Indenture under the
Trust Indenture Act.
The Trustee is hereby authorized to join with the Company in the execution of
any such supplemental indenture, and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee 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.
Any supplemental indenture authorized by the provisions of this Section 11.1 may
be executed by the Company and the Trustee without the consent of the holders of
any of the Debentures at the time Outstanding, notwithstanding any of the
provisions of Section 11.2.
Section 11.2 Supplemental Indentures with Consent of Debentureholders.
With the consent (evidenced as provided in Section 10.1) of the
holders of not less than a majority in aggregate principal amount of the
Debentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner not covered by Section 11.1 the rights of the holders of the
Debentures under this Indenture; provided, however, that no such supplemental
indenture shall without the consent of the holders of each Debenture then
Outstanding and affected thereby, (i) extend the fixed maturity of any
Debentures, reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, without the consent of the holder of
each Debenture so affected; or (ii) reduce the aforesaid percentage of
Debentures, the holders of which are required to consent to any such
supplemental indenture; provided further, that if the Debentures are held by the
Trust or a trustee of the Trust, such supplemental indenture shall not be
effective until the holders of a majority in liquidation preference of Trust
Securities of the Trust shall have consented to such supplemental indenture;
provided further, that if the consent of the holder of each Outstanding
Debenture is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities of the Trust shall have consented to such
supplemental indenture. It shall not be
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necessary for the consent of the Debentureholders affected thereby under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the
provisions of this Article XI, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Debentures shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 11.4 Debentures Affected by Supplemental Indentures.
Debentures affected by a supplemental indenture, authenticated and
delivered after the execution of such supplemental indenture pursuant to the
provisions of this Article XI, may bear a notation in form approved by the
Company, provided such form meets the requirements of any exchange upon which
the Debentures may be listed, as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Debentures so modified as to
conform, in the opinion of the Board of Directors of the Company, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Company, authenticated by the Trustee and delivered in
exchange for the Debentures then Outstanding.
Section 11.5 Execution of Supplemental Indentures.
(a) Upon the request of the Company, accompanied by their Board
Resolutions authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Debentureholders
required to consent thereto as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion but
shall not be obligated to enter into such supplemental indenture. The Trustee,
subject to the provisions of Sections 9.1, may receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this
Article XI is authorized or permitted by, and conforms to, the terms of this
Article XI and that it is proper for the Trustee under the provisions of this
Article XI to join in the execution thereof.
(b) Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section 11.5, the
Trustee shall transmit by mail, first class postage prepaid, a notice, setting
forth in general terms the substance of such supplemental indenture, to the
Debentureholders as their names and addresses appear upon the Debenture
Register. Any failure of the Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE XII
SUCCESSOR CORPORATION
Section 12.1 Company May Consolidate, etc.
Nothing contained in this Indenture or in any of the Debentures shall
prevent any consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the Company, as the
case may be), or successive consolidations or mergers in which the Company, as
the case may be, or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or other disposition of the
property of the Company, as the case may be, or its successor or successors as
an entirety, or substantially as an entirety, to any other corporation (whether
or not affiliated with the Company, as the case may be, or its successor or
successors) authorized to acquire and operate the same; provided, however, the
Company hereby covenants and agrees that, (i) upon any such consolidation,
merger, sale, conveyance, transfer or other disposition, the due and punctual
payment, in the case of the Company, of the principal of and interest on all of
the Debentures, according to their tenor and the due and punctual performance
and observance of all the covenants and conditions of this Indenture to be kept
or performed by the Company as the case may be, shall be expressly assumed, by
supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act, as then in effect) satisfactory in form to the Trustee executed
and delivered to the Trustee by the entity formed by such consolidation, or into
which the Company, as the case may be, shall have been merged, or by the entity
which shall have acquired such property; (ii) in case the Company consolidates
with or merges into another Person or conveys or transfers its properties and
assets substantially then 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 (iii) immediately after giving effect thereto, an Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing.
Section 12.2 Successor Corporation Substituted.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of, in the case of the Company, the due
and punctual payment of the principal of and interest on all of the Debentures
Outstanding and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, as the case may be,
such successor corporation shall succeed to and be substituted for the Company,
with the same effect as if it had been named as the Company herein, and
thereupon the predecessor corporation shall be relieved of all obligations and
covenants under this Indenture and the Debentures.
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(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not in
substance) may be made in the Debentures thereafter to be issued as may be
appropriate.
(c) Nothing contained in this Indenture or in any of the Debentures
shall prevent the Company from merging into itself or acquiring by purchase or
otherwise all or any part of the property of any other Person (whether or not
affiliated with the Company).
Section 12.3 Evidence of Consolidation, etc. to Trustee.
The Trustee, subject to the provisions of Section 9.1, may receive an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or other disposition, and any such assumption, comply
with the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE
Section 13.1 Satisfaction and Discharge of Indenture.
If at any time: (a) the Company shall have delivered to the Trustee
for cancellation all Debentures theretofore authenticated (other than any
Debentures that shall have been destroyed, lost or stolen and that shall have
been replaced or paid as provided in Section 2.9) and Debentures for whose
payment money or Governmental Obligations have theretofore been deposited in
trust or segregated and held in trust by the Company (and thereupon repaid to
the Company or discharged from such trust, as provided in Section 13.5); or (b)
all such Debentures not theretofore delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and the Company shall deposit or cause to be deposited with the Trustee as trust
funds the entire amount in moneys or Governmental Obligations sufficient or a
combination thereof, sufficient in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay at maturity or upon redemption all Debentures
not theretofore delivered to the Trustee for cancellation, including principal
and interest due or to become due to such date of maturity or date fixed for
redemption, as the case may be, and if the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company; then this Indenture shall
thereupon cease to be of further effect except for the provisions of Sections
2.3, 2.7, 2.9, 5.1, 5.2, 5.3 and 9.10, that shall survive until the date of
maturity or redemption date, as the case may be, and Sections 9.6 and 13.5, that
shall survive to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.
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Section 13.2 Discharge of Obligations.
If at any time all Debentures not heretofore delivered to the Trustee
for cancellation or that have not become due and payable as described in Section
13.1 shall have been paid by the Company by depositing irrevocably with the
Trustee as trust funds moneys or an amount of Governmental Obligations
sufficient in the opinion of a nationally recognized certified public accounting
firm to pay at maturity or upon redemption all Debentures not theretofore
delivered to the Trustee for cancellation, including principal and interest due
or to become due to such date of maturity or date fixed for redemption, as the
case may be, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company, then after the date such moneys or
Governmental Obligations, as the case may be, are deposited with the Trustee,
the obligations of the Company under this Indenture shall cease to be of further
effect except for the provisions of Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.6,
9.10 and 13.5 hereof that shall survive until such Debentures shall mature and
be paid. Thereafter, Sections 9.6 and 13.5 shall survive.
Section 13.3 Deposited Moneys to be Held in Trust.
All monies or Governmental Obligations deposited with the Trustee
pursuant to Sections 13.1 or 13.2 shall be held in trust and shall be available
for payment as due, either directly or through any paying agent (including the
Company acting as its own paying agent), to the holders of the Debentures for
the payment or redemption of which such moneys or Governmental Obligations have
been deposited with the Trustee.
Section 13.4 Payment of Monies Held by Paying Agents.
In connection with the satisfaction and discharge of this Indenture,
all moneys or Governmental Obligations then held by any paying agent under the
provisions of this Indenture shall, upon demand of the Company, be paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys or Governmental Obligations.
Section 13.5 Repayment to Company.
Any monies or Governmental Obligations deposited with any paying agent
or the Trustee, or then held by the Company in trust, for payment of principal
of or interest on the Debentures that are not applied but remain unclaimed by
the holders of such Debentures for at least two years after the date upon which
the principal of or interest on such Debentures shall have respectively become
due and payable, shall be repaid to the Company, as the case may be, on May 31
of each year or (if then held by the Company) shall be discharged from such
trust; and thereupon the paying agent and the Trustee shall be released from all
further liability with respect to such moneys or Governmental Obligations, and
the holder of any of the Debentures entitled to receive such payment shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.
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ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
Section 14.1 No Recourse.
No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of the Debentures, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, past, present or future as such, of the
Company or of any predecessor corporation, either directly or through the
Company or any such predecessor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of
any predecessor corporation, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Debentures
or implied therefrom; and that any and all such personal liability of every name
and nature, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator,
stockholder, officer or director as such, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Debentures
or implied therefrom, are hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issuance
of such Debentures.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1 Effect on Successors and Assigns.
All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Company shall bind their respective
successors and assigns, whether so expressed or not.
Section 15.2 Actions by Successor.
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful sole successor of the Company.
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Section 15.3 Surrender of Company Powers.
The Company by instrument in writing executed by appropriate authority
of its Board of Directors and delivered to the Trustee may surrender any of the
powers reserved to the Company, and thereupon such power so surrendered shall
terminate both as to the Company, as the case may be, and as to any successor
corporation.
Section 15.4 Notices.
Except as otherwise expressly provided herein any notice or demand
that by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Debentures to or on the Company may
be given or served by being deposited first class postage prepaid in a post-
office letterbox addressed (until another address is filed in writing by the
Company with the Trustee), as follows: Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration. Any notice, election, request or demand by the
Company or any Debentureholder to or upon the Trustee shall be deemed to have
been sufficiently given or made, for all purposes, if given or made in writing
at the Corporate Trust Office of the Trustee.
Section 15.5 Governing Law.
This Indenture and each Debenture shall be deemed to be a contract
made under the internal laws of the State of Illinois and for all purposes shall
be construed in accordance with the laws of said State.
Section 15.6 Treatment of Debentures as Debt.
It is intended that the Debentures shall be treated as indebtedness
and not as equity for federal income tax purposes. The provisions of this
Indenture shall be interpreted to further this intention.
Section 15.7 Compliance Certificates and Opinions.
(a) Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
(b) Each certificate or opinion of the Company provided for in this
Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant in this Indenture
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shall include (1) a statement that the Person making such certificate or opinion
has read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of such Person, he has made such examination or investigation as, in the
opinion of such Person, is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (4) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with; provided, however, that each such
certificate shall comply with the provisions of Section 314 of the Trust
Indenture Act.
Section 15.8 Payments on Business Days.
In any case where the date of maturity of interest or principal of any
Debenture or the date of redemption of any Debenture shall not be a Business
Day, then payment of interest or principal may be made on the next succeeding
Business Day with the same force and effect as if made on the nominal date of
maturity or redemption, and no interest shall accrue for the period after such
nominal date.
Section 15.9 Conflict with Trust Indenture Act.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
Section 15.10 Counterparts.
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.
Section 15.11 Separability.
In case any one or more of the provisions contained in this Indenture
or in the Debentures shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Debentures,
but this Indenture and the Debentures shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
Section 15.12 Assignment.
The Company shall have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company shall remain liable for all such obligations. Subject to
the foregoing, this Indenture is binding upon and inures to the benefit of the
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parties thereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties thereto.
Section 15.13 Acknowledgment of Rights.
The Company acknowledges that, with respect to any Debentures held by
the Trust or a trustee of the Trust, if the Property Trustee fails to enforce
its rights under this Indenture as the holder of the Debentures held as the
assets of the Trust, any holder of Preferred Securities may institute legal
proceedings directly against the Company to enforce such Property Trustee's
rights under this Indenture without first instituting any legal proceedings
against such Property Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Company to pay interest or principal on
the Debentures on the date such interest or principal is otherwise payable (or
in the case of redemption, on the redemption date), the Company acknowledges
that a holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Debentures.
ARTICLE XVI
SUBORDINATION OF DEBENTURES
Section 16.1 Agreement to Subordinate.
The Company covenants and agrees, and each holder of Debentures issued
hereunder by such holder's acceptance thereof likewise covenants and agrees,
that all Debentures shall be issued subject to the provisions of this Article
XVI; and each holder of a Debenture, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions. The payment by the Company of the principal of and interest on all
Debentures issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and junior in right of payment to the prior payment
in full of all Senior Debt, Subordinated Debt and Additional Senior Obligations
(collectively, "Senior Indebtedness") to the extent provided herein, whether
outstanding at the date of this Indenture or thereafter incurred. No provision
of this Article XVI shall prevent the occurrence of any default or Event of
Default hereunder.
Section 16.2 Default on Senior Debt, Subordinated Debt or Additional Senior
Obligations.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company, or in the event that the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default,
then, in either case, no payment shall be made by the Company with respect to
the principal (including redemption payments) of or interest on the Debentures.
In the event that,
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notwithstanding the foregoing, any payment shall be received by the Trustee when
such payment is prohibited by the preceding sentence of this Section 16.2, such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Trustee in writing within 90 days of such payment of the amounts then due
and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
Section 16.3 Liquidation; Dissolution; Bankruptcy.
(a) Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal or interest on the Debentures; and upon any such
dissolution or winding-up or liquidation or reorganization, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Debentures
or the Trustee would be entitled to receive from the Company, except for the
provisions of this Article XVI, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the holders of the Debentures or by the Trustee
under this Indenture if received by them or it, directly to the holders of
Senior Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the holders of Debentures or to the Trustee.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of the
Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with
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its terms, after giving effect to any concurrent payment or distribution to or
for the benefit of the holders of such Senior Indebtedness.
(c) For purposes of this Article XVI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XVI with respect
to the Debentures to the payment of all Senior Indebtedness of the Company, as
the case may be, that may at the time be outstanding, provided that (i) such
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment; and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Company with,
or the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 16.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII. Nothing in Section 16.2 or in this Section 16.3 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 9.7.
Section 16.4 Subrogation.
(a) Subject to the payment in full of all Senior Indebtedness of the
Company, the rights of the holders of the Debentures shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company, as the case may
be, applicable to such Senior Indebtedness until the principal of and interest
on the Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article XVI, and no payment over pursuant to the provisions of this Article XVI
to or for the benefit of the holders of such Senior Indebtedness by holders of
the Debentures or the Trustee, shall, as between the Company, its creditors
other than holders of Senior Indebtedness of the Company, and the holders of the
Debentures, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article XVI
are and are intended solely for the purposes of defining the relative rights of
the holders of the Debentures, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
(b) Nothing contained in this Article XVI or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness of the
Company), and the holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debentures the
principal of and interest on the Debentures as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the Debentures and creditors of the
Company, as the case may be, other than the holders of Senior
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Indebtedness of the Company, as the case may be, nor shall anything herein or
therein prevent the Trustee or the holder of any Debenture from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XVI of the holders
of such Senior Indebtedness in respect of cash, property or securities of the
Company, as the case may be, received upon the exercise of any such remedy.
(c) Upon any payment or distribution of assets of the Company referred
to in this Article XVI, the Trustee, subject to the provisions of Article IX,
and the holders of the Debentures shall be entitled to conclusively rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the holders of the Debentures, for the purposes of ascertaining
the Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article XVI.
Section 16.5 Trustee to Effectuate Subordination.
Each holder of Debentures by such holder's acceptance thereof
authorizes and directs the Trustee on such holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article XVI and appoints the Trustee such holder's attorney-in-fact for any
and all such purposes.
Section 16.6 Notice by the Company.
(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 of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article XVI. Notwithstanding the
provisions of this Article XVI or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Debentures pursuant to the provisions of this Article XVI, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee therefor; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Section 9.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 16.6 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Debenture), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purposes for which
they were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
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(b) The Trustee, subject to the provisions of Section 9.1, shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness of the Company
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee on behalf of any such
holder or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of such Senior Indebtedness to participate in any payment or distribution
pursuant to this Article XVI, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XVI, 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 16.7 Rights of the Trustee; Holders of Senior Indebtedness.
(a) The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XVI in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. The Trustee's right to compensation and reimbursement
of expenses as set forth in Section 9.7 shall not be subject to the
subordination provisions of the Article XVI.
(b) With respect to the holders of Senior Indebtedness of the Company,
the Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XVI, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 9.1, the Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to holders of
Debentures, the Company or any other Person money or assets to which any holder
of such Senior Indebtedness shall be entitled by virtue of this Article XVI or
otherwise.
Section 16.8 Subordination may not be Impaired.
(a) No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company 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 otherwise be charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
holders of the Debentures, without incurring responsibility to the holders of
the Debentures and without impairing or releasing the subordination provided in
this
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Article XVI or the obligations hereunder of the holders of the Debentures to the
holders of such Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in
any manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
WINTRUST FINANCIAL CORPORATION
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
WILMINGTON TRUST COMPANY, AS TRUSTEE
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
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STATE OF ILLINOIS )
) ss:
COUNTY OF COOK )
On the __th day of ____, 1998, before me personally came
____________________to me known, who, being by me duly sworn, did depose and say
that he is the ______________________ of Company, one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said instrument
is such corporation seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
________________________________
Notary Public, _________________,
___________
[seal] My Commission expires: ____________________
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EXHIBIT A
(FORM OF FACE OF DEBENTURE)
WINTRUST FINANCIAL CORPORATION
____% SUBORDINATED DEBENTURE
DUE _____________, 2028
No. -1- $32,010,310
CUSIP No. ______ __
Wintrust Financial Corporation, an Illinois corporation (the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to,
_________________________ or registered assigns, the principal sum of Thirty
Two Million Ten Thousand Three Hundred Ten Dollars ($32,010,310) (the "Stated
Maturity"), and to pay interest on said principal sum from ________ __, 1998,
or from the most recent interest payment date (each such date, an "Interest
Payment Date") to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on March, June, September
and December of each year commencing December 31, 1998, at the rate of ____% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded quarterly. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months. The amount of interest for any partial period
shall be computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on this Debenture is not a business day, then payment of interest payable on
such date shall 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, payment of such
interest will be made on the immediately preceding business day, in each case,
with the same force and effect as if made on such date. The interest installment
so payable, and punctually paid or duly provided for, on any Interest Payment
Date shall, as provided in the Indenture, be paid to the person in whose name
this Debenture (or one or more Predecessor Debentures, as defined in said
Indenture) is registered at the close of business on the regular record date for
such interest installment, which shall be the close of business on the business
day next preceding such Interest Payment Date unless otherwise provided in the
Indenture. Any such interest installment not punctually paid or duly provided
for shall forthwith cease to be payable to the registered holders on such
regular record date and may be paid to the Person in whose name this Debenture
(or one or more Predecessor Debentures) is registered at the close of business
on a
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special record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered holders of the
Debentures not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of and the interest on this Debenture
shall be payable at the office or agency of the Trustee maintained for that
purpose in any coin or currency of the United States of America that at the time
of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the registered holder at such address as shall appear in the
Debenture Register. Notwithstanding the foregoing, so long as the holder of this
Debenture is the Property Trustee, the payment of the principal of and interest
on this Debenture shall be made at such place and to such account as may be
designated by the Trustee.
The Stated Maturity may be shortened at any time by the Company to any
date not earlier than September 30, 2003, subject to the Company having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines, policies or regulations of the Federal Reserve. Such date may also
be extended at any time at the election of the Company for one or more periods,
but in no event to a date later than __________ __, 2047, subject to certain
limitations described in the Indenture.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions; (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided; and (c) appoints the Trustee his or her attorney-in-
fact for any and all such purposes. Each holder hereof, by his or her acceptance
hereof, hereby waives all notice of the acceptance of the subordination
provisions contained herein and in the Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated ________ __, 1998.
WINTRUST FINANCIAL CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
Attest:
By: _________________________
Name: _______________________
Title: ______________________
A-3
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[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-mentioned
Indenture.
Dated: ________ __, 1998
Wilmington Trust Company, ________________________________________
as Trustee or Authentication Agent
By __________________________ By ______________________________
Authorized Signatory
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[FORM OF REVERSE OF DEBENTURE]
____% SUBORDINATED DEBENTURE
(CONTINUED)
This Debenture is one of the subordinated debentures of the Company (herein
sometimes referred to as the "Debentures"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture dated as of _______
__, 1998 (the "Indenture") duly executed and delivered between the Company and
Wilmington Trust Company, as Trustee (the "Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Debentures. The Debentures are limited in aggregate principal
amount as specified in the Indenture.
Because of the occurrence and continuation of a Special Event, in certain
circumstances, this Debenture may become due and payable at the principal amount
together with any interest accrued thereon (the "Redemption Price"). The
Redemption Price shall be paid prior to 12:00 noon, Eastern Standard Time, time,
on the date of such redemption or at such earlier time as the Company
determines. The Company shall have the right to redeem this Debenture at the
option of the Company, without premium or penalty, in whole or in part at any
time on or after September 30, 2003 (an "Optional Redemption"), or at any time
in certain circumstances upon the occurrence of a Special Event, at a Redemption
Price equal to 100% of the principal amount plus any accrued but unpaid
interest, to the date of such redemption. Any redemption pursuant to this
paragraph shall be made upon not less than 30 days nor more than 60 days notice,
at the Redemption Price. If the Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Debentures shall be redeemed pro
rata or by lot or by any other method utilized by the Trustee.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures for the unredeemed portion hereof shall be issued in the name of
the holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debentures at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or of modifying in any manner the
rights of the holders of the Debentures; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of the Debentures
except as provided in the Indenture, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, without the
consent of
A-5
<PAGE>
the holder of each Debenture so affected; or (ii) reduce the aforesaid
percentage of Debentures, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of each
Debenture then outstanding and affected thereby. The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount of
the Debentures at the time outstanding, on behalf of all of the holders of the
Debentures, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture, and its
consequences, except a default in the payment of the principal of or interest on
any of the Debentures. Any such consent or waiver by the registered holder of
this Debenture (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such holder and upon all future holders and owners of this
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal and interest on this Debenture
at the time and place and at the rate and in the money herein prescribed.
Provided certain conditions are met, the Company shall have the right at
any time during the term of the Debentures and from time to time to extend the
interest payment period of such Debentures for up to 20 consecutive quarters
(each, an "Extended Interest Payment Period"), at the end of which period the
Company shall pay all interest then accrued and unpaid (together with interest
thereon at the rate specified for the Debentures to the extent that payment of
such interest is enforceable under applicable law). Before the termination of
any such Extended Interest Payment Period, so long as no Event of Default shall
have occurred and be continuing, the Company may further extend such Extended
Interest Payment Period, provided that such Extended Interest Payment Period
together with all such further extensions thereof shall not exceed 20
consecutive quarters, extend beyond the Stated Maturity or end on a date other
than an Interest Payment Date. At the termination of any such Extended Interest
Payment Period and upon the payment of all accrued and unpaid interest and any
additional amounts then due and subject to the foregoing conditions, the Company
may commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered holder hereof on the
Debenture Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Trustee accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount shall be
issued to the designated transferee or transferees. No service charge shall be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Debenture,
the Company, the Trustee, any paying agent and the Debenture Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and
A-6
<PAGE>
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Debenture Registrar) for the purpose of receiving payment of or on
account of the principal hereof and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any paying agent nor any
Debenture Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Debentures are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.
All terms used in this Debenture that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
A-7
<PAGE>
Exhibit 4.3
CERTIFICATE OF TRUST
OF
WINTRUST CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF WINTRUST CAPITAL TRUST I (the "Trust"), dated
August 14, 1998, is being duly executed and filed by Wilmington Trust Company, a
Delaware banking corporation, Edward J. Wehmer, David A. Dykstra, and Randolph
M. Hibben, each an individual, as trustees, to form a business trust under the
Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).
1. NAME. The name of the business trust formed hereby is Wintrust Capital
Trust I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust
in the State of Delaware is Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on August 14,
1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY, as trustee
By:/s/ Donald F. Carey, Jr.
----------------------------
Name: Donald F. Carey, Jr.
Title: Vice President
/s/ Edward J. Wehmer
----------------------------
Edward J. Wehmer, as Trustee
/s/ David A. Dykstra
----------------------------
David A. Dykstra, as Trustee
/s/ Randolph M. Hibben
----------------------------
Randolph M. Hibben, as Trustee
<PAGE>
Exhibit 4.4
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of August 14, 1998 (this "Trust
Agreement"), among (i) Wintrust Financial Corporation, an Illinois corporation
(the "Depositor"), (ii) Wilmington Trust Company, a Delaware banking
corporation, as trustee, and (iii) Edward J. Wehmer, David A. Dykstra and
Randolph M. Hibben, each an individual, as trustees (each of such trustees in
(ii) and (iii) a "Trustee" and collectively, the "Trustees"). The Depositor and
the Trustees hereby agree as follows:
1. The trust created hereby (the "Trust") shall be known as "Wintrust
Capital Trust I" in which name the Trustees, or the Depositor to the extent
provided herein, may engage in the transactions contemplated hereby, make and
execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to the
Trustees the sum of Ten Dollars ($10.00). The Trustees hereby acknowledge
receipt of such amount in trust from the Depositor, which amount shall
constitute the initial trust estate. The Trustees hereby declare that they will
hold the trust estate in trust for the Depositor. 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, 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 Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated Trust
Agreement, the Trustees shall not have any duty or obligation hereunder or with
respect to the trust estate, except as otherwise required by applicable law or
as may be necessary to obtain prior to such execution and delivery of any
licenses, consents or approvals required by applicable law or otherwise.
4. The Depositor and the Trustees hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act
Registration Statement") (including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement), relating to the registration
under the Securities Act of 1933, as amended, of the Preferred Securities of the
Trust and possibly certain other securities and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") (including all pre-effective
and post-effective amendments thereto) relating to the registration of the
Preferred Securities of the Trust under the Securities Exchange Act of 1934, as
amended; (ii) to file with the Nasdaq National Market or a national stock
<PAGE>
exchange (the "Exchange") and execute on behalf of the Trust one or more
listing applications and all other applications, statements, certificates,
agreements and other instruments as shall be necessary or desirable to cause the
Preferred Securities to be listed on any of the Exchanges; (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 as shall be necessary or desirable to register the
Preferred Securities under the securities or blue sky laws of such jurisdictions
as the Depositor, on behalf of the Trust, may deem necessary or desirable and
(iv) to execute on behalf of the Trust that certain Underwriting Agreement
relating to the Preferred Securities, among the Trust, the Depositor and the
Underwriter(s) named therein, substantially in the form included as an exhibit
to the 1933 Act Registration Statement. In the event that any filing referred to
in clauses (i), (ii) and (iii) above is required by the rules and regulations of
the Commission, an Exchange or state securities or blue sky laws, to be executed
on behalf of the Trust by one or more of the Trustees, each of the Trustees, in
its or his capacity as a Trustee of the Trust, is hereby authorized and, to the
extent so required, directed to join in any such filing and to execute on behalf
of the Trust any and all of the foregoing, it being understood that Wilmington
Trust Company in its capacity as a Trustee 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 Exchange or
state securities or blue sky laws. In connection with the filings referred to
above, the Depositor and Edward J. Wehmer, David A. Dykstra and Randolph Hibben,
each as Trustees and not in their individual capacities, hereby constitutes and
appoints Edward J. Wehmer, David A. Dykstra and Randolph Hibben, and each of
them, as its true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the Depositor or such Trustee or in the
Depositor's or such Trustees' name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to the 1933
Act Registration Statement and the 1934 Act Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, the Exchange and administrators of the state
securities or blue sky laws, granting unto said attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as the Depositor or such Trustee might or could to in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their respective substitute or substitutes, shall do
or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be four (4) and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Depositor which may increase or decrease the
number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee 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 and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or
2
<PAGE>
remove without cause any Trustee at any time. The Trustees may resign upon
thirty (30) 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 of
principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed as of the day and year first above written.
WINTRUST FINANCIAL CORPORATION,
as Depositor
/s/ Edward J. Wehmer
By: __________________________
Name: EDWARD J. WEHMER
Title: President
WILMINGTON TRUST COMPANY,
as Trustee
/s/ Donald F. Carey, Jr.
By: __________________________
Name: DONALD F. CAREY, JR.
Title: Vice President
/s/ Edward J. Wehmer
_______________________________
EDWARD J. WEHMER, as Trustee
/s/ David A. Dykstra
_______________________________
DAVID A. DYKSTRA, as Trustee
/s/ Randolph M. Hibben
_______________________________
RANDOLPH M. HIBBEN, as Trustee
3
<PAGE>
Exhibit 4.5
[FORM OF]
================================================================================
WINTRUST CAPITAL TRUST I
AMENDED AND RESTATED
TRUST AGREEMENT
among
WINTRUST FINANCIAL CORPORATION, as Depositor,
WILMINGTON TRUST COMPANY, as Property Trustee,
WILMINGTON TRUST COMPANY, as Delaware Trustee,
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
Dated as of _________, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINED TERMS........................................................ 2
Section 101. Definitions............................................ 2
ARTICLE II
ESTABLISHMENT OF THE TRUST........................................... 10
Section 201. Name................................................... 10
Section 202. Office of the Delaware Trustee; Principal Place of
Business............................................... 11
Section 203. Initial Contribution of Trust Property; Organizational
Expenses............................................... 11
Section 204. Issuance of the Preferred Securities................... 11
Section 205. Issuance of the Common Securities; Subscription and
Purchase of Debentures................................. 11
Section 206. Declaration of Trust................................... 12
Section 207. Authorization to Enter into Certain Transactions....... 12
Section 208. Assets of Trust........................................ 16
Section 209. Title to Trust Property................................ 16
ARTICLE III
PAYMENT ACCOUNT...................................................... 16
Section 301. Payment Account........................................ 16
ARTICLE IV
DISTRIBUTIONS; REDEMPTION............................................ 17
Section 401. Distributions.......................................... 17
Section 402. Redemption............................................. 18
Section 403. Subordination of Common Securities..................... 20
Section 404. Payment Procedures..................................... 21
Section 405. Tax Returns and Reports................................
Section 406. Payments of Taxes, Duties, etc. of the Trust...........
Section 407. Payments under Indenture...............................
ARTICLE V
Section 501. Initial Ownership......................................
Section 502. The Trust Securities Certificates...................... 22
Section 503. Execution, Authentication and Delivery of Trust
Securities Certificates................................
Section 503A. Global Preferred Security.............................. 23
Section 504. Registration of Transfer and Exchange of Preferred
Securities Certificates................................ 24
Section 505. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates........................................... 25
Section 506. Persons Deemed Securityholders......................... 26
Section 507. Access to List of Securityholders' Names and Addresses. 26
Section 508. Maintenance of Office or Agency........................ 26
Section 509. Appointment of Paying Agent............................ 26
Section 510. Ownership of Common Securities by Depositor............ 27
Section 511. Trust Securities Certificates.......................... 27
Section 512. Notices to Clearing Agency............................. 28
Section 513. Rights of Securityholders.............................. 28
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING........................... 29
Section 601. Limitations on Voting Rights....................... 29
Section 602. Notice of Meetings................................. 30
Section 603. Meetings of Preferred Securityholders.............. 30
Section 604. Voting Rights...................................... 30
Section 605. Proxies, etc....................................... 31
Section 606. Securityholder Action by Written Consent........... 31
Section 607. Record Date for Voting and Other Purposes.......... 31
Section 608. Acts of Securityholders............................ 31
Section 609. Inspection of Records.............................. 32
ARTICLE VII
REPRESENTATIONS AND WARRANTIES...................................... 33
Section 701. Representations and Warranties of the Bank and the
Property Trustee................................... 33
Section 702. Representations and Warranties of the Delaware
Bank and the Delaware Trustee...................... 34
Section 703. Representations and Warranties of Depositor........ 35
ARTICLE VIII
TRUSTEES............................................................ 35
Section 801. Certain Duties and Responsibilities................ 35
Section 802. Certain Notices.................................... 37
Section 803. Certain Rights of Property Trustee................. 37
Section 804. Not Responsible for Recitals or Issuance
of Securities...................................... 39
Section 805. May Hold Securities................................ 39
Section 806. Compensation; Indemnity; Fees...................... 40
Section 807. Corporate Property Trustee Required; Eligibility
of Trustees........................................ 40
Section 808. Conflicting Interests.............................. 41
Section 809. Co-Trustees and Separate Trustee................... 41
Section 810. Resignation and Removal; Appointment of Successor.. 43
Section 811. Acceptance of Appointment by Successor............. 44
Section 812. Merger, Conversion, Consolidation or Succession
to Business........................................ 45
Section 813. Preferential Collection of Claims Against
Depositor or Trust................................. 45
Section 814. Reports by Property Trustee........................ 45
Section 815. Reports to the Property Trustee.................... 46
Section 816. Evidence of Compliance with Conditions Precedent... 46
Section 817. Number of Trustees................................. 46
Section 818. Delegation of Power................................ 46
Section 819. Voting............................................. 47
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER................................... 47
Section 901. Termination Upon Expiration Date...................... 47
Section 902. Early Termination..................................... 47
Section 903. Termination........................................... 47
Section 904. Liquidation........................................... 48
Section 905. Mergers, Consolidations, Amalgamations or
Replacements of the Trust............................. 49
ARTICLE X
MISCELLANEOUS PROVISIONS.............................................. 50
Section 1001. Limitation of Rights of Securityholders............... 50
Section 1002. Amendment............................................. 50
Section 1003. Separability.......................................... 52
Section 1004. Governing law......................................... 52
Section 1005. Payments Due on Non-Business Day...................... 52
Section 1006. Successors............................................ 52
Section 1007. Headings.............................................. 52
Section 1008. Reports, Notices and Demands.......................... 52
Section 1009. Agreement Not to Petition............................. 53
Section 1010. Trust Indenture Act; Conflict with Trust Indenture Act.53
Section 1011. Acceptance of Terms of Trust Agreement, Guarantee
and Indenture......................................... 54
EXHIBITS
- --------
Exhibit A Certificate of Trust
Exhibit B Form of Common Securities Certificate
Exhibit C Form of Expense Agreement
Exhibit D Form of Preferred Securities Certificate
Exhibit E Form of Preferred Securities Certificate of Authentication
Exhibit F Certificate of Depositary Agreement
</TABLE>
iii
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Amended and Restated Trust Agreement
- ------------------- ------------------------------------
<S> <C>
310(a)(1)......................................................... 807
310(a)(2)......................................................... 807
310(a)(3)......................................................... 807
310(a)(4)......................................................... 207(a)(ii)
310(b)............................................................ 808
311(a)............................................................ 813
311(b)............................................................ 813
312(a)............................................................ 507
312(b)............................................................ 507
312(c)............................................................ 507
313(a)............................................................ 814(a)
313(a)(4)......................................................... 814(b)
313(b)............................................................ 814(b)
313(c)............................................................ 1008
313(d)............................................................ 814(c)
314(a)............................................................ 815
314(b)............................................................Not Applicable
314(c)(1)......................................................... 816
314(c)(2)......................................................... 816
314(c)(3).........................................................Not Applicable
314(d)............................................................Not Applicable
314(e)............................................................ 101, 816
315(a)............................................................801(a), 803(a)
315(b)............................................................ 802, 1008
315(c)............................................................ 801(a)
315(d)............................................................ 801, 803
316(a)(2).........................................................Not Applicable
316(b)............................................................Not Applicable
316(c)............................................................ 607
317(a)(1).........................................................Not Applicable
317(a)(2).........................................................Not Applicable
317(b)............................................................ 509
318(a)............................................................ 1010
</TABLE>
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.
iv
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________ __, 1998, among
(i) WINTRUST FINANCIAL CORPORATION, an Illinois corporation (including any
successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as property trustee (the "Property Trustee" and, in its
separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) WILMINGTON TRUST COMPANY, a Delaware banking corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (the "Delaware Trustee," and, in its separate corporate capacity and not
in its capacity as Delaware Trustee, the "Delaware Bank") (iv) EDWARD J. WEHMER,
an individual, DAVID A. DYKSTRA, an individual, and RANDOLPH M. HIBBEN, an
individual, each of whose address is c/o Company (each an "Administrative
Trustee" and collectively the "Administrative Trustees") (the Property Trustee,
the Delaware Trustee and the Administrative Trustees referred to collectively as
the "Trustees"), and (v) the several Holders (as hereinafter defined).
RECITALS
WHEREAS, the Depositor, the Delaware Trustee, and Edward J. Wehmer, David
A. Dykstra and Randolph M. Hibben, each as an Administrative Trustee, have
heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act by the entering into of that certain Trust
Agreement, dated as of August 14, 1998 (the "Original Trust Agreement"), and by
the execution and filing by the Delaware Trustee, the Depositor and the
Administrative Trustees with the Secretary of State of the State of Delaware of
the Certificate of Trust, filed on August 14, 1998, the form of which is
attached as Exhibit A; and
WHEREAS, the Depositor, the Delaware Trustee, the Property Trustee and the
Administrative Trustees desire to amend and restate the Original Trust Agreement
in its entirety as set forth herein to provide for, among other things, (i) the
issuance of the Common Securities (as defined herein) by the Trust (as defined
herein) to the Depositor; (ii) the issuance and sale of the Preferred Securities
(as defined herein) by the Trust pursuant to the Underwriting Agreement (as
defined herein); (iii) the acquisition by the Trust from the Depositor of all of
the right, title and interest in the Debentures (as defined herein); and (iv)
the appointment of the Trustees;
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 Securityholders (as defined herein),
hereby amends and restates the Original Trust Agreement in its entirety and
agrees as follows:
<PAGE>
ARTICLE I
DEFINED TERMS
Section 101. 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 I 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;
(c) 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; and
(d) 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.
"Act" has the meaning specified in Section 608.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Debentures for such period.
"Additional Interest" has the meaning specified in Section 1.1 of the
Indenture.
"Administrative Trustee" means each of Edward J. Wehmer, David A. Dykstra
and Randolph M. Hibben, solely in his or her capacity as Administrative Trustee
of the Trust formed and continued hereunder and not in his or her individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor trustee appointed as herein provided.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, any Person 10% or more of whose outstanding voting securities
or other ownership interests are directly or indirectly owned, controlled or
held with power to vote by the specified Person; (b) any Person directly or
indirectly controlling, controlled by, or under common control with the
specified Person; (c) a partnership in which the specified Person is a general
partner; (d) any officer or director of the specified Person; and (e) if the
specified Person is an individual, any entity of which the specified Person is
an officer, director or general partner.
2
<PAGE>
"Authenticating Agent" means an authenticating agent with respect to the
Preferred Securities appointed by the Property Trustee pursuant to Section 503.
"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 adjudging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking liquidation or reorganization of or in respect of such
Person under the United States Bankruptcy Code of 1978, as amended, or any other
similar applicable federal or state law, and the continuance of any such decree
or order unvacated and unstayed for a period of 90 days; or the commencement of
an involuntary case under the United States Bankruptcy Code of 1978, as amended,
in respect of such Person, which shall continue undismissed for a period of 90
days or entry of an order for relief in such case; or the entry of a decree or
order of a court having jurisdiction in the premises for the appointment on the
ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee
or assignee in bankruptcy or insolvency of such Person or of its property, or
for the winding up or liquidation of its affairs, and such decree or order shall
have remained in force unvacated and unstayed for a period of 90 days; or
(b) the institution by such Person of proceedings to be adjudicated a
voluntary bankrupt, or the consent by such Person to the filing of a bankruptcy
proceeding against it, or the filing by such Person of a petition or answer or
consent seeking liquidation or reorganization under the United States Bankruptcy
Code of 1978, as amended, or other similar applicable Federal or State law, or
the consent by such Person to the filing of any such petition or to the
appointment on the ground of insolvency or bankruptcy of a receiver or custodian
or liquidator or trustee or assignee in bankruptcy or insolvency of such Person
or of its property, or shall make a general assignment for the benefit of
creditors.
"Bankruptcy Laws" has the meaning specified in Section 1009.
"Board Resolution" means a copy of a resolution certified by the 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 appropriate Trustee.
"Business Day" means a day other than a Saturday or Sunday, a day on which
banking institutions in The City of New York are authorized or required by law,
executive order or regulation to remain closed, or a day on which the Property
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
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"Certificate of Depositary Agreement" means the agreement among Depositor,
Trust and DTC, as the initial Clearing Agency, dated as of the Closing Date,
substantially in the form attached as Exhibit F as the same may be amended and
supplemented from time to time.
"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.
"Change in 1940 Act Law" shall have the meaning set forth in the definition
of "Investment Company Event."
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. DTC
shall be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank or 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 date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"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.
"Common Security" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Company" means Wintrust Financial Corporation.
"Corporate Trust Office" means the office at which, at any particular time,
the corporate trust business of the Property Trustee or the Debenture Trustee,
as the case may be, shall be principally administered, which office at the date
hereof, in each such case, is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration.
"Debenture Event of Default" means an "Event of Default" as defined in
Section 7.1 of the Indenture.
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"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Tax Event" means a "Tax Event" as specified in Section 1.1 of
the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a state chartered trust
company organized under the laws of the State of Delaware and any successor
thereto, as trustee under the Indenture.
"Debentures" means the $32,010,310 aggregate principal amount of the
Depositor's ____% Subordinated Debentures due 2028, issued pursuant to the
Indenture.
"Definitive Preferred Securities Certificates" means Preferred Securities
Certificates issued in certified, fully registered form as provided in Section
513.
"Delaware Bank" has the meaning specified in the Preamble to this Trust
Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Delaware Code Sections 3801 et seq. as it may be amended from time to
time.
"Delaware Trustee" means the commercial bank or trust company identified as
the "Delaware Trustee" in the Preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Trust formed and 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 DTC or any successor thereto.
"Depositor" has the meaning specified in the Preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 401.
"DTC" means The Depository Trust Company.
"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; or
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(b) default by the 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
(c) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trustees 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 defaulting Trustee or Trustees by the
Holders of at least 25% in aggregate liquidation preference 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 a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property Trustee
within 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit C, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
"Extended Interest Payment Period" has the meaning specified in Section 4.1
of the Indenture.
"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
transfer of which shall be made through book entries by a Clearing Agency as
described herein.
"Guarantee" means the Preferred Securities Guarantee Agreement executed and
delivered by the Depositor and Wilmington Trust Company, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the holders of the Preferred Securities, as amended from time to
time.
"Indenture" means the Indenture, dated as of ________ __, 1998, between the
Depositor and the Debenture Trustee, as trustee, as amended or supplemented from
time to time.
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"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.
"Investment Company Event" means the receipt by the Trust and the Depositor
of an Opinion of Counsel, rendered by a law firm having a recognized national
tax and securities law practice, to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
shall be considered an "investment company" that is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred Securities under this
Trust Agreement. The Depositor or the Trust shall request and receive an Opinion
of Counsel with regard to such matters within a reasonable period of time after
the Depositor or the Trust shall have become aware of the possible occurrence of
any such event.
"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 an aggregate Liquidation Amount equal to the aggregate
principal amount of Debentures to be contemporaneously redeemed in accordance
with the Indenture and the proceeds of which shall be used to pay the Redemption
Price of such Trust Securities; and (b) with respect to a distribution of
Debentures to Holders of Trust Securities in connection with a termination or
liquidation of the Trust, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the Holder to whom such Debentures
are distributed. Each Debenture distributed pursuant to clause (b) above shall
carry with it accumulated interest in an amount equal to the accumulated and
unpaid interest then due on such Debentures.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Debentures are to be distributed
to Holders of Trust Securities in connection with a termination and liquidation
of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section 904(d).
"Officers' Certificate" means a certificate signed by the President or an
Executive Vice President and by the Treasurer or the Vice President--Finance or
the Secretary, of the Depositor, and delivered to the appropriate Trustee. One
of the officers signing an Officers' Certificate given pursuant to Section 816
shall be the principal executive, financial or accounting officer of the
Depositor. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
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(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of independent, outside
legal counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, who shall be reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the Recitals to
this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means, as of
the date of determination, all Preferred Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Preferred 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 Preferred Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or in
lieu of which other Preferred Securities have been executed and delivered
pursuant to Sections 504, 505, 511 and 513; 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 Trustee or any Affiliate of the Depositor or any Trustee
shall be disregarded and deemed not to be Outstanding, except that (a) in
determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities that such Trustee knows to be so owned shall be so
disregarded; and (b) 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
Trustees and/or any such Affiliate. Preferred Securities so owned which have
been pledged
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in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Administrative Trustees the pledgee's right so to the
Depositor or any Affiliate of the Depositor.
"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Securityholders in which all amounts paid in respect of
the Debentures shall be held and from which the Property Trustee shall make
payments to the Securityholders in accordance with Sections 401 and 402.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate", means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as
Exhibit D.
"Property Trustee" means the commercial bank or trust company identified as
the "Property Trustee," in the Preamble to this Trust Agreement solely in its
capacity as Property Trustee of the Trust heretofore formed and 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.
"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
Debentures shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among
the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 504.
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"Securityholder" or "Holder" means a Person in whose name a Trust Security
or Trust Securities is registered in the Securities Register; any such Person is
a beneficial owner within the meaning of the Delaware Business Trust Act.
"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"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, including all exhibits hereto, including, for all purposes of
this 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 Trust Agreement and any such modification, amendment or supplement,
respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939, as amended, is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures; (b) the rights of the Property
Trustee under the Guarantee; (c) any cash on deposit in, or owing to, the
Payment Account; and (d) 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 Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
_______________, 1998, among the Trust, the Depositor and the Underwriters named
therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 201. Name.
The Trust continued hereby shall be known as "Wintrust Capital Trust I," as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Trustees, in which name the Trustees may engage in the
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transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
Section 202. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration, or such
other address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Securityholders and the Depositor. The principal executive
office of the Trust is c/o Wintrust Financial Corporation, 727 North Bank Lane,
Lake Forest, Illinois 60045.
Section 203. Initial Contribution of Trust Property; Organizational
Expenses.
The Trustees acknowledge receipt in trust from the Depositor in connection
with the Original Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of the
Trust as they arise or shall, upon request of any Trustee, promptly reimburse
such Trustee for any such expenses paid by such Trustee. The Depositor shall
make no claim upon the Trust Property for the payment of such expenses.
Section 204. Issuance of the Preferred Securities.
On _______ __, 1998, the Depositor and an Administrative Trustee, on behalf
of the Trust and pursuant to the Original Trust Agreement, executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf of the
Trust, shall execute in accordance with Section 502 and deliver in accordance
with the Underwriting Agreement, Preferred Securities Certificates, registered
in the name of Persons entitled thereto in an aggregate amount of 1,080,000
Preferred Securities having an aggregate Liquidation Amount of $27,000,000
against receipt of the aggregate purchase price of such Preferred Securities of
$27,000,000, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee. If the underwriters exercise their over-allotment option
and there is an Option Closing Date (as such term is defined in the Underwriting
Agreement), then an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver in accordance with the
Underwriting Agreement, Preferred Securities Certificates, registered in the
name of the Persons entitled thereto in an aggregate amount of up to 162,000
Preferred Securities having an aggregate Liquidation Amount of up to $4,050,000
against receipt of the aggregate purchase price of such Preferred Securities of
up to $4,050,000, which amount such Administrative Trustee shall promptly
deliver to the Property Trustee.
Section 205. Issuance of the Common Securities; Subscription and Purchase
of Debentures.
(a) Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and
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deliver to the Depositor, Common Securities Certificates, registered in the name
of the Depositor, in an aggregate amount of Common Securities having an
aggregate Liquidation Amount of $835,052 against payment by the Depositor of
such amount. Contemporaneously therewith, an Administrative Trustee, on behalf
of the Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Property Trustee on behalf of the Trust and having
an aggregate principal amount equal to $835,052, and, in satisfaction of the
purchase price for such Debentures, the Property Trustee, on behalf of the
Trust, shall deliver to the Depositor the sum of $835,052.
(b) If the underwriters exercise the Option and there is an Option Closing
Date, then an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Depositor, Common Securities
Certificates, registered in the name of the Depositor, in an additional
aggregate amount of Common Securities having an aggregate Liquidation Amount of
up to $125,258 against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust,
shall subscribe to and purchase from the Depositor, additional Debentures,
registered in the name of the Trust and having an aggregate principal amount of
up to $125,528, and, in satisfaction of the purchase price of such Debentures,
the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the
amount received from one of the Administrative Trustees pursuant to the last
sentence of Section 204.
Section 206. Declaration of Trust.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Debentures;
and (b) to engage in those activities necessary, advisable or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to
have all the rights, powers and duties to the extent set forth herein, and the
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it shall hold the Trust Property in trust upon and subject to the
conditions set forth herein for the benefit of the Securityholders. The
Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. 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 Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Delaware Business Trust Act.
Section 207. Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section 207 and Article VIII, and in accordance with the
following provisions (i) and (ii), the Administrative Trustees shall have the
authority to enter into all transactions and agreements determined by the
Administrative Trustees to be appropriate in exercising the authority, express
or implied, otherwise granted to the Administrative Trustees under this Trust
Agreement, and to perform all acts in
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furtherance thereof, including without limitation, the acts set forth in the
following provision (i) and the Property Trustee shall have the authority to
act, each as set forth below:
(i) As among the Trustees, each Administrative Trustee, acting singly
or jointly, shall have the power and authority to act on behalf
of the Trust with respect to the following matters:
(A) the issuance and sale of the Trust Securities and the
compliance with the Underwriting Agreement in connection
therewith;
(B) to cause the Trust to enter into, and to execute, deliver
and perform on behalf of the Trust, the Expense Agreement
and such other agreements or documents as may be necessary
or desirable in connection with the purposes and function of
the Trust;
(C) assisting in the registration of the Preferred Securities
under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of
this Trust Agreement as a trust indenture under the Trust
Indenture Act;
(D) assisting in the listing of the Preferred Securities upon
The Nasdaq National Market/SM/ or such securities exchange
or exchanges as shall be determined by the Depositor, the
registration of the Preferred Securities under the Exchange
Act, the compliance with the listing requirements of The
Nasdaq National Market/SM/ or the applicable securities
exchange and the preparation and filing of all periodic and
other reports and other documents pursuant to the foregoing;
(E) the sending of notices (other than notices of default) and
other information regarding the Trust Securities and the
Debentures to the Securityholders in accordance with this
Trust Agreement;
(F) the appointment of a Paying Agent, authenticating agent and
Securities Registrar in accordance with this Trust
Agreement;
(G) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of
Delaware;
(H) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and
of each other jurisdiction in which
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such existence is necessary to protect the limited liability
of the Holders of the Preferred Securities or to enable the
Trust to effect the purposes for which the Trust was
created; and
(I) the taking of any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement for the benefit of the Securityholders
(without consideration of the effect of any such action on
any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to
the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments
made in respect of the Debentures in the Payment Account;
(D) the distribution of amounts owed to the Securityholders 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 Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(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 Trust;
(I) after an Event of Default, the taking of any action
incidental to the foregoing as the Property Trustee may from
time to time determine is necessary or advisable to give
effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of any
such action on any particular Securityholder);
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(J) registering transfers of the Trust Securities in accordance
with this Trust Agreement; and
(K) except as otherwise provided in this Section 207(a)(ii), the
Property Trustee shall have none of the duties, liabilities,
powers or the authority of the Administrative Trustees set
forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (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 Securityholders,
except as expressly provided herein; (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" 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 Administrative Trustees
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 Trust or the
Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the 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 Trust with the Commission and
the execution on behalf of the Trust of a registration statement
on the appropriate form in relation to the Preferred Securities,
the Debentures, and the Guarantee, including any amendments
thereto;
(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 to do any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and
advise the Trustees of actions they must take on behalf of the
Trust, and prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with
the applicable laws of any such States;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to The Nasdaq National Market/SM/
or a national stock exchange or other organizations for listing
upon notice of issuance of any Preferred Securities and to file
or cause an Administrative Trustee to file
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thereafter with such exchange or organization such notifications
and documents as may be necessary from time to time;
(iv) the preparation for filing by the Trust with the Commission and
the execution on behalf of the 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 Exchange Act,
including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the
Preferred Securities; 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 Trustees are
authorized and directed to conduct the affairs of the Trust and to operate the
Trust so that the Trust shall not be deemed to be an "investment company"
required to be registered under the Investment Company Act, shall be classified
as a "grantor trust" and not as an association taxable as a corporation for
United States federal income tax purposes and so that the Debentures shall be
treated as indebtedness of the Depositor for United States federal income tax
purposes. In this connection, subject to Section 1002, the Depositor and the
Trustees are authorized to take any action, not inconsistent with applicable law
or this Trust Agreement, that each of the Depositor and the Trustees determines
in their discretion to be necessary or desirable for such purposes.
Section 208. Assets of Trust.
The assets of the Trust shall consist of the Trust Property.
Section 209. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Securityholders in accordance with
this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
Section 301. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits
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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 Securityholders 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 Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 401. Distributions.
(a) Distributions on the Trust Securities shall be cumulative, and shall
accumulate whether or not there are funds of the Trust available for the payment
of Distributions. Distributions shall accumulate from ________ __, 1998, and,
except during any Extended Interest Payment Period with respect to the
Debentures, shall be payable quarterly in arrears on the last calendar day of
March, June, September and December of each year, commencing on December 31,
1998. If any date on which a Distribution is otherwise 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 (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 (and without any reduction of interest or any
other payment in respect of any such acceleration), in each case with the same
force and effect as if made on such date (each date on which distributions are
payable in accordance with this Section 401(a), a "Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in the
Trust Property, and, as a practical matter, the Distributions on the Trust
Securities shall be payable at a rate of ____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for any
full period shall be computed on the basis of a 360-day year of twelve 30-day
months. The amount of Distributions for any partial period shall be computed on
the basis of the number of days elapsed in a 360-day year of twelve 30-day
months. During any Extended Interest Payment Period with respect to the
Debentures, Distributions on the Preferred Securities shall be deferred for a
period equal to the Extended Interest Payment Period. The amount of
Distributions payable for any period shall include the Additional Amounts, if
any.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that
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the Trust has funds on hand and immediately available by 12:30 p.m. on each
Distribution Date in the Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the record holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be the 15th day of March, June, September or December for Distributions
payable on the last calendar day of the respective month.
Section 402. Redemption.
(a) On each Debenture Redemption Date and on the maturity of the
Debentures, the Trust shall 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 Securities Register. The Property
Trustee shall have no responsibility for the accuracy of any CUSIP number
contained in such notice. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation
Amount of the particular Trust Securities to be redeemed;
(v) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Trust Security to be redeemed and
that Distributions thereon shall cease to accumulate on and
after said date, except as provided in Section 4.2(d); and
(vi) the place or places at which Trust Securities are to be
surrendered for the payment of the Redemption Price; and
(c) The Trust Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption of
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 Trust
has immediately available 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 402(c), the Property Trustee, subject to Section
402(c), shall, with respect to Preferred Securities held in global form, 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 Holders of the Preferred Securities. With respect to
Trust Securities that are not held in global form, the Property Trustee, subject
to Section 402(c), shall deposit with the Paying Agent funds sufficient to pay
the applicable Redemption Price and shall give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the record holders
thereof 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 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, (i) all rights of Securityholders
holding Trust Securities so called for redemption shall cease, except the right
of such Securityholders to receive the Redemption Price and any Distribution
payable on or prior to the Redemption Date, but without interest, (ii) such
Securities shall cease to be Outstanding, (iii) 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 Debentures to be delivered upon such
distribution with respect to Preferred Securities held by the Clearing Agency or
its nominee, and (iv) any Trust Securities Certificates not held by the Clearing
Agency for the Preferred Securities or its nominee as specified in clause (iii)
above will be deemed to represent 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. In the event
that any date on which any Redemption Price is payable is not a Business Day,
then payment of the Redemption Price payable on such date shall 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 (and without any reduction of interest or any other
payment in respect of any such acceleration), 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 Trust or by the Depositor
pursuant to the Guarantee, Distributions on such Trust Securities shall continue
to accumulate, at the then applicable rate, from the Redemption Date originally
established by the Trust for such Trust Securities to the date such Redemption
Price is actually paid, in which case the actual payment date shall be the date
fixed for redemption for purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be made
to the record holders thereof as they appear on the Securities Register for the
Trust Securities on the relevant record date, which shall be the date 15 days
prior to the relevant Redemption Date.
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(f) Subject to Section 403(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. 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, by such method (including, without limitation, by lot) as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $25 or an integral multiple of
$25 in excess thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than $25. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this 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 Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
Section 403. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable, shall be
made, subject to Section 402(f), pro rata among the Common Securities and the
Preferred Securities based on the Liquidation Amount of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price 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, 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, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from a
Debenture Event of Default, the record holder of Common Securities, the
Depositor, shall be deemed to have waived any right to act with respect to any
such Event of Default under this Trust Agreement until the effect of all such
Events of Default with respect to the Preferred Securities shall have been
cured, waived or otherwise eliminated. Until any such Event of Default under
this Trust Agreement with respect to the Preferred Securities shall have been so
cured, waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the record holders of the Preferred Securities and not the record
holder of the Common Securities, and only the Holders of the Preferred
Securities shall have the right to direct the Property Trustee to act on their
behalf.
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Section 404. 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 in respect of the Common Securities shall be made in such
manner as shall be mutually agreed between the Property Trustee and the Common
Securityholder.
Section 405. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
forms required to be filed in respect of the Trust in each taxable year of the
Trust; and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service forms required to
be furnished to such Securityholder or the information required to be provided
on such form. The Administrative Trustees shall provide the Depositor with a
copy of all such returns and reports promptly after such filing or furnishing.
The Property Trustee shall comply with United States federal withholding and
backup withholding tax laws and information reporting requirements with respect
to any payments to Securityholders under the Trust Securities.
Section 406. Payment of Taxes, Duties, etc. of the Trust.
Upon receipt under the Debentures of Additional Interest (as defined in
Section 1.1 of the Indenture), the Property Trustee, at the direction of an
Administrative Trustee or the Depositor, shall promptly pay any taxes, duties or
governmental charges of whatsoever nature (other than withholding taxes) imposed
on the Trust by the United States or any other taxing authority.
Section 407. Payments Under Indenture.
Any amount payable hereunder to any record holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder has
directly received under the Indenture pursuant to Section 514(b) or (c) hereof.
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ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 501. Initial Ownership.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 203 and 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 Trust.
Section 502. The Trust Securities Certificates.
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in excess
thereof, and the Common Securities Certificates shall be issued in denominations
of $25 Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of at least one Administrative Trustee. Trust Securities Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the 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 Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 504, 511
and 513.
Section 503. Execution, Authentication and Delivery of Trust Securities
Certificates.
(a) On the Closing Date and on any date on which the underwriters exercise
their over-allotment option, as applicable (an "Option Closing Date"), the
Administrative Trustees shall cause Trust Securities Certificates, in an
aggregate Liquidation Amount as provided in Sections 204 and 205, to be executed
on behalf of the Trust by at least one of the Administrative Trustees and
delivered to or upon the written order of the Depositor, signed by its Chief
Executive Officer, President, any Vice President or its Treasurer without
further corporate action by the Depositor, in authorized denominations.
(b) A Preferred Securities Certificate shall not be valid until
authenticated by the manual signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that the Preferred
Securities Certificate has been authenticated under this Trust Agreement. Each
Preferred Security Certificate shall be dated the date of its authentication.
Upon the written order of the Trust signed by one of the Administrative
Trustees, the Property Trustee shall authenticate and make available for
delivery the Preferred Securities Certificates.
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The Property Trustee may appoint an Authenticating Agent acceptable to the
Trust to authenticate the Preferred Securities. An Authenticating Agent may
authenticate the Preferred Securities whenever the Property Trustee may do so.
Each reference in this Trust Agreement to authentication by the Property Trustee
includes authentication by such agent. An Authenticating Agent has the same
rights as the Property Trustee to deal with the Company or the Trust.
Section 503A. 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, no Global
Preferred Security may be exchanged for Preferred Securities registered in
the names of persons other than the Depositary or its nominee unless (i) the
Depositary notifies the Debenture Trustee that it is unwilling or unable to
continue as a depositary for such Global Preferred Securities and the Depositor
is unable to locate a qualified successor depositary, (ii) the Depositor
executes and delivers to the Trustee a written order stating that it elects to
terminate the book-entry system through the Depositary or (iii) there shall have
occurred and be continuing a Debenture 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 or cancellation 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 cancelled, or equal to the Liquidation Amount of such other
Preferred Securities 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 Property Trustee, in accordance with the
rules and procedures of the Depositary for such Global Preferred Security (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 Administrative Trustees shall
execute and the Property Trustee shall, subject to Section 504(b) and as
otherwise provided in this Article V, authenticate and deliver 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 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
otherwise, shall be executed, authenticated and delivered in the form of, and
shall be, a Global Preferred Security, unless such Global Preferred Security is
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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 Securities 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 Depositor
shall have any liability in respect of any transfers effected by the Clearing
Agency.
(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 504. Registration of Transfer and Exchange of Preferred
Securities Certificates.
(a) The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 508, a register or registers for the purpose of
registering Trust Securities Certificates and, subject to the provisions of
Section 503A, transfers and exchanges of Preferred Securities Certificates
(herein referred to as the "Securities Register") in which the registrar
designated by the Depositor (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 510 in the case of the Common Securities Certificates) and
registration of transfers and exchanges of Preferred Securities Certificates as
herein provided. The Property Trustee shall be the initial Securities
Registrar.
(b) Subject to the provisions of Section 503A, upon surrender for
registration of transfer of any Preferred Securities Certificate at the office
or agency maintained pursuant to Section 508, the Administrative Trustees or any
one of them shall execute and deliver, in the name of the designated transferee
or transferees, one or more new Preferred Securities Certificates in authorized
denominations of a like aggregate Liquidation Amount dated the date of execution
by such Administrative Trustee or Trustees. The Securities Registrar shall not
be required to register the transfer of any Preferred Securities that have been
called for redemption. At the option of a record holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 508.
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(c) Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange, subject to the provisions of Section 503A,
shall be accompanied by a written instrument of transfer in form satisfactory to
the Property Trustee and the Securities Registrar duly executed by the Holder or
his attorney duly authorized in writing. Each Preferred Securities Certificate
surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Property Trustee in accordance with its
customary practice. The Trust shall not be required to (i) issue, register the
transfer of, or exchange any Preferred Securities during a period beginning at
the opening of business 15 calendar days before the date of mailing of a notice
of redemption of any Preferred Securities called for redemption and ending at
the close of business on the day of such mailing; or (ii) register the transfer
of or exchange any Preferred Securities so selected for redemption, in whole or
in part, except the unredeemed portion of any such Preferred Securities being
redeemed in part.
(d) No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, subject to the provisions of
Section 503A, but the Securities Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Preferred Securities Certificates.
(e) Preferred 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 Preferred Security not made in accordance
with this Trust Agreement shall be null and void. A Preferred 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 Preferred Security that is not
a Global Preferred Security as provided in Section 504(a). A beneficial interest
in a Global Preferred Security may be exchanged for a Preferred Security that is
not a Global Preferred Security only as provided in Section 503A.
Section 505. 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 Administrative Trustees 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,
the Administrative Trustees, or any one of them, on behalf of the Trust shall
execute and make available for delivery, 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
505, the Administrative Trustees 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 505 shall constitute conclusive
evidence of an undivided beneficial interest in the assets of the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
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Section 506. Persons Deemed Securityholders.
The Trustees, the Paying Agent and the Securities Registrar shall treat the
Person in whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities Certificate for the
purpose of receiving Distributions and for all other purposes whatsoever, and
neither the Trustees nor the Securities Registrar shall be bound by any notice
to the contrary.
Section 507. Access to List of Securityholders' Names and Addresses.
At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished to the Property Trustee (a) within five Business Days of March
15, June 15, September 15 and December 15 of each year, a list, in such form as
the Property Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date; and (b) promptly after
receipt by any Administrative Trustee or the Depositor of a request therefor
from the Property Trustee in order to enable the Property Trustee to discharge
its obligations under this Trust Agreement, in each case to the extent such
information is in the possession or control of the Administrative Trustees or
the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Trust Agreement or under
the Trust Securities, and the corresponding rights of the Trustee shall be as
provided in the Trust Indenture Act. Each Holder, by receiving and holding a
Trust Securities Certificate, and each owner shall be deemed to have agreed not
to hold the Depositor, the Property Trustee or the Administrative Trustees
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
Section 508. Maintenance of Office or Agency.
The Administrative Trustees shall maintain, or cause to be maintained, in
The City of New York, or other location designated by the Administrative
Trustees, 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 Trustees in respect of the Trust
Securities Certificates may be served. The Administrative Trustees initially
designate the Corporate Trust Office of the Property Trustee, Wilmington Trust
Company, as the principal corporate trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor and to
the Securityholders of any change in the location of the Securities Register or
any such office or agency.
Section 509. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment
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Account for the purpose of making the Distributions referred to above. The
Administrative Trustees may revoke such power and remove the Paying Agent if
such Trustees determine in their sole discretion that the Paying Agent shall
have failed to perform its obligations under this Trust Agreement in any
material respect. The Paying Agent shall initially be the Property Trustee, and
any co-paying agent chosen by the Property Trustee, and acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees, the Property Trustee and the Depositor. 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 Administrative
Trustees shall appoint a successor that is acceptable to the Property Trustee
and the Depositor to act as Paying Agent (which shall be a bank or trust
company). The Administrative Trustees shall cause such successor Paying Agent
or any additional Paying Agent appointed by the Administrative Trustees to
execute and deliver to the Trustees an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Trustees that as Paying
Agent, such successor Paying Agent or additional Paying Agent shall hold all
sums, if any, held by it for payment to the Securityholders in trust for the
benefit of the Securityholders entitled thereto until such sums shall be paid to
such Securityholders. 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 801, 803 and 806 shall apply to the Property Trustee also in its
role as Paying Agent, for so long as the Property Trustee shall act as Paying
Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include
any co-paying agent unless the context requires otherwise.
Section 510. Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, any attempted transfer of the Common Securities (other than a transfer in
connection with a merger or consolidation of the Depositor into another
corporation pursuant to Section 12.1 of the Indenture) shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE."
Section 511. Trust Securities Certificates.
(a) 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 the
Clearing Agency and registered in the name of the Clearing Agency'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 Clearing Agency to a nominee of the Clearing Agency or by a
nominee of the Clearing Agency to the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor of
such Clearing Agency or a nominee of such successor.
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(b) 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 512. 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 Trustees shall
give all such notices and communications specified herein to be given to the
Clearing Agency, and shall have no obligations to provide notice to the owners
of the beneficial interest in the Global Preferred Securities.
Section 513. Rights of Securityholders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 209, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the 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 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. When issued and
delivered to Holders of the Preferred Securities against payment of the purchase
price therefor, the Preferred Securities shall be fully paid and nonassessable
interests in the Trust. The Holders of the Preferred 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.
(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 Debentures fail to declare
the principal of all of the 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 by a notice in writing to the Depositor and
the Debenture Trustee; and upon any such declaration such principal amount of
and the accrued interest on all of the Debentures shall become immediately due
and payable, provided that the payment of principal and interest on such
Debentures shall remain subordinated to the extent provided in the Indenture.
(c) For so long as any Preferred Securities remain outstanding, upon a
Debenture Event of Default arising from the failure to pay interest or principal
on the Debentures, the Holders of any Preferred Securities then Outstanding
shall, to the fullest extent permitted by law, have the right to directly
institute proceedings for enforcement of payment to such Holders of principal of
or interest on the Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities of such Holders.
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ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 601. Limitations on Voting Rights.
(a) Except as provided in this Section 601, in Sections 512, 810 and 1002
and in the Indenture and as otherwise required by law, no record Holder of
Preferred Securities shall have any right to vote or in any manner otherwise
control the administration, operation and management of the 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 Securityholders from time to time as partners or members of an
association.
(b) So long as any Debentures are held by the Property Trustee on behalf
of the Trust, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Debentures; (ii) waive any past default which is waivable under Article VII
of the Indenture; (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
Holder of Outstanding 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 Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Outstanding Preferred
Securities, except by a subsequent vote of the Holders of the Outstanding
Preferred Securities. The Property Trustee shall notify each Holder of the
Outstanding Preferred Securities of any notice of default received from the
Debenture Trustee with respect to the Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Trustees shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to the
effect that the Trust shall continue to be classified as a grantor trust and not
as an association taxable as a corporation for United States federal income tax
purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise; or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class shall 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 Outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would cease
to be classified
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as a grantor trust or would be classified as an association taxable as a
corporation for United States federal income tax purposes.
Section 602. Notice of Meetings.
Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder 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 603. Meetings of Preferred Securityholders.
(a) No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter in respect of which Preferred Securityholders are entitled to
vote upon the written request of the Preferred Securityholders of 25% of the
Outstanding Preferred Securities (based upon their aggregate Liquidation Amount)
and the Administrative Trustees or the Property Trustee may, at any time in
their discretion, call a meeting of Preferred Securityholders to vote on any
matters as to which the Preferred Securityholders are entitled to vote.
(b) Preferred Securityholders of record of 50% of the Outstanding
Preferred Securities (based upon their aggregate Liquidation Amount), present in
person or by proxy, shall constitute a quorum at any meeting of Securityholders.
(c) If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding more
than a majority of the Preferred Securities (based upon their aggregate
Liquidation Amount) held by the Preferred Securityholders of record present,
either in person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
Section 604. Voting Rights.
Securityholders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Trust Securities (with any fractional multiple
thereof rounded up or down as the case may be to the closest integral multiple)
in respect of any matter as to which such Securityholders are entitled to vote.
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Section 605. Proxies, etc.
At any meeting of Securityholders, any Securityholder 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 Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
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 Securityholder 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 606. Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Securityholders holding more than a majority of all
outstanding Trust Securities (based upon their aggregate Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).
Section 607. Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders 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 Administrative Trustees or the Property Trustee may from time
to time fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of Distribution or other action, as the case may
be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
Section 608. Acts of Securityholders.
(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 Securityholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Securityholders or
owners 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 an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders
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
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and (subject to Section 801) conclusive in favor of the Trustees, if made in the
manner provided in this Section 608.
(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 Trustee receiving the same deems sufficient.
(c) The ownership of Preferred Securities shall be proved by the
Securities Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder 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 Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Securityholder 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 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) A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person.
Section 609. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection at the
principal executive office of the Trust (as indicated in Section 202) by record
holders of the Trust Securities during normal business hours for any purpose
reasonably related to such record holder's interest as a record holder.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 701. Representations and Warranties of the Bank and the Property
Trustee.
The Bank and the Property Trustee, each severally on behalf of and as to
itself, as of the date hereof, and each Successor Property Trustee at the time
of the Successor Property Trustee's acceptance of its appointment as Property
Trustee hereunder (in the case of a Successor Property Trustee, the term "Bank"
as used herein shall be deemed to refer to such Successor Property Trustee in
its separate corporate capacity), hereby represents and warrants (as applicable)
for the benefit of the Depositor and the Securityholders that:
(a) the Bank is a state chartered trust company duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered
by the Property Trustee and constitutes the valid and legally binding agreement
of the Property Trustee enforceable against it in accordance with its 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;
(d) the execution, delivery and performance by the Property Trustee of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Property Trustee and does not require any approval of
stockholders of the Bank and such execution, delivery and performance shall not
(i) violate the Bank's charter or by-laws; (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of, any Lien on any properties included in the
Trust Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Property
Trustee or the Bank is a party or by which it is bound; or (iii) violate any
law, governmental rule or regulation of the United States or the State of
Delaware, as the case may be, governing the banking or trust powers of the Bank
or the Property Trustee (as appropriate in context) or any order, judgment or
decree applicable to the Property Trustee or the Bank;
(e) neither the authorization, execution or delivery by the Property
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Property Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing federal law governing the banking or trust powers of the Bank or the
Property Trustee, as the case may be, under the laws of the United States or the
State of Delaware; and
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(f) there are no proceedings pending or, to the best of the Property
Trustee's knowledge, threatened against or affecting the Bank or the Property
Trustee in any court or before any governmental authority, agency or arbitration
board or tribunal which, individually or in the aggregate, would materially and
adversely affect the Trust or would question the right, power and authority of
the Property Trustee to enter into or perform its obligations as one of the
Trustees under this Trust Agreement.
(g) the Property Trustee is a Person eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000.
Section 702. Representations and Warranties of the Delaware Bank and the
Delaware Trustee.
The Delaware Bank and the Delaware Trustee, each severally on behalf of and
as to itself, as of the date hereof, and each Successor Delaware Trustee at the
time of the Successor Delaware Trustee's acceptance of appointment as Delaware
Trustee hereunder (the term "Delaware Bank" being used to refer to such
Successor Delaware Trustee in its separate corporate capacity), hereby
represents and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:
(a) the Delaware Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(b) the Delaware Bank has full corporate power, authority and legal right
to execute, deliver and perform its obligations under this Trust Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered
by the Delaware Trustee and constitutes the valid and legally binding agreement
of the Delaware Trustee enforceable against it in accordance with its 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;
(d) the execution, delivery and performance by the Delaware Trustee of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Delaware Trustee and does not require any approval of
stockholders of the Delaware Bank and such execution, delivery and performance
shall not (i) violate the Delaware Bank's charter or by-laws; (ii) violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any indenture,
mortgage, credit agreement, license or other agreement or instrument to which
the Delaware Bank or the Delaware Trustee is a party or by which it is bound; or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Delaware, as the case may be, governing the banking or trust powers
of the Delaware Bank or the Delaware Trustee (as appropriate in context) or any
order, judgment or decree applicable to the Delaware Bank or the Delaware
Trustee;
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(e) neither the authorization, execution or delivery by the Delaware
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Delaware Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing federal law governing the banking or trust powers of the Delaware Bank
or the Delaware Trustee, as the case may be, under the laws of the United States
or the State of Delaware; and
(f) there are no proceedings pending or, to the best of the Delaware
Trustee's knowledge, threatened against or affecting the Delaware Bank or the
Delaware Trustee in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power and
authority of the Delaware Trustee to enter into or perform its obligations as
one of the Trustees under this Trust Agreement.
Section 703. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued on the Closing Date or the
Option Closing Date, if applicable, on behalf of the Trust have been duly
authorized and, shall have been, duly and validly executed, issued and delivered
by the Administrative Trustees pursuant to the terms and provisions of, and in
accordance with the requirements of, this Trust Agreement and the
Securityholders shall be, as of such date, entitled to the benefits of this
Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Bank, the Property Trustee or the Delaware
Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
TRUSTEES
Section 801. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees 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 Trustees 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. No Administrative Trustee nor the Delaware Trustee shall be liable for its
act or omissions hereunder except as a result of its own gross negligence or
willful misconduct. The
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Property Trustee's liability shall be determined under the Trust Indenture Act.
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 Trustees shall be subject to the provisions of this Section
801. To the extent that, at law or in equity, the Delaware Trustee or an
Administrative Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to the Securityholders, the Delaware Trustee or
such Administrative Trustee shall not be liable to the Trust or to any
Securityholder for such Trustee'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 Delaware Trustee or the
Administrative Trustees otherwise existing at law or in equity, are agreed by
the Depositor and the Securityholders to replace such other duties and
liabilities of the Delaware Trustee or the Administrative Trustees, as the case
may be.
(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 Securityholder,
by its acceptance of a Trust Security, agrees that it shall look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 801(b)
does not limit the liability of the Trustees expressly set forth elsewhere in
this Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) 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) 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;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in Liquidation Amount of the Trust 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;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the 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
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limitations on liability afforded to the Property Trustee under
this Trust Agreement and the Trust Indenture Act;
(iv) 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 to the
Payment Account maintained by the Property Trustee pursuant to
Section 301 and except to the extent otherwise required by law;
and
(d) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable for
the negligence, default or misconduct of the Administrative Trustees or the
Depositor.
Section 802. Certain Notices.
(a) Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 1008, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived. For purposes of
this Section 802 the term "Event of Default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default.
(b) The Administrative Trustees shall transmit, to the Securityholders in
the manner and to the extent provided in Section 1008, notice of the Depositor's
election to begin or further extend an Extended Interest Payment Period on the
Debentures (unless such election shall have been revoked) within the time
specified for transmitting such notice to the holders of the Debentures pursuant
to the Indenture as originally executed.
Section 803. Certain Rights of Property Trustee.
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be 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, 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) if (i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action; or (ii) in
construing any of the provisions of this Trust Agreement the Property Trustee
finds the same ambiguous or inconsistent with other
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provisions contained herein; or (iii) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then, except as to any
matter as to which the Preferred Securityholders are entitled to vote under the
terms of this Trust Agreement, the Property Trustee shall deliver a notice to
the Depositor requesting written instructions of the Depositor as to the course
of action to be taken and the Property Trustee shall take such action, or
refrain from taking such action, as the Property Trustee shall be instructed in
writing to take, or to refrain from taking, by the Depositor; provided, however,
that if the Property Trustee does not receive such instructions of the Depositor
within 10 Business Days after it has delivered such notice, or such reasonably
shorter period of time set forth in such notice (which to the extent practicable
shall not be less than 2 Business Days), it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Trust
Agreement as it shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee shall have no liability
except for its own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officer's Certificate which,
upon receipt of such request, shall be promptly delivered by the Depositor or
the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any recording, filing
or registration of any instrument (including any financing or continuation
statement, any filing under tax or securities laws or any filing under tax or
securities laws) or any rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its choice (which
counsel may be counsel to the Depositor or any of its Affiliates) 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, such counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g) 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 Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
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(h) 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 Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
(i) the Property 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, provided that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or attorney
appointed by it hereunder;
(j) 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 of the Trust Securities
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 enforcing such remedy or right or
taking such other action until such instructions are received; and (iii) shall
be protected in acting in accordance with such instructions; and
(k) 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 the
Property Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it, in any jurisdiction in which it shall
be illegal, or in which the Property Trustee shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or acts, or to
exercise any such right, power, duty or obligation. No permissive power or
authority available to the Property Trustee shall be construed to be a duty.
Section 804. 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 Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Debentures.
Section 805. May Hold Securities.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 808 and 813 and except as provided in the
definition of the term "Outstanding" in Article I, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
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Section 806. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the 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) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (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 such Trustee's negligence, bad faith or
willful misconduct (or, in the case of the Administrative Trustees or the
Delaware Trustee, any such expense, disbursement or advance as may be
attributable to its, his or her gross negligence, bad faith or willful
misconduct); and
(c) to indemnify each of the Trustees or any predecessor Trustee for, and
to hold the Trustees harmless against, any loss, damage, claims, liability,
penalty or expense incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of this Trust
Agreement, including the 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 hereunder, except any such expense, disbursement or advance as
may be attributable to such Trustee's negligence, bad faith or willful
misconduct for (or, in the case of the Administrative Trustees or the Delaware
Trustee, any such expense, disbursement or advance as may be attributable to
its, his or her gross negligence, bad faith or willful misconduct).
Each Trustee may claim a Lien or charge on Trust Property as a result of
any amount due and unpaid pursuant to this Section 806.
Section 807. Corporate Property Trustee Required; Eligibility of
Trustees.
(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
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
807, the combined capital and surplus of such Person 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 Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section 807, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is
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at least 21 years of age or a legal entity that shall act through one or more
persons authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. 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 808. Conflicting Interests.
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.
Section 809. 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 Depositor shall have power to appoint,
and upon the written request of the Property Trustee, the Depositor 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 809. If the Depositor does not
join in such appointment within 15 days after the receipt by it of a request so
to do, or in case a Debenture Event of Default has occurred and is continuing,
the Property Trustee alone shall have power to make such appointment. Any co-
trustee or separate trustee appointed pursuant to this Section 809 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.
(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:
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(i) 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 Trustees
specified hereunder, shall be exercised, solely by such Trustees
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 or 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 809, and, in case a
Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have the 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 809.
(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 810. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of any Trustee (the "Relevant Trustee") and
no appointment of a successor Trustee pursuant to this Article VIII shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 811.
(b) Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time with respect to the Trust Securities by giving written
notice thereof to the Securityholders. If the instrument of acceptance by the
successor Trustee required by Section 811 shall not have been delivered to the
Relevant Trustee within 30 days after the giving of such notice of resignation,
the Relevant Trustee may petition, at the expense of the Depositor, any court of
competent jurisdiction for the appointment of a successor Relevant Trustee with
respect to the Trust Securities.
(c) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Common Securityholder at any time.
(d) If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees with respect to the Trust Securities and the Trust, and the successor
Trustee shall comply with the applicable requirements of Section 811. If the
Property Trustee or the Delaware Trustee shall resign, be removed or become
incapable of continuing to act as the Property Trustee or the Delaware Trustee,
as the case may be, at a time when a Debenture Event of Default shall have
occurred and is continuing, the Preferred Securityholders, by Act of the
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then Outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust
Securities and the Trust, and such successor Trustee shall comply with the
applicable requirements of Section 811. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder, by Act of the Common Securityholder delivered to an
Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees with respect to the Trust Securities and the
Trust, and such successor Administrative Trustee or Administrative Trustees
shall comply with the applicable requirements of Section 811. If no successor
Relevant Trustee with respect to the Trust Securities shall have been so
appointed by the Common Securityholder or the Preferred Securityholders and
accepted appointment in the manner required by Section 811, any Securityholder
who has been a Securityholder of Trust Securities on behalf of himself and all
others
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similarly situated may petition a court of competent jurisdiction for the
appointment Trustee with respect to the Trust Securities.
(e) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give notice to
the Depositor. Each notice shall include the name of the successor 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 Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of remaining Administrative Trustees if
there are at least two of them; or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees set forth in Section 807).
Section 811. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Relevant Trustee
with respect to the Trust Securities and the Trust, the retiring Relevant
Trustee and each successor Relevant Trustee with respect to the Trust Securities
shall execute and deliver an instrument hereto wherein each successor Relevant
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 Relevant Trustee all the rights, powers, trusts and duties of the
retiring Relevant Trustee with respect to the Trust Securities and the 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 Relevant Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee with respect to the Trust Securities and
the Trust; but, on request of the Trust or any successor Relevant Trustee such
retiring Relevant Trustee shall duly assign, transfer and deliver to such
successor Relevant Trustee all Trust Property, all proceeds thereof and money
held by such retiring Relevant Trustee hereunder with respect to the Trust
Securities and the Trust.
(b) Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the immediately preceding paragraph, as the case may be.
(c) No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article VIII.
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Section 812. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative 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
corporation succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided 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 813. Preferential Collection of Claims Against Depositor or
Trust.
If and when the Property Trustee or the Delaware Trustee shall be or become
a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
Section 814. Reports by Property Trustee.
(a) Not later than July 15 of each year commencing with July 15, 1999, the
Property Trustee shall transmit to all Securityholders in accordance with
Section 1008, and to the Depositor, a brief report dated as of May 15 with
respect to:
(i) its eligibility under Section 807 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.
(b) In addition the Property Trustee shall transmit to Securityholders 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.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with The Nasdaq National Market/sm/,
and each national securities exchange or other organization upon which the Trust
Securities are listed, and also with the Commission and the Depositor.
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Section 815. Reports to the Property Trustee.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) 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.
Section 816. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
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.
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 817. Number of Trustees.
(a) The number of Trustees shall be five, provided that the Holder of all
of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware Trustee
may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 817(a), or if the
number of Trustees is increased pursuant to Section 817(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 810.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Administrative Trustees shall occur,
until such vacancy is filled by the appointment of an Administrative Trustee in
accordance with Section 810, the Administrative Trustees in office, regardless
of their number (and notwithstanding any other provision of this Agreement),
shall have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by this Trust
Agreement.
Section 818. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
207(a); and
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the
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Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
Section 819. Voting.
Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by not
less than a majority of the Administrative Trustees, unless there are only two,
in which case both must consent.
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
Section 901. Termination Upon Expiration Date.
Unless earlier dissolved, the Trust shall automatically dissolve on,
_____________, 2053 (the "Expiration Date") subject to distribution of the Trust
Property in accordance with Section 904.
Section 902. Early Termination.
The first to occur of any of the following events is an "Early Termination
Event:"
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by the Depositor
at any time (which direction is wholly optional and within the discretion of the
Depositor, subject to Depositor having received prior approval of the Board of
Governors of the Federal Reserve System if so required under applicable
guidelines, policies or regulations thereof) to dissolve the Trust and
distribute the Debentures to Securityholders in exchange for the Preferred
Securities in accordance with Section 904;
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all of the Debentures (whether upon a Debenture Redemption
Date or the maturity of the Debenture); and
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction.
Section 903. Termination.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 904,
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or upon the redemption of all of the Trust Securities pursuant to Section 402,
of all amounts required to be distributed hereunder upon the final payment of
the Trust Securities; (b) the payment of any expenses owed by the Trust; (c) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust or
the Securityholders; and (d) the filing of a Certificate of Cancellation by the
Administrative Trustee under the Business Trust Act.
Section 904. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b), or (d) of
Section 902 occurs or upon the Expiration Date, the Trust shall be liquidated by
the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of Debentures,
subject to Section 904(d). Notice of liquidation shall be given by the Property
Trustee by first-class mail, postage prepaid, mailed not later than 30 nor more
than 60 days prior to the Liquidation Date to each Holder of Trust 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 shall no longer be deemed to be Outstanding and any
Trust Securities Certificates not surrendered for exchange shall
be deemed to represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for
Debentures, or, if Section 904(d) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property
Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 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 Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the Liquidation
Date, (i) the Trust Securities shall no longer be deemed to be outstanding; (ii)
certificates representing a Like Amount of Debentures shall be issued to holders
of Trust Securities Certificates upon surrender of such certificates to the
Administrative Trustees or their agent for exchange; (iii) the Depositor shall
use its reasonable efforts to have the Debentures listed on the Nasdaq National
Market(SM) or on such other securities exchange or other organization as the
Preferred Securities are then listed or traded; (iv) any Trust Securities
Certificates not so surrendered for exchange shall be deemed to represent
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a Like Amount of Debentures, accruing interest at the rate provided for in the
Debentures from the last Distribution Date on which a Distribution was made on
such Trust Securities Certificates until such certificates are so surrendered
(and until such certificates are so surrendered, no payments of interest or
principal shall be made to holders of Trust Securities Certificates with respect
to such Debentures); and (v) all rights of Securityholders holding Trust
Securities shall cease, except the right of such Securityholders to receive
Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 904, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution,
winding-up or other termination of the Trust, Securityholders shall be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding-up or termination, the Liquidation Distribution can be paid
only in part because the 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 Trust on the Trust Securities shall be paid
on a pro rata basis (based upon Liquidation Amounts). The holder of the Common
Securities shall be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination 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.
Section 905. Mergers, Consolidations, Amalgamations or Replacements of the
Trust.
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the 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 rank
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise; (ii) the
Depositor expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee as the holder
of the Debentures; (iii) the Successor Securities are listed or traded, or any
Successor Securities shall be listed or traded upon notification of issuance, on
any national securities exchange or other organization on which the Preferred
Securities are then listed, if any; (iv) such merger,
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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 entity has a purpose substantially identical to that
of the Trust; (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Depositor has received an
Opinion of Counsel 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 Trust nor such successor entity shall be required
to register as an "investment company" under the Investment Company Act; and
(vii) the Depositor owns all of the Common Securities of such successor entity
and guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the 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 Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 1001. Limitation of Rights of Securityholders.
The death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Securityholder 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 1002. Amendment.
(a) This Trust Agreement may be amended from time to time by the Trustees
and the Depositor, without the consent of any Securityholders, (i) as provided
in Section 811 with respect to acceptance of appointment by a successor Trustee;
(ii) to cure any ambiguity, correct or supplement any provision herein or
therein which may be inconsistent with any other provision herein or therein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, that shall not be inconsistent with the other provisions
of this Trust Agreement; or (iii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Trust shall be classified for United States federal income tax purposes as a
grantor trust at all times that any Trust Securities are outstanding or to
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ensure that the Trust shall not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the case
of clause (ii), such action shall not adversely affect in any material respect
the interests of any Securityholder, and any amendments of this Trust Agreement
shall become effective when notice thereof is given to the Securityholders.
(b) Except as provided in Section 601(c) or Section 1002(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of Trust Securityholders representing not less
than a majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding; and (ii) upon receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment shall not affect the Trust's status
as a grantor trust for United States federal income tax purposes or the 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 Securityholder (such consent
being obtained in accordance with Section 603 or 606 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 Securityholder 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 Securityholders
(such consent being obtained in accordance with Section 603 or 606 hereof), this
paragraph (c) of this Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an "investment company" under the Investment Company Act or to fail or
cease to be classified as a grantor trust for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees 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.
51
<PAGE>
Section 1003. 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.
Section 1004. Governing law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES 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 CONFLICT OF LAWS PRINCIPLES
THEREOF).
Section 1005. 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 which is a 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 (and without any reduction of interest
or any other payment in respect of any such acceleration), in each case with
the same force and effect as though made on the date fixed for such payment, and
no distribution shall accumulate thereon for the period after such date.
Section 1006. Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust or the Relevant Trustee(s),
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article XII 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 1007. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 1008. Reports, Notices and Demands.
Any report, 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
any Securityholder 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, (a) in the case of a
Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and
52
<PAGE>
address may appear on the Securities Register; and (b) in the case of the Common
Securityholder or the Depositor, to Wintrust Financial Corporation, 727 North
Bank Lane, Lake Forest, Illinois 60045, Attention: David A. Dykstra, Chief
Financial Officer, facsimile no.: (847) 234-3567. Any notice to Preferred
Securityholders shall also be given to such owners as have, within two years
preceding the giving of such notice, filed their names and addresses with the
Property Trustee for that purpose. Such notice, demand or other communication
to or upon a Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or transmission.
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
Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(a) with respect to the Property Trustee to Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration; (b) with respect to the Delaware
Trustee, to Wilmington Trust Company at the above address; and (c) with respect
to the Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention: Administrative Trustees of Capital Trust." Such
notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
Section 1009. Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code of 1978, as amended) (collectively, "Bankruptcy Laws") or
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor or any of the Trustees takes action
in violation of this Section 1009, the Property Trustee agrees, for the benefit
of Securityholders, that at the expense of the Depositor (which expense shall be
paid prior to the filing), it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor or such
Trustee against the Trust or the commencement of such action and raise the
defense that the Depositor or such Trustee has agreed in writing not to take
such action and should be stopped and precluded therefrom. The provisions of
this Section 1009 shall survive the termination of this Trust Agreement.
Section 1010. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
53
<PAGE>
(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 1011. 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 SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
[SIGNATURE PAGE FOLLOWS]
54
<PAGE>
WINTRUST FINANCIAL CORPORATION
By:
-----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, as Property Trustee
By:
-----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, as Delaware Trustee
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
Edward J. Wehmer, As Administrative Trustee
--------------------------------------------
David A. Dykstra, As Administrative Trustee
--------------------------------------------
Randolph M. Hibben, As Administrative Trustee
55
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
WINTRUST CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF Wintrust Capital Trust I (the "Trust"), dated
August 14, 1998, is being duly executed and filed by Wilmington Trust
Company, a Delaware banking corporation, Edward J. Wehmer, David A. Dykstra and
Randolph M. Hibben, each an individual, as trustees, to form a business trust
under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).
1. NAME. The name of the business trust formed hereby is Wintrust Capital
Trust I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on
August 14, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
has executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY, as trustee
By: /s/ Donald F. Carey, Jr.
-------------------------------------
Name: Donald F. Carey, Jr.
------------------------------
Title: Vice President
-----------------------------
/s/ Edward J. Wehmer
----------------------------------------
Edward J. Wehmer, as Trustee
/s/ David A. Dykstra
----------------------------------------
David A. Dykstra, as Trustee
/s/ Randolph M. Hibben
----------------------------------------
Randolph M. Hibben, as Trustee
A-1
<PAGE>
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number 1 Number of Common Securities _________
Certificate Evidencing Common Securities
of
Wintrust Capital Trust I
Common Securities
(liquidation amount $25 per Common Security)
WINTRUST CAPITAL TRUST I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that WINTRUST FINANCIAL
CORPORATION (the "Holder") is the registered owner of __________________
(_______) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the ____% Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). In
accordance with Section 510 of the Trust Agreement (as defined below), the
Common Securities are not transferable and any attempted transfer hereof 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 Trust dated as of ________ __, 1998, as the same may be
amended from time to time (the "Trust Agreement"), including the designation of
the terms of the Common Securities as set forth therein. The Trust shall furnish
a copy of the Trust Agreement to the Holder without charge upon written request
to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of _________, 1998.
Wintrust Capital Trust I
By: ____________________________________
Name: _________________________________
Title: _________________________________
B-1
<PAGE>
EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
___________ __, 1998, between WINTRUST FINANCIAL CORPORATION, an Illinois
corporation (the "Company"), and WINTRUST CAPITAL TRUST I, a Delaware business
trust (the "Trust").
RECITALS
WHEREAS, the Trust intends to issue its common securities (the "Common
Securities") to, and receive ____% Subordinated Debentures (the "Debentures")
from, the Company and to issue and sell Wintrust Capital Trust I ___% Cumulative
Trust Preferred Securities (the "Preferred Securities") with such powers,
preferences and special rights and restrictions as are set forth in the Amended
and Restated Trust Agreement of the Trust dated as of ________ __, 1998, as the
same may be amended from time to time (the "Trust Agreement");
WHEREAS, the Company shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which purchase the Company acknowledges shall be made in reliance
upon the execution and delivery of this Agreement, the Company, including in its
capacity as holder of the Common Securities, and the Trust hereby agree as
follows:
ARTICLE I
Section 1.1 Guarantee by the Company.
Subject to the terms and conditions hereof, the Company, including in its
capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment when
and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This Agreement is intended to be for the
benefit of, and to be enforceable by, all such Beneficiaries, whether or not
such Beneficiaries have received notice hereof.
C-1
<PAGE>
Section 1.2 Term of Agreement.
This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Preferred Securities (whether upon redemption,
liquidation, exchange or otherwise); and (b) the date on which there are no
Beneficiaries remaining; provided, however, that this Agreement shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
holder of Preferred Securities or any Beneficiary must restore payment of any
sums paid under the Preferred Securities, under any obligation, under the
Preferred Securities Guarantee Agreement dated the date hereof by the Company
and Wilmington Trust Company as guarantee trustee or under this Agreement for
any reason whatsoever. This Agreement is continuing, irrevocable, unconditional
and absolute.
Section 1.3 Waiver of Notice.
The Company hereby waives notice of acceptance of this Agreement and of any
obligation to which it applies or may apply, and the Company hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
Section 1.4 No Impairment.
The obligations, covenants, agreements and duties of the Company under this
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 extension of time for the payment by the Trust of all or any
portion of the obligations or for the performance of any other obligation under,
arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the obligations or any
action on the part of the Trust granting indulgence or extension of any kind; or
(c) 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 Trust or any of the assets of the
Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Company with respect to the happening of any of the
foregoing.
C-2
<PAGE>
Section 1.5 Enforcement.
A Beneficiary may enforce this Agreement directly against the Company, and
the Company waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding against the
Company.
ARTICLE II
Section 2.1 Binding Effect.
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the Beneficiaries.
Section 2.2 Amendment.
So long as there remains any Beneficiary or any Preferred Securities of any
series are outstanding, this Agreement shall not be modified or amended in any
manner adverse to such Beneficiary or to any of the holders of the Preferred
Securities.
Section 2.3 Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same by facsimile
transmission (confirmed by mail), telex, or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or upon
receipt of an answerback, if sent by telex):
Wintrust Capital Trust I
c/o Wintrust Financial Corporation
727 North Bank Lane
Lake Forest, Illinois 60045
Facsimile No.: (847) 234-3567
Attention: David A. Dykstra, Administrative Trustee
Wintrust Financial Corporation
727 North Bank Lane
Lake Forest, Illinois 60045
Facsimile No.: (847) 234-3567
Attention: David A. Dykstra, Chief Financial Officer
Section 2.4 This agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Illinois (without regard
to conflict of laws principles).
C-3
<PAGE>
THIS AGREEMENT is executed as of the day and year first above written.
WINTRUST FINANCIAL CORPORATION
By: ____________________________________
Name: _________________________________
Title: _________________________________
WINTRUST CAPITAL TRUST I
By: ____________________________________
Name: _________________________________
Title: Administrative Trustee
C-4
<PAGE>
EXHIBIT D
Certificate Number Number of Preferred Securities ____________
Certificate Evidencing Preferred Securities
of
Wintrust Capital Trust I
____% Cumulative Trust Preferred Securities
(liquidation amount $25 per Preferred Security)
CUSIP __________
Wintrust Capital Trust I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that ________________
(the "Holder") is the registered owner of _____ preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust and
designated the ____% Cumulative Trust Preferred Securities (liquidation amount
$25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in Section 504 of the Trust
Agreement (as defined herein). 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 Trust dated
as of _______ __, 1998, as the same may be amended from time to time (the "Trust
Agreement"), including the designation of the terms of Preferred Securities as
set forth therein. The Holder is entitled to the benefits of the Preferred
Securities Guarantee Agreement entered into by Wintrust Financial Corporation,
an Illinois corporation, and Wilmington Trust Company as guarantee trustee,
dated as of _________ __, 1998, as the same may be amended from time to time
(the "Guarantee"), to the extent provided therein. The Trust shall furnish a
copy of the Trust Agreement and the Guarantee to the Holder without charge upon
written request to the Trust at its principal place of business or registered
office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Unless the Certificate of Authentication has been manually executed by the
Authentication Agent, this certificate is not valid or effective.
D-1
<PAGE>
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed
this Certificate this ____ day of __________.
CERTIFICATE OF AUTHENTICATION: WINTRUST CAPITAL TRUST I
This is one of the ____% Cumulative
Trust Preferred Securities referred By:____________________________________
to in the within-mentioned Amended Edward J. Wehmer, as Trustee
and Restated Trust Agreement.
By:____________________________________
David A. Dykstra, as Trustee
WILMINGTON TRUST COMPANY,
as Authentication Agent and Registrar
By:____________________________________
Randolph M. Hibben, as Trustee
By:____________________________________
AUTHORIZED SIGNATURE
D-2
<PAGE>
[FORM OF REVERSE OF CERTIFICATE]
The Trust will furnish without charge to any registered owner of Preferred
Securities who so requests, a copy of the Trust Agreement and the Guarantee. Any
such request should be in writing and addressed to Wintrust Capital Trust I, c/o
Secretary, Wintrust Financial Corporation, 727 North Bank Lane, Lake Forest,
Illinois 60045 or to the Registrar named on the face of this Certificate.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN CON -- as tenants in common UNIF GIFT MIN ACT -- under Uniform Gift
TEN ENT -- as tenants by the entireties to Minors Act and
JT TEN -- as joint tenants with right not as tenants
of survival
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
________________________________________________________________________________
(Please insert social security or other identifying number of assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(insert address and zip code of assignee)
the within Certificate and all rights and interests represented by the Preferred
Securities evidenced thereby, and hereby irrevocably constitutes and appoints
_______________________________________________________________________ attorney
to transfer the said Preferred Securities on the books of the within-named Trust
with full power of substitution in the premises.
Dated: _______________________ Signature: _________________________________
Note: The signature(s) to this
assignment must correspond with
the name(s) as written upon the
face of this Certificate in every
particular, without alteration or
enlargement, or any change
whatever.
Signature(s) Guaranteed:
______________________________
NOTICE: Signature(s) must be guaranteed
by an "eligible guarantor institution"
that is a member or participant in a
"signature guarantee program" (i.e., the
Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion
Program or the New York Stock Exchange, Inc.
Medallion Signature Program).
D-3
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE OF AUTHENTICATION
This is one of the ____% Cumulative Trust Preferred Securities referred to
in the within-mentioned Amended and Restated Trust Agreement.
WILMINGTON TRUST COMPANY,
as Authentication Agent and Registrar
By:______________________________________
AUTHORIZED SIGNATURE
E-1
<PAGE>
Exhibit 4.7
[FORM OF]
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
by and between
WINTRUST FINANCIAL CORPORATION
and
WILMINGTON TRUST COMPANY
Dated as of ______ __, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION...................................... 1
Section 1.1. Definitions and Interpretation........................ 1
ARTICLE II
TRUST INDENTURE ACT................................................. 5
Section 2.1. Trust Indenture Act; Application...................... 5
Section 2.2. Lists of Holders of Securities........................ 5
Section 2.3. Reports by the Preferred Guarantee Trustee............ 5
Section 2.4. Periodic Reports to Preferred Guarantee Trustee....... 6
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 PREFERRED GUARANTEE TRUSTEE............ 7
Section 3.1. Powers and Duties of the Preferred Guarantee Trustee.. 7
Section 3.2. Certain Rights of Preferred Guarantee Trustee......... 8
Section 3.3. Not Responsible for Recitals or Issuance of Guarantee. 10
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE......................................... 10
Section 4.1. Preferred Guarantee Trustee; Eligibility.............. 10
Section 4.2. Appointment, Removal and Resignation of Preferred
Guarantee Trustees.................................... 11
ARTICLE V
GUARANTEE........................................................... 12
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
LIMITATION OF TRANSACTIONS; SUBORDINATION........................... 14
Section 6.1. Limitation of Transactions............................ 14
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 6.2. Ranking............................................... 15
ARTICLE VII
TERMINATION......................................................... 15
Section 7.1. Termination........................................... 15
ARTICLE VIII
INDEMNIFICATION..................................................... 15
Section 8.1. Exculpation........................................... 15
Section 8.2. Indemnification....................................... 16
ARTICLE IX
MISCELLANEOUS....................................................... 16
Section 9.1. Successors and Assigns................................ 16
Section 9.2. Amendments............................................ 16
Section 9.3. Notices............................................... 16
Section 9.4. Benefit............................................... 17
Section 9.5. Governing Law......................................... 17
</TABLE>
ii
<PAGE>
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
- ---------------- ---------
<S> <C>
310(a) 4.1(a)
310(b) 4.1(c), 2.8
310(c) Not Applicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Not Applicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Not Applicable
314(c) 2.5
314(d) Not Applicable
314(e) 1.1, 2.5, 3.2
314(f) 2.1, 3.2
315(a) 3.1(d)
315(b) 2.7
315(c) 3.1
315(d) 3.1(d)
316(a) 1.1, 2.6, 5.4
316(b) 5.3
317(a) 3.1
317(b) Not Applicable
318(a) 2.1(a)
318(b) 2.1
318(c) 2.1(b)
</TABLE>
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.
iii
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
THIS PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred Securities
Guarantee"), dated as of ________ __, 1998, is executed and delivered by
WINTRUST FINANCIAL CORPORATION, an Illinois corporation (the "Guarantor"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation organized under the
laws of the State of Delaware, as trustee (the "Preferred Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Wintrust Capital Trust I, a Delaware
statutory business trust (the "Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of ________ __, 1998, among the trustees of the Trust
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
on the date hereof up to 1,242,000 preferred securities, having an aggregate
liquidation amount of $31,050,000, designated the ____% Cumulative Trust
Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Preferred Securities Guarantee, 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 by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions and Interpretation.
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) terms defined in the Trust Agreement as at the date of execution of
this Preferred Securities Guarantee have the same meaning when used in this
Preferred Securities Guarantee, unless otherwise defined in this Preferred
Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities Guarantee has the
same meaning throughout;
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(d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee to Articles and
Sections are to Articles and Sections of this Preferred Securities Guarantee,
unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday, a day on which
federal or state banking institutions in New York, New York are authorized or
required by law, executive order or regulation to close or a day on which the
Corporate Trust Office of the Preferred Guarantee Trustee is closed for
business.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the ____% Subordinated Debentures due __________, 2028,
of the Debenture Issuer held by the Property Trustee of the Trust.
"Debenture Issuer" means Wintrust Financial Corporation, issuer of the
Debentures under the Indenture.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee.
"Guarantor" means Wintrust Financial Corporation, an Illinois corporation.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Trust: (i) any accrued and unpaid Distributions (as defined in the
Trust Agreement) that are required to be paid on such Preferred Securities, to
the extent the Trust shall have funds available therefor, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of redemption
(the
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"Redemption Price"), to the extent the Trust has funds available therefor, with
respect to any Preferred Securities called for redemption by the Trust, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Trust (other than in connection with the distribution of Debentures to the
Holders in exchange for Preferred Securities as provided in the Trust
Agreement), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor (the
"Liquidation Distribution"), and (b) the amount of assets of the Trust remaining
available for distribution to Holders in liquidation of the Trust.
"Holder" shall mean any holder, as registered on the books and records of
the 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 Preferred Guarantee Trustee or any of their
respective Affiliates.
"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of _______ __, 1998, among the
Debenture Issuer and Wilmington Trust Company, as trustee, and any indenture
supplemental thereto pursuant to which certain subordinated debt securities of
the Debenture Issuer are to be issued to the Property Trustee of the Trust.
"Liquidation Amount" means the stated value of $25 per Preferred Security.
"Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.
"Majority in liquidation amount of the Preferred Securities" means the
holders of more than 50% of the Liquidation Amount of all of the Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person, at least one of whom shall be
the principal executive officer, principal financial officer, principal
accounting officer, treasurer or any vice president of such Person. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
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(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"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 Guarantee Trustee" means Wilmington Trust Company, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Redemption Price" has the meaning provided therefor in the definition of
Guarantee Payments.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
the secretary, any assistant secretary, the treasurer, any assistant treasurer
or other officer or assistant officer of the Corporate Trust Office of the
Preferred Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
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ARTICLE II
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
Section 2.2. Lists of Holders of Securities.
(a) In the event the Preferred Guarantee Trustee is not also acting
in the capacity of the Property Trustee under the Trust Agreement, the Guarantor
shall cause to be provided to the Preferred Guarantee Trustee with a list, in
such form as the Preferred Guarantee Trustee may reasonably require, of the
names and addresses of the Holders of the Preferred Securities ("List of
Holders") as of the date (i) within 1 Business Day after March 15, June 15,
September 15 and December 15, and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request for a List of Holders as of a date
no more than 15 days before such List of Holders is given to the Preferred
Guarantee Trustee; provided, that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders caused to have been given to the Preferred
Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Preferred Guarantee Trustee.
On or before July 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
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Section 2.4. Periodic Reports to Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee 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 Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, 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
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 2.7. Event of Default; Notice.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided, that, except in the case of a default by Guarantor on any of its
payment obligations, the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Preferred
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Trust Agreement shall
have obtained actual knowledge.
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Section 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Preferred Securities Guarantee 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 PREFERRED GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Preferred Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, 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 Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee 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 Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, 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 Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee 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:
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(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred 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 Preferred Guarantee
Trustee and conforming to the requirements of this Preferred Securities
Guarantee; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Preferred
Guarantee Trustee, unless it shall be proved that the Preferred Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Preferred 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 Preferred
Guarantee Trustee, or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred 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 Preferred
Guarantee 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 Preferred Securities Guarantee or indemnity, reasonably satisfactory to the
Preferred Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
Section 3.2. Certain Rights of Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Preferred 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
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evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties;
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any action
hereunder, the Preferred 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, shall be promptly delivered by the Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court of
competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred Securities
Guarantee at the request or direction of any Holder, unless such Holder shall
have provided to the Preferred Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Preferred
Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the rights and powers
vested in it by this Preferred Securities Guarantee;
(vii) the Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees,
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custodians or attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and the
signature of the Preferred Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action;
(x) whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Preferred Guarantee Trustee (i) may request instructions
from the Holders of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be protected
in conclusively relying on or acting in accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred 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 Preferred 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 Preferred Guarantee Trustee shall be construed to be a duty.
Section 3.3. Not Responsible for Recitals or Issuance of Guarantee.
The Recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
Section 4.1. Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
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(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, and subject to supervision
or examination by Federal, State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred 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 Preferred Guarantee
Trustees.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee.
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Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal
or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued
to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
Section 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Trust), as and when due, regardless of any defense, right of set-off
or counterclaim that the Trust may have or assert. 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 Trust to pay such
amounts to the Holders.
Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the 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 Preferred Securities Guarantee 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 Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the
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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 (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the extension of any interest payment period on the Debentures
or any extension of the maturity date of the Debentures permitted by the
Indenture);
(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 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 Trust or any of the assets of
the Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) any failure or omission to receive any regulatory approval or
consent required in connection with the Preferred Securities (or the common
equity securities issued by the Trust), including the failure to receive any
approval of the Board of Governors of the Federal Reserve System required for
the redemption of the Preferred Securities;
(g) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(h) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, 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 consent of, the Guarantor with respect to the happening of any of the
foregoing.
Section 5.4. Rights of Holders.
(a) Subject to Section 5.4(b), the Holders of a Majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting of any proceeding for any remedy available
to the Preferred Guarantee Trustee in respect of this Preferred Securities
Guarantee or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may institute and prosecute a
legal proceeding directly against the Guarantor to enforce its rights under this
Preferred Securities Guarantee,
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without first instituting a legal proceeding against the Trust, the Preferred
Guarantee Trustee or any other Person.
Section 5.5. Guarantee of Payment.
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Trust in respect of any amounts paid
to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. 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 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 Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.1. Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there shall
have occurred an Event of Default under this Preferred Securities Guarantee, an
event of default under the Trust Agreement or during an Extended Interest
Payment Period (as defined in the Indenture), then (a) the Guarantor shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock (other than as a result of a reclassification of its capital
stock for another class of its capital stock) and (b) the Guarantor shall not
make any payment of interest or principal on or repay, repurchase or redeem any
debt securities issued by the Guarantor which rank pari passu with or junior to
the Debentures.
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Section 6.2 Ranking.
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all Senior Debt, Subordinated Debt and Additional Senior Obligations,
as defined in the Indenture, of the Guarantor, to the extent and in the manner
set forth in the Indenture, and the applicable provisions of the Indenture will
apply, in all relevant respects, to the obligations of the Guarantor hereunder.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) upon full
payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust, or (iii) upon distribution of the Debentures to the
Holders of the Preferred Securities. Notwithstanding the foregoing, this
Preferred Securities Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts
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pertinent to the existence and amount of assets from which Distributions to
Holders of Preferred Securities might properly be paid.
Section 8.2. Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Successors and Assigns.
All guarantees and agreements contained in this Preferred Securities
Guarantee 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.
Section 9.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust Agreement
with respect to meetings of Holders of the Preferred Securities apply to the
giving of such approval.
Section 9.3. Notices.
All notices provided for in this Preferred Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
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Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administrator
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):
Wintrust Financial Corporation
727 North Bank Lane
Lake Forest, Illinois 60045
Attention: David A. Dykstra, Chief Financial Officer
(c) If given to any Holder of Preferred
Securities, at the address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 9.4. Benefit.
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
Section 9.5. Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS.
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This Preferred Securities Guarantee is executed as of the day and year
first above written.
WINTRUST FINANCIAL CORPORATION,
as Guarantor
By: ____________________________________
Its: ____________________________________
WILMINGTON TRUST COMPANY
as Preferred Guarantee Trustee
By: ____________________________________
Its: ____________________________________
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Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
---------------- ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Inclusive of interest on deposits:
- ---------------------------------
Pre-tax income (loss) from
operations........................ $ 847 $ 229 $ 1,058 $(2,283) $ 1,002 $(2,000) $(3,146)
Add: Interest on deposits........... 23,604 15,954 37,375 22,760 14,090 5,498 1,973
Interest on short-term
borrowings and notes
payable..................... 829 464 964 1,395 1,682 4,373 1,911
------- ------- ------- ------- ------- ------- -------
Total fixed charges......... 24,433 16,418 38,339 24,155 15,772 9,871 3,884
------- ------- ------- ------- ------- ------- -------
Pre-tax earnings (loss) before
fixed charges..................... $25,280 $16,647 $39,397 $21,872 $16,774 $ 7,871 $ 738
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges,
inclusive of interest on
deposits.......................... 1.03x 1.01x 1.03x (a) 1.06x (a) (a)
======= ======= ======= ======= ======= ======= =======
Exclusive of interest on deposits:
- ----------------------------------
Pre-tax income (loss) from
operations........................ $ 847 $ 229 $ 1,058 $(2,283) $ 1,002 $(2,000) $(3,146)
Add: Total fixed charges -
interest on short-term
borrowings and notes payable...... 829 464 964 1,395 1,682 4,373 1,911
Pre-tax earnings (loss) before....... ------- ------- ------- ------- ------- ------- -------
fixed charges..................... $ 1,676 $ 693 $ 2,022 $ (888) $ 2,684 $ 2,373 $(1,235)
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges,
exclusive of interest on
deposits.......................... 2.02x 1.49x 2.10x (a) 1.60x (a) (a)
======= ======= ======= ======= ======= ======= =======
</TABLE>
____________________
(a) Earnings were inadequate to cover fixed charges in the years ended December
31, 1996, 1994 and 1993 by $2.3 million, $2.0 million and $3.1 million,
respectively.
<PAGE>
Exhibit 23.1
[KPMG PEAT MARWICK LLP LOGO]
The Board of Directors
Wintrust Financial Corporation
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Registration Statement.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
August 17, 1998
